Is Cryptocurrency a Good Investment? The Pros & Cons
In this section, we’re going to answer the question - is cryptocurrency a good investment?
If you’re reading this, it’s probably no secret that you’re interested in cryptocurrencies. As you should be - the crypto industry has seen some unparalleled growth over the past few years!
That said, however, online, on social media platforms, there’s a constant mixture of good and bad news surrounding the crypto space. One day the market is experiencing unprecedented growth, while the other - everything’s crashing down rapidly! All of that might lead you to wonder - is crypto a good investment?
In this section, we’re going to talk about investing in crypto. To be a bit more specific, we’ll address the questions of what’s the general appeal of crypto, to begin with, what are the pros and cons of investing in this industry, and wrap things up with a clear conclusion, too.
Without further ado, let’s get to it!
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Is Cryptocurrency a Good Investment? (5 PROS & CONS!)
What’s the Appeal of Investing in Crypto?
So, naturally, the first question that we should look into is this - what’s the actual appeal of investing in crypto, and why do so many people do it nowadays?
Well, as you might probably expect, there isn’t a single answer to this question. Let’s still look at some of the more-common ones, however.
First of all, cryptocurrencies are still relatively new. This opens them up to being a very speculatory asset class - no one really knows how much a crypto asset “should” be worth, and thus, there’s potentially some money to be made, if you’re lucky enough!
Imagine it like this - let’s say that scientists have just discovered a new form of apples. These apples are super-healthy, juicy, delicious, and can stay fresh for a very long period of time. How much would an apple like that be worth?
Well, straight off the bat, no one would know! Do these apples have any downsides? Are they rare, and difficult to grow, or maybe in a year or so, everyone will have this type of an apple tree in their garden? Again - there’s a lot of speculation involved, and the price of that apple might sway quite a bit!
Same as with those apples, people love to speculate about certain cryptocurrencies, as well. Which of them will grow in price, and which will fall? How can you maximize your potential returns? These and many more questions lead people to wonder - is cryptocurrency a good investment?
Another big reason why certain individuals might want to invest in the space is simply because it’s an innovation. As I’ve pointed out a few times already, crypto is still very new - as time goes on, though, it’s becoming increasingly more adopted, by the day. Some people might simply enjoy being “ahead of the curve”, and want to participate in this technological advancement, as early as possible.
A common example here would be the internet, in the early 2000s. When it just came about, there were countless numbers of skeptics who thought that it’s just a fad, and that it would go away in a few months or years. Well, as you probably know, the reality is very different! Many people hope that the same will be true with crypto, too.
There are multiple additional reasons for why individuals are wondering - is cryptocurrency a good investment? That being said, though, if you’re one of those people who strive to be an early investor, simply because you love the technology behind the concept, make sure to check out other sections on our Crypto 101 Handbook - there are countless sections about all-things-crypto, to help you understand the space better!
The Pros & Cons of Investing in Crypto
Moving on, let’s now take a look at some of the biggest pros and cons of investing in cryptocurrencies. Once you have them laid out clearly, in front of you, the decision will be much simpler to make!
Let’s start with the pros.
The very first benefit of investing in cryptocurrencies is the joint anonymity & transparency factor. When you invest in crypto, you are able to remain completely anonymous while doing so, if you wish to.
These days, with regulations getting stricter, it’s something that’s becoming increasingly more difficult to do. However, crypto enthusiasts still find ways to achieve at least partial anonymity - it all depends on just how far you’re willing to go!
Transparency is another key factor to consider, in that equation. Cryptocurrencies are based on blockchain technology, which is, by default, transparent. Unless we’re talking about some niche private blockchain, public ledgers will allow everyone to come in and check the code behind them, and search for various potential bugs and issues.
All crypto transactions that are performed on such blockchains are public, as well. However, they won’t have your name attached to them - instead, only your wallet address will be shown to the observer, which does, once again, prove the anonymity aspect of the entire ordeal.
If you’d like to learn more about how all of this works, you can check out the section on blockchain decentralization and anonymity - I go more in-depth into this topic there.
Next up - the chance to earn huge returns on your investment.
Yes, this one’s a bit obvious, but it can still be considered somewhat of a benefit, or a “pro” of investing in crypto. That’s simply because there isn’t any other popular financial field that would allow you to earn such potential returns!
A large part of the crypto appeal is the fact that this industry has managed to turn multiple people into millionaires, overnight. It’s like you playing in a lottery, but one that would allow you to increase and decrease your odds, depending on how well you’ve done your research.
Of course, everything is never as simple as it seems, and there are huge downsides that accompany this factor, as well. We’ll talk about them later, though - for now, just keep in mind that many people would answer the question of “should you invest in crypto?” by giving you this very reason to do so - the potential for huge returns.
Moving on, another huge pro of investing in cryptocurrencies is the fact that, as I’ve pointed out earlier, there are seemingly countless ways to do so. And no, I’m not talking about using different exchange platforms to buy your crypto - instead, I’m referencing the variety of choices that this space houses.
If you want to take the “traditional” path, you COULD go ahead, register on an exchange, and purchase crypto this way. On the other hand, there’s also the DeFi (or, decentralized finance) space to explore, with all of the different services that it offers. Then, there are NFTs, which are a whole separate world, in of themselves.
These few categories then split off into a huge array of smaller subcategories - crypto borrowing and lending, advanced trading tools, royalty earnings with NFTs, different investment strategies, DAOs, and so on, and so forth. Each of these topics deserve a separate section of their own - I’ve already covered quite a few of them in our Crypto 101 Handbook, so don’t forget to check it out!
One more huge “pro” of investing in cryptocurrencies is the fact that this financial field is often considered to be much more approachable than traditional finance, at least for the younger generation. That’s due to the fact that crypto is constantly popping up in various pop-culture events, especially when it comes to memes.
Think about it yourself - Elon Musk and his support for Dogecoin, the surge of animal-themed coins and tokens, that whole situation with the WallStreetBets subreddit, and so on. Combine that with the fact that you can start investing in crypto with as little as a few dollars, and you can see why many people from the younger generation are wondering - should I buy crypto?!
With all of that being said, however, we couldn’t really finish off this section without talking about the negative aspects of investing in space, too. At the very top of these cons, you will find market volatility.
It’s something that I’ve explored earlier when talking about the appeal of crypto. Remember that example with the special apple? Well, sure - the price (or, worth) of that apple could go up, and make you a lot of money! However, it could also crash down, when you find out that all of your friends and neighbors have also acquired a huge amount of these apples.
The same is true with crypto, as well. With it being so new and, frankly, still poorly regulated, no one really knows how much this technology is worth, and the speculatory nature of this ordeal can really put a dent in your wallet! Say, you decide to buy BTC when it’s worth $60,000, only to find that it has crashed all the way down to $30,000 the next week. That’s not a nice feeling to experience, especially if you only wanted to make a bit of profit, and aren’t “in it” for the long run!
Another big con that you should consider before investing in crypto is that this space is still not properly regulated, in most areas around the world. Governments are trying to change this, but these bureaucratic processes are usually very slow and tedious.
Why does this matter? Well, it’s very easy to get scammed, or face tax-related issues when you’re dealing with an unregulated financial market. There are little-to-no fail-safes, and you become completely responsible for whatever happens to your assets. It requires a lot of knowledge and time in the market in order to make the smartest possible decisions!
Final Thoughts
To finish off, let’s wrap it up by stepping back, and taking a look at the question - should you invest in crypto?
Well, I believe that cryptocurrencies & crypto technology is a really cool innovation, and one that’s still very young. This means that there are going to be a lot of issues associated with it, and a lot of things that still need to be figured out. I mean, you could say that one of the cons of investing in crypto today is the fact that there are still very limited use cases for this technology!
As time goes on, though, it’s obvious that crypto is becoming more and more adapted into our everyday lives. If you’re a fan of innovations, this is super-exciting! Whatever the case might be, however, and whatever you might decide to do, just keep in mind that, as of me writing this section, the space is still quite unpredictable, and you need to be very cautious with everything that you do!
Imagine that you’ve decided to start working out. While planning out your routine, you’ve come to a crossroads - should you purchase your own equipment, or sign up for a gym membership?<\/p>\n<p>Both positions have their own pros and cons. If you were to buy your own training equipment, this would allow you to be independent, and train whenever you’d like. On the other hand, it would cost a lot of money and would require you to build a mini gym for yourself all on your own. These are the issues that would be avoided by buying a gym membership.<\/p>\n<p>So, this example illustrates the <strong>relationship between crypto coins and tokens<\/strong> perfectly with their cons and pros equally.<\/p>\n<p>In this section, we’re comparing crypto coins VS tokens. To be more specific, we’ll talk about what these two assets are, what are their main differences, and why this is something that you should know about, in the first place.<\/p>\n<p><em>Ready? Let’s get right to it!<\/em><\/p>\n<h2>What are Crypto Coins and Tokens?<\/h2>\n<p>To start things off, before we can really get into the comparison between crypto coins and tokens, we do need to figure out what these two assets are, in the first place.<\/p>\n<p>Some of the most popular examples of <strong>crypto coins<\/strong> include <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bitcoin-btc/">Bitcoin, <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-ethereum-eth/">Ethereum, and <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//goon//binance/">Binance Coin<\/strong><\/a>. In other words, they are popular and very large crypto assets that have some sort of a broad function associated with them.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto-coins-vs-tokens-1.o.jpg/" alt=\"Coin vs token: Most popular crypto assets vs smaller crypto assets.\" width=\"801\" height=\"502\" \/><\/p>\n<p><strong>Tokens<\/strong>, on the other hand, are <strong>smaller crypto assets<\/strong> that usually serve a much more niche and specific purpose than coins. On top of that, tokens can’t exist on their own - instead, they are “hosted” on the <strong><a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-blockchain/">blockchain of a crypto coin. So, you could say that tokens as so-called child coins that are based on the big environments of parent coins.<\/p>\n<p>Here, it’s also worth mentioning that the term “cryptocurrency” can refer to both coins and tokens - it’s situation-dependent! So, to make it clear here is an example for you: <\/p>\n<p>Imagine if coins are visualized as operating systems on your computer (Microsoft, Windows, or Apple's macOS), then crypto tokens are the programs that you launch in those Windows or macOS environments. Still, Microsoft Windows as a parent software can run without any additional programs, but with extra child apps, let's say Chrome internet browser, Microsoft Office package, and Cyberpunk game, it is more versatile and fun. <em>Simple enough, isn’t it?<\/em><\/p>\n<p><em><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto-coins-vs-tokens-2.o.jpg/" alt=\"Coin vs token: An example with an operating system.\" width=\"800\" height=\"527\" \/><\/em><\/p>\n<p>Now, a blockchain is a place where data, or information, is stored. I won’t go into detail on the topic in this section, but if you’re really interested to learn more about it, you can check out the section \"<a href=https://www.bitdegree.org/"//crypto//learn//what-is-blockchain/">What is the Blockchain?<\/strong><\/a>\".<\/p>\n<p>That being said, let’s reiterate the earlier point - crypto coins have <strong>their own blockchains<\/strong>, while crypto tokens are hosted on <strong>already-existing blockchains of the coins<\/strong>. In other words, tokens DO NOT have a blockchain of their own but they are children of bigger parents - coins, and they use their parents’ blockchain to launch and operate themself!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto-coins-vs-tokens-3.o.jpg/" alt=\"Coin vs token: Tokens are children of bigger parent coins.\" width=\"839\" height=\"281\" \/><\/p>\n<p>Another way you can look at it is via the example I’ve given at the beginning of this section. If you want to start working out and want to build a miniature gym of your own (with your own equipment, that is), you will be investing money, time, and a lot of patience. This is the same as when developing a new cryptocurrency - the developers must code the entire logic and functionality model of the brand new blockchain behind their future coin.<\/p>\n<p>Sticking with this example, taking out a local gym membership will save you both money and a lot of time, as well. Thus, creating a token on an existing blockchain environment is much easier - no matter what sort of a function it will serve, the core, underlying logic behind it will still be that of the blockchain that it’s built on.<\/p>\n<p>When discussing crypto coins and tokens, your best bet would be to think about <strong>Ethereum<\/strong>. It’s the second-largest crypto project in the world, right after <strong>Bitcoin<\/strong>, and is often referred to as the “<strong>global computer<\/strong>”.<\/p>\n<p>The <strong>vast majority of all tokens <\/strong>on the current market are developed, created, and launched on the <strong>Ethereum blockchain<\/strong>. Without getting too technical, the main reason why this is the case is that Ethereum provides probably the best and easiest environment for token launch and it was the first highly adopted coin with such a smart blockchain environment that supports this functionality.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto-coins-vs-tokens-4.o.jpg/" alt=\"Coin vs token: What are crypto coins and tokens?\" width=\"801\" height=\"520\" \/><\/p>\n<p>Returning back, a great example of the more well-known Ethereum-based tokens would be, the so-called, <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-stablecoin/">stablecoins. And yes, it sounds weird, but this is the one and only situation when tokens are called coins, even if they are still created on a parent blockchain of Ethereum, and not on their own. But they are the special ones, and here is why!<\/p>\n<p>A stablecoin is a type of crypto token whose price is “pegged” (or tied) to the value of the dollar, and which is backed by actual dollars, as well. In other words, <strong>one stablecoin will always be worth one dollar<\/strong>. It’s like a virtual US dollar in a blockchain with always the same value of the tangible US dollar in real life.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto-coins-vs-tokens-5.o.jpg/" alt=\"Coin vs token: Ethereum-based tokens.\" width=\"800\" height=\"747\" \/><\/p>\n<p>To get a broader picture, the most popular stablecoin today is <strong><a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-tether-usdt/">USDT <strong>(Tether)<\/strong><\/a>. Tether is HUGE. As of writing this section, it’s the third-largest crypto asset, right after Bitcoin and Ethereum, and it possesses a <strong><a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-market-capitalization-market-cap-mcap/">market capitalization<\/a> of over $78 billion<\/strong>. In addition, as I mentioned before, one Tether will always be worth one US dollar in value and will never change. <\/p>\n<p><em>If Tether is so incredibly huge, then why doesn’t it have a blockchain of its own?<\/em><\/p>\n<p>Once again, this is because of just how good Ethereum is when it comes to launching such crypto assets as stablecoins or any other types of tokens. The team behind Ethereum is constantly improving the technology, and making it easier, universal, and faster for developers to create and deploy tokens on the ETH blockchain.<\/p>\n<p>Developers of new tokens don’t really need to think about building their own blockchain environment from scratch, they get fully universal functionality of Ethereum, all pre-ready in the box.<\/p>\n<h2>What are the Differences Between Coins and Tokens?<\/h2>\n<p>Continuing on with this chapter, we’ve established what crypto coins and tokens are. Now, what are the actual differences between these two?<\/p>\n<p>Well, the biggest difference is just that - while crypto coins have blockchains of their own, tokens use the blockchains of existing coins. Though it’s worth mentioning that <strong>NOT ALL blockchains<\/strong> allow for tokens to be created on them!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto-coins-vs-tokens-6.o.jpg/" alt=\"Coin vs token: Differences between coins and tokens.\" width=\"800\" height=\"239\" \/><\/p>\n<p>Think about it this way - imagine that each crypto coin is some sort of a building. There are bigger buildings, smaller buildings, and so on. All of them serve different functions and have different features, right?<\/p>\n<p>For example, some buildings have large garages where you can store a lot of cars. Then there are small buildings (for example, private houses) that might not have a designated place for a car, in general!<\/p>\n<p>Well, in this case, let’s imagine that <strong>crypto tokens would actually be the cars<\/strong> that can be stored (or not) next to the buildings in the virtual city we just mentioned.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto-coins-vs-tokens-7.o.jpg/" alt=\"Coin vs token: An example with a car.\" width=\"801\" height=\"433\" \/><\/p>\n<p>In the same manner, some crypto coin blockchains allow developers to create tokens on them, while others do not. <\/p>\n<p><em>Why? <\/em>Because coin developers simply designed their blockchains that way, just to serve different purposes. Some coins were built with the intention just to <strong>serve their own mission<\/strong>. For example, Bitcoin was designed to just be the money equivalent in the virtual world and that’s it.<\/p>\n<p>On the opposite side, other coins were designed to serve not just their own, but additional features, by sharing their own functionality with tokens that could be launched and function in accordance with the parent coin on which those blockchain tokens were launched.<\/p>\n<p>The most popular blockchains for token creation are <strong>Ethereum<\/strong>, the <strong>Binance Smart Chain<\/strong>, and <strong>TRON<\/strong>.<\/p>\n<p>Another big difference between coins and tokens is that coins usually serve a larger purpose, and are more general in their use, while token utility concentrates on specific projects.<\/p>\n<p><em>Sounds confusing? <\/em>Allow me to give you a few examples.<\/p>\n<p>Let’s take <strong>Bitcoin<\/strong> and the <strong>Uniswap token<\/strong>. Bitcoin is the largest cryptocurrency on the market. Most people agree that its use case is that of a “store of value”. Meaning that people invest in Bitcoin with the hope that their investments will grow in value, or at least that their money will retain its value.<\/p>\n<p><em>A very general and broad use case, wouldn’t you agree?<\/em><\/p>\n<p><em><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto-coins-vs-tokens-8.o.jpg/" alt=\"Coin vs token: Store of value.\" width=\"800\" height=\"446\" \/><\/em><\/p>\n<p>Now, the Uniswap token is a token of the most popular decentralized crypto exchange, <strong>Uniswap<\/strong>. The exchange allows you to trade one type of Ethereum token for another, in an anonymous manner, and without any official company overseeing the process (thus, it’s decentralized). The Uniswap token, however, isn’t required for those trades.<\/p>\n<p><em>So… What is it even used for, then?<\/em><\/p>\n<p>Well, Uniswap token holders will be able to <strong>vote for changes and upgrades<\/strong> made to the exchange in question and might receive some discounts when swapping other tokens on the platform. Here, the use case of the Uniswap token is very niche and related strictly to the decentralized exchange platform.<\/p>\n<p>Another great example would be the earlier-mentioned <strong>Ethereum coin<\/strong>, and its well-known token called <strong>Shiba Inu<\/strong>. Ethereum blockchain allows developers to create crypto projects in a fast and efficient manner, by using special Ethereum features such as <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-smart-contract/">smart contracts<\/strong><\/a>.<\/p>\n<p>Smart contracts are basically automated agreements between two or more parties. I won’t go too in-depth into the topic, but if you’re interested to learn more about it, you can check out the section \"<a href=https://www.bitdegree.org/"//crypto//learn//what-are-smart-contracts/">What are Smart Contracts?<\/strong><\/a>\". For now, it should suffice to say that smart contracts are an essential part of the Ethereum network.<\/p>\n<p><img title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto-coins-vs-tokens-9.o.jpg/" alt=\"Coin vs token: Shiba Inu token.\" width=\"800\" height=\"438\" \/>Essentially, Ethereum is used as a launchpad for other projects - it’s like a computer that you run programs on. The Shiba Inu token, on the other hand, would be one of these programs - a token of the Ethereum.<\/p>\n<p>It was created on the Ethereum blockchain and this means that Shiba Inu has all of the <strong>fundamental characteristics of the Ethereum blockchain <\/strong>and it works in accordance with the logic of this network. However, you might wonder - <em>what’s the purpose of this token?<\/em><\/p>\n<p>Well, Shiba Inu was created as something that’s known as a “meme token”. Essentially, it has no single, clear purpose, and is mostly used for investment and meme purposes. Nowadays, you may also use Shiba Inu to donate to certain animal charities. In addition, there’s artwork being created that’s inspired by the project, but once again, its uses are very niche.<\/p>\n<h2>Why Do the Differences Between Coins and Tokens Matter?<\/h2>\n<p>Moving on, we’ve now covered what are crypto coins and tokens, and how they’re different from one another. The last thing that we need to discuss in this section is the question of why these things should even matter to you, in the first place!<\/p>\n<p>As you might have gathered already, coins and tokens are very different in how they work. Thus, anyone who is interested in crypto <strong>should be able to differentiate<\/strong> between the two. It’s one of the biggest questions in crypto.<\/p>\n<p>However, to tell you my honest opinion, apart from being savvy about the topic and understanding how crypto works, you aren’t really going to need to know the specific differences between coins and tokens, especially if you’re simply investing in or trading crypto.<\/p>\n<p>Sure, depending on if it's a coin or a token, the <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-transaction-fee/">transaction fees<\/strong><\/a> are going to be different, and the logic behind the project will possess different features and quirks, too. But, to your average investor, this usually does not matter. Instead, people look into the ACTUAL PROJECTS, and their value proposition - not if it’s a coin or a token.<\/p>","definition":"Did you know that, as of 2022, there are nearly over 10,000 digital coins out there?","status":"published","meta_title":"Coin VS Token: How Do They Differ?","meta_description":"Trying to figure out the difference between coins vs tokens? You'll surely find a detailed answer to this question with examples right here!","meta_keywords":"coin vs token, token vs coin crypto, coin vs token cryptocurrency, difference between token and coin crypto, what is the difference between tokens and coins in cryptocurrency","modified_content":"<p>In this section, I’ll explain the <strong>differences between <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-coin/">crypto coins<\/a> VS <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-token/">tokens./n Imagine that you’ve decided to start working out. While planning out your routine, you’ve come to a crossroads - should you purchase your own equipment, or sign up for a gym membership?<\/p>\n<p>Both positions have their own pros and cons. If you were to buy your own training equipment, this would allow you to be independent, and train whenever you’d like. On the other hand, it would cost a lot of money and would require you to build a mini gym for yourself all on your own. These are the issues that would be avoided by buying a gym membership.<\/p>\n<p>So, this example illustrates the <strong>relationship between crypto coins and tokens<\/strong> perfectly with their cons and pros equally.<\/p>\n<p>In this section, we’re comparing crypto coins VS tokens. To be more specific, we’ll talk about what these two assets are, what are their main differences, and why this is something that you should know about, in the first place.<\/p>\n<p><em>Ready? Let’s get right to it!<\/em><\/p>\n<div class=\"container\">\n <div class=\"row justify-content-center\">\n <div class=\"col-md-10 suggested-comparisons pb-3 mb-4\">\n <div class=\"d-flex flex-row\">\n <div class=\"text-center\">\n <div class=\"img-block-yt\">\n <img src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//images//compare-crypto-exchanges.gif/"/n alt=\"Crypto Token VS Coin (Animated Explainer & Examples)\"\n title=\"Crypto Token VS Coin (Animated Explainer & Examples)\" class=\"border-0\">\n <p>Video Explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"col-xs-10 col-sm-10 col-md-10 text-left py-3 yt-info\">\n <h4 class=\"mb-1\">Video Explainer: Coin VS Token: How Do They Differ?<\/h4>\n <p class=\"py-1 mb-0 youtube-video-subtitle\">Reading is not your thing? Watch the \"Coin VS Token: How Do They Differ?\" video explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div class=\"col-12 col-md-11 px-3\">\n <div class=\"wrapper mb-0\">\n <div class=\"position-relative youtube mb-4 bg-transparent p-0 video-modal-popup\" data-toggle=\"modal\"\n data-target=\"#video-modal\" data-id=\"kNAC7CXFOTw\" data-title=\"CryptoFinallyExplained\">\n <div class=\"video-gradient-top\"><\/div>\n <p class=\"text-left dyk-video-title\">Crypto Token VS Coin (Animated Explainer & Examples)<\/p>\n <img data-srcset=\"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/crypto-token-vs-coin-animated-explainer-examples.jpg?tr=w-420 500w,\n https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/crypto-token-vs-coin-animated-explainer-examples.jpg?tr=w-760 1000w\"\n alt=\"Crypto Token VS Coin (Animated Explainer & Examples)\"\n title=\"Crypto Token VS Coin (Animated Explainer & Examples)\"\n class=\"p-0 lazyload\">\n <img class=\"play-button lazyload\" data-target=\"#video-modal\"\n data-src=\"https:\/\/assets.bitdegree.org\/crypto\/assets\/video-button.png?tr=w-85\"\n alt=\"Crypto Token VS Coin (Animated Explainer & Examples)\">\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div>\n <a href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n class=\"btn yt-promo mb-2\" target=\"_blank\" rel=\"nofollow noopener noindex\">\n <div class=\"row justify-content-center align-items-center mx-0 text-center\">\n <div class=\"col-4 col-md-4\">\n <i class=\"fab fa-youtube yt-dyk-btn\"><\/i>\n <\/div>\n <div class=\"col-8 col-md-8 text-center yt-promo-text\">\n <h4 class=\"m-0 text-white\">SUBSCRIBE<\/h4>\n <span>ON YOUTUBE<\/span>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n<div class=\"modal fade\" id=\"video-modal\" tabindex=\"-1\" role=\"dialog\">\n <div class=\"modal-dialog modal-dialog-centered modal-lg\" role=\"document\">\n <div class=\"modal-content\">\n <div class=\"modal-body p-0\">\n <button type=\"button\" class=\"video-modal-close close\" data-dismiss=\"modal\" aria-label=\"Close\">\n <i aria-hidden=\"true\" class=\"fas fa-times\"><\/i>\n <\/button>\n <div id=\"iframe\"><\/div>\n <\/div>\n <a class=\"text-decoration-none\"\n href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n rel=\"nofollow noopener noindex\" target=\"_blank\">\n <div class=\"modal-footer p-0 d-block bg-white\">\n <div class=\"row justify-content-center m-0\">\n <div class=\"col-3 col-md-4 col-lg-2 p-0\">\n <img class=\"w-100 h-100\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//crypto-subscribe.jpg/" alt=\"Subscribe\">\n <\/div>\n <div class=\"col-9 col-md-8 col-lg-2 px-0 d-flex\">\n <div class=\"modal-subscribe w-100\">\n <p class=\"m-0 mt-1 mr-3\">SUBSCRIBE<br>\n <span class=\"m-0\">ON YOUTUBE<\/span>\n <\/p>\n <\/div>\n <\/div>\n <div class=\"col-12 col-md-12 col-lg-8 p-0 text-center d-flex justify-content-center align-items-center\">\n <div class=\"modal-subscribe-text\">\n <h4 class=\"m-0\">Understand crypto with ease<\/h4>\n <span>New explainer videos every week!<\/span>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n<\/div>\n<h2>What are Crypto Coins and Tokens?<\/h2>\n<p>To start things off, before we can really get into the comparison between crypto coins and tokens, we do need to figure out what these two assets are, in the first place.<\/p>\n<p>Some of the most popular examples of <strong>crypto coins<\/strong> include <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bitcoin-btc/">Bitcoin, <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-ethereum-eth/">Ethereum, and <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//goon//binance/">Binance Coin<\/strong><\/a>. In other words, they are popular and very large crypto assets that have some sort of a broad function associated with them.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto-coins-vs-tokens-1.o.jpg/" alt=\"Coin vs token: Most popular crypto assets vs smaller crypto assets.\" width=\"801\" height=\"502\" \/><\/p>\n<p><strong>Tokens<\/strong>, on the other hand, are <strong>smaller crypto assets<\/strong> that usually serve a much more niche and specific purpose than coins. On top of that, tokens can’t exist on their own - instead, they are “hosted” on the <strong><a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-blockchain/">blockchain of a crypto coin. So, you could say that tokens as so-called child coins that are based on the big environments of parent coins.<\/p>\n<p>Here, it’s also worth mentioning that the term “cryptocurrency” can refer to both coins and tokens - it’s situation-dependent! So, to make it clear here is an example for you: <\/p>\n<p>Imagine if coins are visualized as operating systems on your computer (Microsoft, Windows, or Apple's macOS), then crypto tokens are the programs that you launch in those Windows or macOS environments. Still, Microsoft Windows as a parent software can run without any additional programs, but with extra child apps, let's say Chrome internet browser, Microsoft Office package, and Cyberpunk game, it is more versatile and fun. <em>Simple enough, isn’t it?<\/em><\/p>\n<p><em><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto-coins-vs-tokens-2.o.jpg/" alt=\"Coin vs token: An example with an operating system.\" width=\"800\" height=\"527\" \/><\/em><\/p>\n<p>Now, a blockchain is a place where data, or information, is stored. I won’t go into detail on the topic in this section, but if you’re really interested to learn more about it, you can check out the section \"<a href=https://www.bitdegree.org/"//crypto//learn//what-is-blockchain/">What is the Blockchain?<\/strong><\/a>\".<\/p>\n<p>That being said, let’s reiterate the earlier point - crypto coins have <strong>their own blockchains<\/strong>, while crypto tokens are hosted on <strong>already-existing blockchains of the coins<\/strong>. In other words, tokens DO NOT have a blockchain of their own but they are children of bigger parents - coins, and they use their parents’ blockchain to launch and operate themself!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto-coins-vs-tokens-3.o.jpg/" alt=\"Coin vs token: Tokens are children of bigger parent coins.\" width=\"839\" height=\"281\" \/><\/p>\n<p>Another way you can look at it is via the example I’ve given at the beginning of this section. If you want to start working out and want to build a miniature gym of your own (with your own equipment, that is), you will be investing money, time, and a lot of patience. This is the same as when developing a new cryptocurrency - the developers must code the entire logic and functionality model of the brand new blockchain behind their future coin.<\/p>\n<p>Sticking with this example, taking out a local gym membership will save you both money and a lot of time, as well. Thus, creating a token on an existing blockchain environment is much easier - no matter what sort of a function it will serve, the core, underlying logic behind it will still be that of the blockchain that it’s built on.<\/p>\n<p>When discussing crypto coins and tokens, your best bet would be to think about <strong>Ethereum<\/strong>. It’s the second-largest crypto project in the world, right after <strong>Bitcoin<\/strong>, and is often referred to as the “<strong>global computer<\/strong>”.<\/p>\n<p>The <strong>vast majority of all tokens <\/strong>on the current market are developed, created, and launched on the <strong>Ethereum blockchain<\/strong>. Without getting too technical, the main reason why this is the case is that Ethereum provides probably the best and easiest environment for token launch and it was the first highly adopted coin with such a smart blockchain environment that supports this functionality.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto-coins-vs-tokens-4.o.jpg/" alt=\"Coin vs token: What are crypto coins and tokens?\" width=\"801\" height=\"520\" \/><\/p>\n<p>Returning back, a great example of the more well-known Ethereum-based tokens would be, the so-called, <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-stablecoin/">stablecoins. And yes, it sounds weird, but this is the one and only situation when tokens are called coins, even if they are still created on a parent blockchain of Ethereum, and not on their own. But they are the special ones, and here is why!<\/p>\n<p>A stablecoin is a type of crypto token whose price is “pegged” (or tied) to the value of the dollar, and which is backed by actual dollars, as well. In other words, <strong>one stablecoin will always be worth one dollar<\/strong>. It’s like a virtual US dollar in a blockchain with always the same value of the tangible US dollar in real life.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto-coins-vs-tokens-5.o.jpg/" alt=\"Coin vs token: Ethereum-based tokens.\" width=\"800\" height=\"747\" \/><\/p>\n<p>To get a broader picture, the most popular stablecoin today is <strong><a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-tether-usdt/">USDT <strong>(Tether)<\/strong><\/a>. Tether is HUGE. As of writing this section, it’s the third-largest crypto asset, right after Bitcoin and Ethereum, and it possesses a <strong><a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-market-capitalization-market-cap-mcap/">market capitalization<\/a> of over $78 billion<\/strong>. In addition, as I mentioned before, one Tether will always be worth one US dollar in value and will never change. <\/p>\n<p><em>If Tether is so incredibly huge, then why doesn’t it have a blockchain of its own?<\/em><\/p>\n<p>Once again, this is because of just how good Ethereum is when it comes to launching such crypto assets as stablecoins or any other types of tokens. The team behind Ethereum is constantly improving the technology, and making it easier, universal, and faster for developers to create and deploy tokens on the ETH blockchain.<\/p>\n<p>Developers of new tokens don’t really need to think about building their own blockchain environment from scratch, they get fully universal functionality of Ethereum, all pre-ready in the box.<\/p>\n<h2>What are the Differences Between Coins and Tokens?<\/h2>\n<p>Continuing on with this chapter, we’ve established what crypto coins and tokens are. Now, what are the actual differences between these two?<\/p>\n<p>Well, the biggest difference is just that - while crypto coins have blockchains of their own, tokens use the blockchains of existing coins. Though it’s worth mentioning that <strong>NOT ALL blockchains<\/strong> allow for tokens to be created on them!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto-coins-vs-tokens-6.o.jpg/" alt=\"Coin vs token: Differences between coins and tokens.\" width=\"800\" height=\"239\" \/><\/p>\n<p>Think about it this way - imagine that each crypto coin is some sort of a building. There are bigger buildings, smaller buildings, and so on. All of them serve different functions and have different features, right?<\/p>\n<p>For example, some buildings have large garages where you can store a lot of cars. Then there are small buildings (for example, private houses) that might not have a designated place for a car, in general!<\/p>\n<p>Well, in this case, let’s imagine that <strong>crypto tokens would actually be the cars<\/strong> that can be stored (or not) next to the buildings in the virtual city we just mentioned.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto-coins-vs-tokens-7.o.jpg/" alt=\"Coin vs token: An example with a car.\" width=\"801\" height=\"433\" \/><\/p>\n<p>In the same manner, some crypto coin blockchains allow developers to create tokens on them, while others do not. <\/p>\n<p><em>Why? <\/em>Because coin developers simply designed their blockchains that way, just to serve different purposes. Some coins were built with the intention just to <strong>serve their own mission<\/strong>. For example, Bitcoin was designed to just be the money equivalent in the virtual world and that’s it.<\/p>\n<p>On the opposite side, other coins were designed to serve not just their own, but additional features, by sharing their own functionality with tokens that could be launched and function in accordance with the parent coin on which those blockchain tokens were launched.<\/p>\n<p>The most popular blockchains for token creation are <strong>Ethereum<\/strong>, the <strong>Binance Smart Chain<\/strong>, and <strong>TRON<\/strong>.<\/p>\n<p>Another big difference between coins and tokens is that coins usually serve a larger purpose, and are more general in their use, while token utility concentrates on specific projects.<\/p>\n<p><em>Sounds confusing? <\/em>Allow me to give you a few examples.<\/p>\n<p>Let’s take <strong>Bitcoin<\/strong> and the <strong>Uniswap token<\/strong>. Bitcoin is the largest cryptocurrency on the market. Most people agree that its use case is that of a “store of value”. Meaning that people invest in Bitcoin with the hope that their investments will grow in value, or at least that their money will retain its value.<\/p>\n<p><em>A very general and broad use case, wouldn’t you agree?<\/em><\/p>\n<p><em><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto-coins-vs-tokens-8.o.jpg/" alt=\"Coin vs token: Store of value.\" width=\"800\" height=\"446\" \/><\/em><\/p>\n<p>Now, the Uniswap token is a token of the most popular decentralized crypto exchange, <strong>Uniswap<\/strong>. The exchange allows you to trade one type of Ethereum token for another, in an anonymous manner, and without any official company overseeing the process (thus, it’s decentralized). The Uniswap token, however, isn’t required for those trades.<\/p>\n<p><em>So… What is it even used for, then?<\/em><\/p>\n<p>Well, Uniswap token holders will be able to <strong>vote for changes and upgrades<\/strong> made to the exchange in question and might receive some discounts when swapping other tokens on the platform. Here, the use case of the Uniswap token is very niche and related strictly to the decentralized exchange platform.<\/p>\n<p>Another great example would be the earlier-mentioned <strong>Ethereum coin<\/strong>, and its well-known token called <strong>Shiba Inu<\/strong>. Ethereum blockchain allows developers to create crypto projects in a fast and efficient manner, by using special Ethereum features such as <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-smart-contract/">smart contracts<\/strong><\/a>.<\/p>\n<p>Smart contracts are basically automated agreements between two or more parties. I won’t go too in-depth into the topic, but if you’re interested to learn more about it, you can check out the section \"<a href=https://www.bitdegree.org/"//crypto//learn//what-are-smart-contracts/">What are Smart Contracts?<\/strong><\/a>\". For now, it should suffice to say that smart contracts are an essential part of the Ethereum network.<\/p>\n<p><img title=\"\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto-coins-vs-tokens-9.o.jpg/" alt=\"Coin vs token: Shiba Inu token.\" width=\"800\" height=\"438\" \/>Essentially, Ethereum is used as a launchpad for other projects - it’s like a computer that you run programs on. The Shiba Inu token, on the other hand, would be one of these programs - a token of the Ethereum.<\/p>\n<p>It was created on the Ethereum blockchain and this means that Shiba Inu has all of the <strong>fundamental characteristics of the Ethereum blockchain <\/strong>and it works in accordance with the logic of this network. However, you might wonder - <em>what’s the purpose of this token?<\/em><\/p>\n<p>Well, Shiba Inu was created as something that’s known as a “meme token”. Essentially, it has no single, clear purpose, and is mostly used for investment and meme purposes. Nowadays, you may also use Shiba Inu to donate to certain animal charities. In addition, there’s artwork being created that’s inspired by the project, but once again, its uses are very niche.<\/p>\n<h2>Why Do the Differences Between Coins and Tokens Matter?<\/h2>\n<p>Moving on, we’ve now covered what are crypto coins and tokens, and how they’re different from one another. The last thing that we need to discuss in this section is the question of why these things should even matter to you, in the first place!<\/p>\n<p>As you might have gathered already, coins and tokens are very different in how they work. Thus, anyone who is interested in crypto <strong>should be able to differentiate<\/strong> between the two. It’s one of the biggest questions in crypto.<\/p>\n<p>However, to tell you my honest opinion, apart from being savvy about the topic and understanding how crypto works, you aren’t really going to need to know the specific differences between coins and tokens, especially if you’re simply investing in or trading crypto.<\/p>\n<p>Sure, depending on if it's a coin or a token, the <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-transaction-fee/">transaction fees<\/strong><\/a> are going to be different, and the logic behind the project will possess different features and quirks, too. But, to your average investor, this usually does not matter. Instead, people look into the ACTUAL PROJECTS, and their value proposition - not if it’s a coin or a token.<\/p>","youtube_video":{"id":8,"channel_id":1,"sort":92,"video_title":"Crypto Token VS Coin (Animated Explainer & Examples)","description":"What\u2019s the difference between crypto Tokens VS Coins?\n\nBoth coins and tokens are cryptocurrency assets. However, coins have blockchains of their own, while tokens are built on existing blockchains, and usually represent some sort of a project.\n\nToday I\u2019ll explain to you what crypto coins and tokens are, without using any complicated crypto terminology or industry-specific jargon. With the help of examples and visual stories, I will also discuss the specific differences between the two assets, and explain why you should care about all of it, in the first place.\n\nDo you think the differences between coins and tokens are important? Share your opinions in the comments down below!\n\nVideo Time Table:\n\n0:00 Introduction to Coin VS Token\n1:12 What Are Crypto Coins & Tokens?\n6:52 What Are the Differences Between Coins & Tokens?\n11:13 Why Do The Differences Between Coins & Tokens Matter?\n12:16 Wrap-up: Coin VS Token\n\nGet Quick Crypto Tips on Twitter - Follow:\nhttps:\/\/twitter.com\/crypto_xplained\n\n#CoinVsToken #TokenVsCoin #CryptoTokenVsCoin #CryptoCoin #CryptoToken #Blockchain #Cryptocurrencies","video_id":"kNAC7CXFOTw","duration":760,"view_count":16231,"thumbnail_url":"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/crypto-token-vs-coin-animated-explainer-examples.jpg","thumbnail_width":1280,"thumbnail_height":720,"published_at":"2022-01-27T16:19:15.000000Z","created_at":"2022-02-21T13:20:28.000000Z","updated_at":"2024-01-09T23:00:04.000000Z","channel":{"id":1,"title":"CryptoFinallyExplained","channel_id":"UCOryUY0yxC08eJtK23mNgiA","main_playlist_id":"UUOryUY0yxC08eJtK23mNgiA"}}}"
:prev-section="{"id":34,"chapter_id":2,"order":2,"featured_image_id":3065,"youtube_video_id":35,"author_id":1,"created_at":"2022-08-10T13:26:33.000000Z","updated_at":"2023-12-22T06:30:57.000000Z","slug":"how-does-cryptocurrency-work","title":"How Does Cryptocurrency Work?","content":"<p>In this section, I’m going to tell you how does cryptocurrency work!<\/p>\n<p>Nowadays, <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-cryptocurrency/">cryptocurrencies seem to be all around us - we trade crypto, transact in crypto, send it to our friends and relatives, buy and sell goods and services for crypto, and can even borrow and lend it out, too!<\/p>\n<p>As we perform all of those processes, though, do you ever think about what’s going on in the background? I’ll let you in on a little secret - <strong>there’s a lot of stuff happening, with every single transaction!<\/strong> So, then - let’s figure out how cryptocurrencies ACTUALLY work!<\/p>\n<p>In this section, we’re going to dive deep into the question of how does cryptocurrency work. Specifically, we’ll explore what makes cryptocurrencies unique, what happens during a transaction, and why these questions are something you should even care about, in the first place.<\/p>\n<p><em>So, let’s get to it!<\/em><\/p>\n<h2>What Makes Cryptocurrencies Unique?<\/h2>\n<p>In order to really get a grasp on what is cryptocurrency and how does it work, you need to first understand the underlying technology that crypto is built upon - <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-blockchain/">blockchains. This is, evidently, something that I’ve explored thoroughly in <a href=https://www.bitdegree.org/"//crypto//learn//what-is-blockchain/">a separate section<\/strong><\/a>. If you still haven’t read it, do so - it will help you get a better understanding of what we’re talking about today!<\/p>\n<p>That being said, for the context of this section, we’ll focus on one of the key functions of blockchain technology - <strong>automated and immutable bookkeeping.<\/strong><\/p>\n<p><strong><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How does cryptocurrency work: What makes cryptocurrencies unique?\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//how_does_cryptocurrency_work_01.o.jpg/" alt=\"How does cryptocurrency work: What makes cryptocurrencies unique?\" width=\"1000\" height=\"673\" \/><\/strong><\/p>\n<p>You see, <strong>a blockchain is simply a huge digital database.<\/strong> You can think about it as multiple boxes, being connected by a single chronological chain. Each box holds information about the transactions that you perform, and the chain helps with keeping everything organized and, well… Chronological!<\/p>\n<p>This is the very first thing that makes cryptocurrencies unique - the fact that each cryptocurrency is based on a blockchain, and that all transactions that involve cryptocurrencies are recorded on the said blockchain, too. For a visual example, you can imagine it as a bank - every money transfer and credit card transaction that you make is recorded by your bank!<\/p>\n<p>Now, admittedly, cryptocurrencies and crypto transactions are widely considered to be an improvement over traditional banking institutions, and default money transferring methods. One of the biggest reasons why that’s the case is just that - transparent and immutable bookkeeping.<\/p>\n<p><strong>Traditional banks can run into a wide array of troubles<\/strong>, when it comes to managing the personal information of their customers. Data breaches, power outages, and good, old-fashioned human error are just a few things that can go wrong! With blockchains generally being completely transparent and <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-decentralization/">decentralized, all of these aforementioned issues are, admittedly, non-threatening.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How does cryptocurrency work: Traditional banking problems.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//how_does_cryptocurrency_work_02.o.jpg/" alt=\"How does cryptocurrency work: Traditional banking problems.\" width=\"1000\" height=\"763\" \/><\/p>\n<p><strong>Then, there’s the anonymity aspect, too.<\/strong> With your traditional banking institutions, anonymity is out of the question - you have to identify yourself, be transparent about where your money is coming from, who you’re sending your money to, and so on. So, if you have a friend named Tim, and want to send him some money, you’ll need to tell the bank WHY you’re sending your money to Tim, as well as make sure that Tim isn’t a suspicious individual who would be involved in some shady business.<\/p>\n<p>Now, sure, that’s an exaggeration, but you get the idea - with traditional banks, everything is pretty strict, in this regard. With crypto, though, it’s somewhat the opposite - <strong>the same blockchain technology behind cryptocurrencies aims to preserve your anonymity!<\/strong><\/p>\n<p>Specifically, this is done with the help of <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-wallet/">cryptocurrency wallets<\/strong><\/a>. Each wallet has a unique code associated with it - it’s called a “<a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-address/">public wallet address<\/strong><\/a>”. When you transact with crypto, while all of the information is stored on the blockchain and is public for everyone to see, all that anyone will see is your wallet address sending an X amount of cryptocurrency to Tim’s wallet address.<\/p>\n<p>In other words, no one will know that it’s YOU sending the crypto to TIM.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How does cryptocurrency work: Public wallet address.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//how_does_cryptocurrency_work_03.o.jpg/" alt=\"How does cryptocurrency work: Public wallet address.\" width=\"1000\" height=\"1088\" \/><\/p>\n<p>One last point that I’d like to stress, when it comes to cryptocurrencies and how they work, is the fact that <strong>there are multiple different crypto projects, as well as blockchains out there.<\/strong> Each of these crypto projects have their own, special functions, and many of them have very unique working models, too.<\/p>\n<p>That is to say - in this section, we’re focusing on the general aspects of how does crypto work, from the perspective of cryptocurrency transactions.<\/p>\n<p>That’s the general gist of things, as far as the unique features of crypto technology are concerned. As you might expect, there’s a lot more to cover, in this regard, but as I’ve mentioned earlier, it’s something for a different section, altogether. So, if you’re not familiar with any of the concepts that we’ve discussed, up to this point in the section, <strong>check out other sections on our Crypto 101 Handbook<\/strong> - it covers each and every single of those topics, in-depth!<\/p>\n<h2>What Happens During a Crypto Transaction?<\/h2>\n<p>Now that you’re familiar with the unique features of cryptocurrencies, in general, it’s time to check out how does crypto work, transaction-wise - specifically, <strong>what happens when you perform a cryptocurrency transaction. <\/strong>For consistency’s sake, let’s stick to the same example I gave earlier - you sending some crypto to Tim.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How does cryptocurrency work: What happens during a crypto transaction?\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//how_does_cryptocurrency_work_04.o.jpg/" alt=\"How does cryptocurrency work: What happens during a crypto transaction?\" width=\"1000\" height=\"497\" \/><\/p>\n<p>Also, let’s say that you’ve decided to send <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bitcoin-btc/">Bitcoin to Tim - evidently, this would work the same with most other cryptocurrencies out there, but Bitcoin is probably still the simplest example.<\/p>\n<p>So, in order to perform this transaction, you will need to have a cryptocurrency wallet, with BTC inside of it. Most wallets work the same - <strong>you enter the receiver wallet address, the amount of crypto that you’d like to send, and pass a few confirmations.<\/strong><\/p>\n<p>Now, as soon as you send that BTC, your transaction will be submitted to the network. In the case of Bitcoin, it will need to be verified, in order to be confirmed. This is the core security measure that’s employed by blockchain technology - it’s called a “<a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-consensus/">consensus algorithm<\/strong><\/a>”, and it helps keep the cryptocurrency network secure and fraud-resistant.<\/p>\n<p>It’s a really intimidating-sounding term, but what it boils down to is <strong>a method of how the blockchain confirms the validity of a transaction.<\/strong> Different blockchains use different methods, and with Bitcoin, the consensus algorithm is called “<a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-proof-of-work-pow/">Proof-of-Work”./n Have you ever heard the term “<a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-miner/">cryptocurrency miner<\/strong><\/a>”? Well, this is what Proof-of-Work refers to - miners are people who employ their computers (or other special devices) to earn cryptocurrency for them! <strong>Miners earn crypto for confirming transactions happening on the blockchain<\/strong> - such as your transaction, where you send Tim your Bitcoin.<\/p>\n<p>As you might imagine, this is an entire, huge topic, in of its own! For now, though, just keep in mind what I said earlier - when you perform the transaction, it’s placed in a queue, on the blockchain, and awaits confirmation. Now, if your transaction is legitimate, it will receive all of the required confirmations, and the Bitcoin that you’ve sent will reach Tim’s wallet in no time.<\/p>\n<p>On the flip side, if you decide to “trick the system”, and try to perform some sort of a hacker-like faulty transaction, it will get denied, pretty fast - <strong>that’s the magic of consensus algorithms and blockchain security!<\/strong><\/p>\n<p>You should be aware of this entire process if you’re looking at how does investing in cryptocurrency work, as well. As you purchase crypto, or perform any other transactions, many of those processes will be happening in the background!<\/p>\n<p>All of that being said, that’s essentially how crypto transactions work! Mind you, as we’ve established earlier, each cryptocurrency is going to have this process look a bit different from the other. Especially nowadays, with so many new blockchain projects constantly springing up, all around. The premise, though, will remain the same, either way!<\/p>\n<h2>Why Should You Know How Cryptocurrencies Work?<\/h2>\n<p>So, then - now that you have a general idea of how cryptocurrencies work, it’s also worth addressing the “why” - specifically, <strong>why it’s important to know this<\/strong>, in the first place!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How does cryptocurrency work: Why should you know how cryptocurrencies work?\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//how_does_cryptocurrency_work_05.o.jpg/" alt=\"How does cryptocurrency work: Why should you know how cryptocurrencies work?\" width=\"1000\" height=\"585\" \/><\/p>\n<p>Naturally, since you’re reading this, you do probably already have some reasons of your own. However, the point that I want to emphasize is that EVERYONE should learn about crypto - how it works, what happens during transactions, and so on.<\/p>\n<p>The biggest reason for why that’s the case is pretty simple, actually - <strong>with crypto becoming as popular as it is, it’s being integrated into our everyday lives! <\/strong>While the integrations are still very slow, I urge you to think about it - the simplest example would be major payment gateways, such as PayPal and Visa starting to accept and perform cryptocurrency transfers.<\/p>\n<p>Following that, if you understand how cryptocurrencies work, <strong>you will also have a much better chance of protecting yourself from potential scams and hacking attempts. <\/strong>No malicious individual or organization will be able to come in and trick you, since you will already understand the differences between a normal cryptocurrency transaction, and some shady dealing happening in the background.<\/p>\n<p>Lastly, learning about how cryptocurrencies work is also one of the very first steps that you can take when it comes to studying the crypto world, as a whole! Cryptocurrencies, and the blockchain technology behind them, are some of the core, essential elements that make up the entire industry.<\/p>\n<p>This is very true if you want to look into how does the crypto market work, or even how does investing in cryptocurrency work, as well! When you understand the technology behind crypto, and what happens during transactions, you’ll be much better-equipped to start your investment journey!<\/p>\n<p>All that you need to do in order to understand the importance of crypto tech is <strong>take a look at <a href=https://www.bitdegree.org/"//crypto//learn//what-is-defi/">DeFi, or decentralized finance.<\/strong> It’s a new-and-emerging form of finance, and one that already houses some huge investors, and incredible amounts of money. Well, no matter if it’s a cryptocurrency lending platform, a gambling game based on blockchain technology, or some sort of a wallet project, everything essentially boils down to the very fundamentals of how cryptocurrencies work!<\/p>","definition":"Did you know that cryptocurrencies and crypto transactions are considered to be an improvement over traditional banking institutions and conventional money transfer methods?","status":"published","meta_title":"How does Cryptocurrency Work? A Thorough Explanation","meta_description":"Trying to find an answer to the question \"how does cryptocurrency work?\" You'll find a thorough and beginner-friendly explanation here!","meta_keywords":"how does cryptocurrency work, how does crypto work, what is cryptocurrency and how does it work, how does cryptocurrency work for dummies, what makes a cryptocurrency valuable, how does investing in cryptocurrency work, how does the crypto market work","modified_content":"<p>In this section, I’m going to tell you how does cryptocurrency work!<\/p>\n<p>Nowadays, <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-cryptocurrency/">cryptocurrencies seem to be all around us - we trade crypto, transact in crypto, send it to our friends and relatives, buy and sell goods and services for crypto, and can even borrow and lend it out, too!<\/p>\n<p>As we perform all of those processes, though, do you ever think about what’s going on in the background? I’ll let you in on a little secret - <strong>there’s a lot of stuff happening, with every single transaction!<\/strong> So, then - let’s figure out how cryptocurrencies ACTUALLY work!<\/p>\n<p>In this section, we’re going to dive deep into the question of how does cryptocurrency work. Specifically, we’ll explore what makes cryptocurrencies unique, what happens during a transaction, and why these questions are something you should even care about, in the first place.<\/p>\n<p><em>So, let’s get to it!<\/em><\/p>\n<div class=\"container\">\n <div class=\"row justify-content-center\">\n <div class=\"col-md-10 suggested-comparisons pb-3 mb-4\">\n <div class=\"d-flex flex-row\">\n <div class=\"text-center\">\n <div class=\"img-block-yt\">\n <img src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//images//compare-crypto-exchanges.gif/"/n alt=\"How Does Cryptocurrency Work? (Explained with Animation)\"\n title=\"How Does Cryptocurrency Work? (Explained with Animation)\" class=\"border-0\">\n <p>Video Explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"col-xs-10 col-sm-10 col-md-10 text-left py-3 yt-info\">\n <h4 class=\"mb-1\">Video Explainer: How Does Cryptocurrency Work?<\/h4>\n <p class=\"py-1 mb-0 youtube-video-subtitle\">Reading is not your thing? Watch the \"How Does Cryptocurrency Work?\" video explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div class=\"col-12 col-md-11 px-3\">\n <div class=\"wrapper mb-0\">\n <div class=\"position-relative youtube mb-4 bg-transparent p-0 video-modal-popup\" data-toggle=\"modal\"\n data-target=\"#video-modal\" data-id=\"rAtJ7Lw90KA\" data-title=\"CryptoFinallyExplained\">\n <div class=\"video-gradient-top\"><\/div>\n <p class=\"text-left dyk-video-title\">How Does Cryptocurrency Work? (Explained with Animation)<\/p>\n <img data-srcset=\"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/how-does-cryptocurrency-work-explained-with-animation.jpg?tr=w-420 500w,\n https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/how-does-cryptocurrency-work-explained-with-animation.jpg?tr=w-760 1000w\"\n alt=\"How Does Cryptocurrency Work? (Explained with Animation)\"\n title=\"How Does Cryptocurrency Work? (Explained with Animation)\"\n class=\"p-0 lazyload\">\n <img class=\"play-button lazyload\" data-target=\"#video-modal\"\n data-src=\"https:\/\/assets.bitdegree.org\/crypto\/assets\/video-button.png?tr=w-85\"\n alt=\"How Does Cryptocurrency Work? (Explained with Animation)\">\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div>\n <a href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n class=\"btn yt-promo mb-2\" target=\"_blank\" rel=\"nofollow noopener noindex\">\n <div class=\"row justify-content-center align-items-center mx-0 text-center\">\n <div class=\"col-4 col-md-4\">\n <i class=\"fab fa-youtube yt-dyk-btn\"><\/i>\n <\/div>\n <div class=\"col-8 col-md-8 text-center yt-promo-text\">\n <h4 class=\"m-0 text-white\">SUBSCRIBE<\/h4>\n <span>ON YOUTUBE<\/span>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n<div class=\"modal fade\" id=\"video-modal\" tabindex=\"-1\" role=\"dialog\">\n <div class=\"modal-dialog modal-dialog-centered modal-lg\" role=\"document\">\n <div class=\"modal-content\">\n <div class=\"modal-body p-0\">\n <button type=\"button\" class=\"video-modal-close close\" data-dismiss=\"modal\" aria-label=\"Close\">\n <i aria-hidden=\"true\" class=\"fas fa-times\"><\/i>\n <\/button>\n <div id=\"iframe\"><\/div>\n <\/div>\n <a class=\"text-decoration-none\"\n href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n rel=\"nofollow noopener noindex\" target=\"_blank\">\n <div class=\"modal-footer p-0 d-block bg-white\">\n <div class=\"row justify-content-center m-0\">\n <div class=\"col-3 col-md-4 col-lg-2 p-0\">\n <img class=\"w-100 h-100\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//crypto-subscribe.jpg/" alt=\"Subscribe\">\n <\/div>\n <div class=\"col-9 col-md-8 col-lg-2 px-0 d-flex\">\n <div class=\"modal-subscribe w-100\">\n <p class=\"m-0 mt-1 mr-3\">SUBSCRIBE<br>\n <span class=\"m-0\">ON YOUTUBE<\/span>\n <\/p>\n <\/div>\n <\/div>\n <div class=\"col-12 col-md-12 col-lg-8 p-0 text-center d-flex justify-content-center align-items-center\">\n <div class=\"modal-subscribe-text\">\n <h4 class=\"m-0\">Understand crypto with ease<\/h4>\n <span>New explainer videos every week!<\/span>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n<\/div>\n<h2>What Makes Cryptocurrencies Unique?<\/h2>\n<p>In order to really get a grasp on what is cryptocurrency and how does it work, you need to first understand the underlying technology that crypto is built upon - <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-blockchain/">blockchains. This is, evidently, something that I’ve explored thoroughly in <a href=https://www.bitdegree.org/"//crypto//learn//what-is-blockchain/">a separate section<\/strong><\/a>. If you still haven’t read it, do so - it will help you get a better understanding of what we’re talking about today!<\/p>\n<p>That being said, for the context of this section, we’ll focus on one of the key functions of blockchain technology - <strong>automated and immutable bookkeeping.<\/strong><\/p>\n<p><strong><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How does cryptocurrency work: What makes cryptocurrencies unique?\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//how_does_cryptocurrency_work_01.o.jpg/" alt=\"How does cryptocurrency work: What makes cryptocurrencies unique?\" width=\"1000\" height=\"673\" \/><\/strong><\/p>\n<p>You see, <strong>a blockchain is simply a huge digital database.<\/strong> You can think about it as multiple boxes, being connected by a single chronological chain. Each box holds information about the transactions that you perform, and the chain helps with keeping everything organized and, well… Chronological!<\/p>\n<p>This is the very first thing that makes cryptocurrencies unique - the fact that each cryptocurrency is based on a blockchain, and that all transactions that involve cryptocurrencies are recorded on the said blockchain, too. For a visual example, you can imagine it as a bank - every money transfer and credit card transaction that you make is recorded by your bank!<\/p>\n<p>Now, admittedly, cryptocurrencies and crypto transactions are widely considered to be an improvement over traditional banking institutions, and default money transferring methods. One of the biggest reasons why that’s the case is just that - transparent and immutable bookkeeping.<\/p>\n<p><strong>Traditional banks can run into a wide array of troubles<\/strong>, when it comes to managing the personal information of their customers. Data breaches, power outages, and good, old-fashioned human error are just a few things that can go wrong! With blockchains generally being completely transparent and <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-decentralization/">decentralized, all of these aforementioned issues are, admittedly, non-threatening.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How does cryptocurrency work: Traditional banking problems.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//how_does_cryptocurrency_work_02.o.jpg/" alt=\"How does cryptocurrency work: Traditional banking problems.\" width=\"1000\" height=\"763\" \/><\/p>\n<p><strong>Then, there’s the anonymity aspect, too.<\/strong> With your traditional banking institutions, anonymity is out of the question - you have to identify yourself, be transparent about where your money is coming from, who you’re sending your money to, and so on. So, if you have a friend named Tim, and want to send him some money, you’ll need to tell the bank WHY you’re sending your money to Tim, as well as make sure that Tim isn’t a suspicious individual who would be involved in some shady business.<\/p>\n<p>Now, sure, that’s an exaggeration, but you get the idea - with traditional banks, everything is pretty strict, in this regard. With crypto, though, it’s somewhat the opposite - <strong>the same blockchain technology behind cryptocurrencies aims to preserve your anonymity!<\/strong><\/p>\n<p>Specifically, this is done with the help of <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-wallet/">cryptocurrency wallets<\/strong><\/a>. Each wallet has a unique code associated with it - it’s called a “<a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-address/">public wallet address<\/strong><\/a>”. When you transact with crypto, while all of the information is stored on the blockchain and is public for everyone to see, all that anyone will see is your wallet address sending an X amount of cryptocurrency to Tim’s wallet address.<\/p>\n<p>In other words, no one will know that it’s YOU sending the crypto to TIM.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How does cryptocurrency work: Public wallet address.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//how_does_cryptocurrency_work_03.o.jpg/" alt=\"How does cryptocurrency work: Public wallet address.\" width=\"1000\" height=\"1088\" \/><\/p>\n<p>One last point that I’d like to stress, when it comes to cryptocurrencies and how they work, is the fact that <strong>there are multiple different crypto projects, as well as blockchains out there.<\/strong> Each of these crypto projects have their own, special functions, and many of them have very unique working models, too.<\/p>\n<p>That is to say - in this section, we’re focusing on the general aspects of how does crypto work, from the perspective of cryptocurrency transactions.<\/p>\n<p>That’s the general gist of things, as far as the unique features of crypto technology are concerned. As you might expect, there’s a lot more to cover, in this regard, but as I’ve mentioned earlier, it’s something for a different section, altogether. So, if you’re not familiar with any of the concepts that we’ve discussed, up to this point in the section, <strong>check out other sections on our Crypto 101 Handbook<\/strong> - it covers each and every single of those topics, in-depth!<\/p>\n<h2>What Happens During a Crypto Transaction?<\/h2>\n<p>Now that you’re familiar with the unique features of cryptocurrencies, in general, it’s time to check out how does crypto work, transaction-wise - specifically, <strong>what happens when you perform a cryptocurrency transaction. <\/strong>For consistency’s sake, let’s stick to the same example I gave earlier - you sending some crypto to Tim.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How does cryptocurrency work: What happens during a crypto transaction?\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//how_does_cryptocurrency_work_04.o.jpg/" alt=\"How does cryptocurrency work: What happens during a crypto transaction?\" width=\"1000\" height=\"497\" \/><\/p>\n<p>Also, let’s say that you’ve decided to send <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bitcoin-btc/">Bitcoin to Tim - evidently, this would work the same with most other cryptocurrencies out there, but Bitcoin is probably still the simplest example.<\/p>\n<p>So, in order to perform this transaction, you will need to have a cryptocurrency wallet, with BTC inside of it. Most wallets work the same - <strong>you enter the receiver wallet address, the amount of crypto that you’d like to send, and pass a few confirmations.<\/strong><\/p>\n<p>Now, as soon as you send that BTC, your transaction will be submitted to the network. In the case of Bitcoin, it will need to be verified, in order to be confirmed. This is the core security measure that’s employed by blockchain technology - it’s called a “<a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-consensus/">consensus algorithm<\/strong><\/a>”, and it helps keep the cryptocurrency network secure and fraud-resistant.<\/p>\n<p>It’s a really intimidating-sounding term, but what it boils down to is <strong>a method of how the blockchain confirms the validity of a transaction.<\/strong> Different blockchains use different methods, and with Bitcoin, the consensus algorithm is called “<a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-proof-of-work-pow/">Proof-of-Work”./n Have you ever heard the term “<a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-miner/">cryptocurrency miner<\/strong><\/a>”? Well, this is what Proof-of-Work refers to - miners are people who employ their computers (or other special devices) to earn cryptocurrency for them! <strong>Miners earn crypto for confirming transactions happening on the blockchain<\/strong> - such as your transaction, where you send Tim your Bitcoin.<\/p>\n<p>As you might imagine, this is an entire, huge topic, in of its own! For now, though, just keep in mind what I said earlier - when you perform the transaction, it’s placed in a queue, on the blockchain, and awaits confirmation. Now, if your transaction is legitimate, it will receive all of the required confirmations, and the Bitcoin that you’ve sent will reach Tim’s wallet in no time.<\/p>\n<p>On the flip side, if you decide to “trick the system”, and try to perform some sort of a hacker-like faulty transaction, it will get denied, pretty fast - <strong>that’s the magic of consensus algorithms and blockchain security!<\/strong><\/p>\n<p>You should be aware of this entire process if you’re looking at how does investing in cryptocurrency work, as well. As you purchase crypto, or perform any other transactions, many of those processes will be happening in the background!<\/p>\n<p>All of that being said, that’s essentially how crypto transactions work! Mind you, as we’ve established earlier, each cryptocurrency is going to have this process look a bit different from the other. Especially nowadays, with so many new blockchain projects constantly springing up, all around. The premise, though, will remain the same, either way!<\/p>\n<h2>Why Should You Know How Cryptocurrencies Work?<\/h2>\n<p>So, then - now that you have a general idea of how cryptocurrencies work, it’s also worth addressing the “why” - specifically, <strong>why it’s important to know this<\/strong>, in the first place!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How does cryptocurrency work: Why should you know how cryptocurrencies work?\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//how_does_cryptocurrency_work_05.o.jpg/" alt=\"How does cryptocurrency work: Why should you know how cryptocurrencies work?\" width=\"1000\" height=\"585\" \/><\/p>\n<p>Naturally, since you’re reading this, you do probably already have some reasons of your own. However, the point that I want to emphasize is that EVERYONE should learn about crypto - how it works, what happens during transactions, and so on.<\/p>\n<p>The biggest reason for why that’s the case is pretty simple, actually - <strong>with crypto becoming as popular as it is, it’s being integrated into our everyday lives! <\/strong>While the integrations are still very slow, I urge you to think about it - the simplest example would be major payment gateways, such as PayPal and Visa starting to accept and perform cryptocurrency transfers.<\/p>\n<p>Following that, if you understand how cryptocurrencies work, <strong>you will also have a much better chance of protecting yourself from potential scams and hacking attempts. <\/strong>No malicious individual or organization will be able to come in and trick you, since you will already understand the differences between a normal cryptocurrency transaction, and some shady dealing happening in the background.<\/p>\n<p>Lastly, learning about how cryptocurrencies work is also one of the very first steps that you can take when it comes to studying the crypto world, as a whole! Cryptocurrencies, and the blockchain technology behind them, are some of the core, essential elements that make up the entire industry.<\/p>\n<p>This is very true if you want to look into how does the crypto market work, or even how does investing in cryptocurrency work, as well! When you understand the technology behind crypto, and what happens during transactions, you’ll be much better-equipped to start your investment journey!<\/p>\n<p>All that you need to do in order to understand the importance of crypto tech is <strong>take a look at <a href=https://www.bitdegree.org/"//crypto//learn//what-is-defi/">DeFi, or decentralized finance.<\/strong> It’s a new-and-emerging form of finance, and one that already houses some huge investors, and incredible amounts of money. Well, no matter if it’s a cryptocurrency lending platform, a gambling game based on blockchain technology, or some sort of a wallet project, everything essentially boils down to the very fundamentals of how cryptocurrencies work!<\/p>","youtube_video":{"id":35,"channel_id":1,"sort":61,"video_title":"How Does Cryptocurrency Work? (Explained with Animation)","description":"How does cryptocurrency work?\n\nThese days, transacting with cryptocurrencies has become a pretty common practice. Whether it be trading, sending crypto to friends, or even participating in DeFi activities, oftentimes, we don\u2019t really think about what\u2019s happening in the background.\n\nIn this video, I aim to address just that! I\u2019ll tell you how does cryptocurrency work, from the perspective of what happens when you perform a cryptocurrency transaction. I\u2019ll also talk about what makes cryptocurrenies unique, and explore some reasons why all of this should matter to you, in the first place!\n\nDo you know some examples of a unique crypto working model? If so, do share them in the comments down below!\n\nVideo Time Table:\n\n0:00 Introduction to How Does Cryptocurrency Work\n0:58 What Makes Cryptocurrencies Unique?\n4:24 What Happens During a Crypto Transaction?\n6:49 Why Should You Know How Cryptocurrencies Work?\n8:39 Wrap-up: How Does Cryptocurrency Work?\n\nMore Related Videos:\n\n? What is a Cryptocurrency?\nhttps:\/\/www.youtube.com\/watch?v=eVLUrZtKhBk\n? What is Blockchain?\nhttps:\/\/www.youtube.com\/watch?v=O2-XxMo5PFs\n? Blockchain Transaction Easily Explained\nhttps:\/\/www.youtube.com\/watch?v=h1zkHIBFiS4\n\nGet Quick Crypto Tips on Twitter - Follow:\nhttps:\/\/twitter.com\/crypto_xplained\n\n#HowDoesCryptocurrencyWork #HowDoesCryptoWork #WhatisCryptocurrencyandHowDoesitWork","video_id":"rAtJ7Lw90KA","duration":549,"view_count":664,"thumbnail_url":"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/how-does-cryptocurrency-work-explained-with-animation.jpg","thumbnail_width":1280,"thumbnail_height":720,"published_at":"2022-08-31T15:21:42.000000Z","created_at":"2022-08-31T23:00:02.000000Z","updated_at":"2024-01-09T23:00:04.000000Z","channel":{"id":1,"title":"CryptoFinallyExplained","channel_id":"UCOryUY0yxC08eJtK23mNgiA","main_playlist_id":"UUOryUY0yxC08eJtK23mNgiA"}}}"
:model="{"id":35,"chapter_id":2,"order":3,"featured_image_id":3066,"youtube_video_id":36,"author_id":1,"created_at":"2022-08-25T07:31:40.000000Z","updated_at":"2023-12-22T07:38:06.000000Z","slug":"is-cryptocurrency-a-good-investment","title":"Is Cryptocurrency a Good Investment? The Pros & Cons","content":"<p>In this section, we’re going to answer the question - <strong>is cryptocurrency a good investment?<\/strong><\/p>\n<p>If you’re reading this, it’s probably no secret that you’re interested in cryptocurrencies. As you should be - the crypto industry has seen some unparalleled growth over the past few years!<\/p>\n<p>That said, however, online, on social media platforms, there’s a constant mixture of good and bad news surrounding the crypto space. One day the market is experiencing unprecedented growth, while the other - everything’s crashing down rapidly! All of that might lead you to wonder - is crypto a good investment?<\/p>\n<p>In this section, <strong>we’re going to talk about<\/strong> <strong>investing in crypto.<\/strong> To be a bit more specific, we’ll address the questions of what’s the general appeal of crypto, to begin with, what are the pros and cons of investing in this industry, and wrap things up with a clear conclusion, too.<\/p>\n<p><em>Without further ado, let’s get to it!<\/em><\/p>\n<h2>What’s the Appeal of Investing in Crypto?<\/h2>\n<p>So, naturally, the first question that we should look into is this - what’s the actual appeal of investing in crypto, and why do so many people do it nowadays?<\/p>\n<p>Well, as you might probably expect, there isn’t a single answer to this question. Let’s still look at some of the more-common ones, however.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Is cryptocurrency a good investment: What's the appeal of investing in crypto?\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//should_you_invest_in_crypto_01.o.jpg/" alt=\"Is cryptocurrency a good investment: What's the appeal of investing in crypto?\" width=\"1000\" height=\"393\"><\/p>\n<p>First of all, cryptocurrencies are still relatively new. This opens them up to being <strong>a very speculatory asset class<\/strong> - no one really knows how much a crypto asset “should” be worth, and thus, there’s potentially some money to be made, if you’re lucky enough!<\/p>\n<p>Imagine it like this - let’s say that scientists have just discovered a new form of apples. These apples are super-healthy, juicy, delicious, and can stay fresh for a very long period of time. How much would an apple like that be worth?<\/p>\n<p>Well, straight off the bat, no one would know! Do these apples have any downsides? Are they rare, and difficult to grow, or maybe in a year or so, everyone will have this type of an apple tree in their garden? Again - there’s a lot of speculation involved, and the price of that apple might sway quite a bit!<\/p>\n<p>Same as with those apples, <strong>people love to speculate about certain cryptocurrencies<\/strong>, as well. Which of them will grow in price, and which will fall? How can you maximize your potential returns? These and many more questions lead people to wonder - is cryptocurrency a good investment?<\/p>\n<p>Another big reason why certain individuals might want to invest in the space is simply because <strong>it’s an innovation.<\/strong> As I’ve pointed out a few times already, crypto is still very new - as time goes on, though, it’s becoming increasingly more adopted, by the day. Some people might simply enjoy being “ahead of the curve”, and want to participate in this technological advancement, as early as possible.<\/p>\n<p>A common example here would be the internet, in the early 2000s. When it just came about, there were countless numbers of skeptics who thought that it’s just a fad, and that it would go away in a few months or years. Well, as you probably know, the reality is very different! Many people hope that the same will be true with crypto, too.<\/p>\n<p>There are multiple additional reasons for why individuals are wondering - is cryptocurrency a good investment? That being said, though, if you’re one of those people who strive to be an early investor, simply because you love the technology behind the concept, <strong>make sure to check out other sections on our Crypto 101 Handbook<\/strong> - there are countless sections about all-things-crypto, to help you understand the space better!<\/p>\n<h2>The Pros & Cons of Investing in Crypto<\/h2>\n<p>Moving on, let’s now take a look at some of the biggest pros and cons of investing in cryptocurrencies. Once you have them laid out clearly, in front of you, the decision will be much simpler to make!<\/p>\n<p><strong>Let’s start with the pros.<\/strong><\/p>\n<p>The very first benefit of investing in cryptocurrencies is the joint <strong>anonymity & transparency<\/strong> factor. When you invest in crypto, you are able to remain completely anonymous while doing so, if you wish to.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Is cryptocurrency a good investment: Anonymity & Transparency.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//should_you_invest_in_crypto_02.o.jpg/" alt=\"Is cryptocurrency a good investment: Anonymity & Transparency.\" width=\"1000\" height=\"489\"><\/p>\n<p>These days, with regulations getting stricter, it’s something that’s becoming increasingly more difficult to do. However, crypto enthusiasts still find ways to achieve at least partial <strong>anonymity<\/strong> - it all depends on just how far you’re willing to go!<\/p>\n<p><strong>Transparency<\/strong> is another key factor to consider, in that equation. Cryptocurrencies are based on blockchain technology, which is, by default, transparent. Unless we’re talking about some niche private blockchain, public ledgers will allow everyone to come in and check the code behind them, and search for various potential bugs and issues.<\/p>\n<p>All crypto transactions that are performed on such blockchains are public, as well. However, they won’t have your name attached to them - instead, only your <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-address/">wallet address<\/strong><\/a> will be shown to the observer, which does, once again, prove the anonymity aspect of the entire ordeal.<\/p>\n<p>If you’d like to learn more about how all of this works, you can check out the section on <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//decentralized-blockchain/">blockchain decentralization and anonymity<\/strong><\/a> - I go more in-depth into this topic there.<\/p>\n<p>Next up - <strong>the chance to earn huge returns on your investment.<\/strong><\/p>\n<p>Yes, this one’s a bit obvious, but it can still be considered somewhat of a benefit, or a “pro” of investing in crypto. That’s simply because there isn’t any other popular financial field that would allow you to earn such potential returns!<\/p>\n<p>A large part of the crypto appeal is the fact that this industry has managed to <strong>turn multiple people into millionaires, overnight.<\/strong> It’s like you playing in a lottery, but one that would allow you to increase and decrease your odds, depending on how well you’ve done your research.<\/p>\n<p>Of course, everything is never as simple as it seems, and there are huge downsides that accompany this factor, as well. We’ll talk about them later, though - for now, just keep in mind that many people would answer the question of “should you invest in crypto?” by giving you this very reason to do so - <strong>the potential for huge returns.<\/strong><\/p>\n<p>Moving on, another huge pro of investing in cryptocurrencies is the fact that, as I’ve pointed out earlier, there are seemingly <strong>countless ways to do so.<\/strong> And no, I’m not talking about using different exchange platforms to buy your crypto - instead, I’m referencing the variety of choices that this space houses.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Is cryptocurrency a good investment: Variety of choices.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//should_you_invest_in_crypto_03.o.jpg/" alt=\"Is cryptocurrency a good investment: Variety of choices.\" width=\"1000\" height=\"539\"><\/p>\n<p>If you want to take the “traditional” path, you COULD go ahead, register on an exchange, and purchase crypto this way. On the other hand, there’s also the <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//what-is-defi/">DeFi (or, decentralized finance) space to explore, with all of the different services that it offers. Then, there are <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//what-are-nfts/">NFTs, which are a whole separate world, in of themselves.<\/p>\n<p><strong>These few categories then split off into a huge array of smaller subcategories<\/strong> - crypto borrowing and lending, advanced trading tools, royalty earnings with NFTs, different investment strategies, DAOs, and so on, and so forth. Each of these topics deserve a separate section of their own - I’ve already covered quite a few of them in our Crypto 101 Handbook, so don’t forget to check it out!<\/p>\n<p>One more huge “pro” of investing in cryptocurrencies is the fact that this financial field is often considered to be <strong>much more approachable than traditional finance<\/strong>, at least for the younger generation. That’s due to the fact that crypto is constantly popping up in various pop-culture events, especially when it comes to memes.<\/p>\n<p>Think about it yourself - Elon Musk and his support for Dogecoin, the surge of animal-themed coins and tokens, that whole situation with the WallStreetBets subreddit, and so on. Combine that with the fact that you can start investing in crypto with as little as a few dollars, and you can see why many people from the younger generation are wondering - <em>should I buy crypto?!<\/em><\/p>\n<p>With all of that being said, however, we couldn’t really finish off this section without talking about the negative aspects of investing in space, too. At the very top of these cons, you will find <strong>market volatility.<\/strong><\/p>\n<p><strong><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Is cryptocurrency a good investment: Market volatility.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//should_you_invest_in_crypto_04.o.jpg/" alt=\"Is cryptocurrency a good investment: Market volatility.\" width=\"1000\" height=\"1067\"><\/strong><\/p>\n<p>It’s something that I’ve explored earlier when talking about the appeal of crypto. Remember that example with the special apple? Well, sure - the price (or, worth) of that apple could go up, and make you a lot of money! However, it could also crash down, when you find out that all of your friends and neighbors have also acquired a huge amount of these apples.<\/p>\n<p>The same is true with crypto, as well. With it being so new and, frankly, still poorly regulated, <strong>no one really knows how much this technology is worth<\/strong>, and the speculatory nature of this ordeal can really put a dent in your wallet! Say, you decide to buy <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bitcoin-btc/">BTC when it’s worth $60,000, only to find that it has crashed all the way down to $30,000 the next week. That’s not a nice feeling to experience, especially if you only wanted to make a bit of profit, and aren’t “in it” for the long run!<\/p>\n<p>Another big con that you should consider before investing in crypto is that this space is still <strong>not properly regulated<\/strong>, in most areas around the world. Governments are trying to change this, but these bureaucratic processes are usually very slow and tedious.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Is cryptocurrency a good investment: Poorly regulated.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//should_you_invest_in_crypto_05.o.jpg/" alt=\"Is cryptocurrency a good investment: Poorly regulated.\" width=\"1000\" height=\"1045\"><\/p>\n<p>Why does this matter? Well, <strong>it’s very easy to get scammed<\/strong>, or face tax-related issues when you’re dealing with an unregulated financial market. There are little-to-no fail-safes, and you become completely responsible for whatever happens to your assets. It requires a lot of knowledge and time in the market in order to make the smartest possible decisions!<\/p>\n<h2>Final Thoughts<\/h2>\n<p>To finish off, let’s wrap it up by stepping back, and taking a look at the question - <strong>should you invest in crypto?<\/strong><\/p>\n<p>Well, I believe that cryptocurrencies & crypto technology is a really cool innovation, and one that’s still very young. This means that there are going to be a lot of issues associated with it, and a lot of things that still need to be figured out. I mean, you could say that one of the cons of investing in crypto today is the fact that there are still very limited use cases for this technology!<\/p>\n<p>As time goes on, though, it’s obvious that crypto is becoming more and more adapted into our everyday lives. If you’re a fan of innovations, this is super-exciting! Whatever the case might be, however, and whatever you might decide to do, just keep in mind that, as of me writing this section, the space is still quite unpredictable, and <strong>you need to be very cautious with everything that you do!<\/strong><\/p>","definition":"Did you know that the Bitcoin price in 2009 was barely above zero? Nowadays, it costs thousands of dollars.","status":"published","meta_title":"Is Cryptocurrency a Good Investment? Pros, Cons, and Risks","meta_description":"Is Cryptocurrency a Good Investment? Read this and discover all the benefits, drawbacks, and dangers of investing in cryptocurrencies.","meta_keywords":"is cryptocurrency a good investment, is crypto a good investment, should i buy crypto, should you invest in crypto, how much should you invest in crypto, why you should invest in crypto, how to invest in cryptocurrency.","modified_content":"<p>In this section, we’re going to answer the question - <strong>is cryptocurrency a good investment?<\/strong><\/p>\n<p>If you’re reading this, it’s probably no secret that you’re interested in cryptocurrencies. As you should be - the crypto industry has seen some unparalleled growth over the past few years!<\/p>\n<p>That said, however, online, on social media platforms, there’s a constant mixture of good and bad news surrounding the crypto space. One day the market is experiencing unprecedented growth, while the other - everything’s crashing down rapidly! All of that might lead you to wonder - is crypto a good investment?<\/p>\n<p>In this section, <strong>we’re going to talk about<\/strong> <strong>investing in crypto.<\/strong> To be a bit more specific, we’ll address the questions of what’s the general appeal of crypto, to begin with, what are the pros and cons of investing in this industry, and wrap things up with a clear conclusion, too.<\/p>\n<p><em>Without further ado, let’s get to it!<\/em><\/p>\n<div class=\"container\">\n <div class=\"row justify-content-center\">\n <div class=\"col-md-10 suggested-comparisons pb-3 mb-4\">\n <div class=\"d-flex flex-row\">\n <div class=\"text-center\">\n <div class=\"img-block-yt\">\n <img src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//images//compare-crypto-exchanges.gif/"/n alt=\"Is Cryptocurrency a Good Investment? (5 PROS & CONS!)\"\n title=\"Is Cryptocurrency a Good Investment? (5 PROS & CONS!)\" class=\"border-0\">\n <p>Video Explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"col-xs-10 col-sm-10 col-md-10 text-left py-3 yt-info\">\n <h4 class=\"mb-1\">Video Explainer: Is Cryptocurrency a Good Investment? The Pros & Cons<\/h4>\n <p class=\"py-1 mb-0 youtube-video-subtitle\">Reading is not your thing? Watch the \"Is Cryptocurrency a Good Investment? The Pros & Cons\" video explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div class=\"col-12 col-md-11 px-3\">\n <div class=\"wrapper mb-0\">\n <div class=\"position-relative youtube mb-4 bg-transparent p-0 video-modal-popup\" data-toggle=\"modal\"\n data-target=\"#video-modal\" data-id=\"cqVkgcEa5NI\" data-title=\"CryptoFinallyExplained\">\n <div class=\"video-gradient-top\"><\/div>\n <p class=\"text-left dyk-video-title\">Is Cryptocurrency a Good Investment? (5 PROS & CONS!)<\/p>\n <img data-srcset=\"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/is-cryptocurrency-a-good-investment-5-pros-cons.jpg?tr=w-420 500w,\n https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/is-cryptocurrency-a-good-investment-5-pros-cons.jpg?tr=w-760 1000w\"\n alt=\"Is Cryptocurrency a Good Investment? (5 PROS & CONS!)\"\n title=\"Is Cryptocurrency a Good Investment? (5 PROS & CONS!)\"\n class=\"p-0 lazyload\">\n <img class=\"play-button lazyload\" data-target=\"#video-modal\"\n data-src=\"https:\/\/assets.bitdegree.org\/crypto\/assets\/video-button.png?tr=w-85\"\n alt=\"Is Cryptocurrency a Good Investment? (5 PROS & CONS!)\">\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div>\n <a href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n class=\"btn yt-promo mb-2\" target=\"_blank\" rel=\"nofollow noopener noindex\">\n <div class=\"row justify-content-center align-items-center mx-0 text-center\">\n <div class=\"col-4 col-md-4\">\n <i class=\"fab fa-youtube yt-dyk-btn\"><\/i>\n <\/div>\n <div class=\"col-8 col-md-8 text-center yt-promo-text\">\n <h4 class=\"m-0 text-white\">SUBSCRIBE<\/h4>\n <span>ON YOUTUBE<\/span>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n<div class=\"modal fade\" id=\"video-modal\" tabindex=\"-1\" role=\"dialog\">\n <div class=\"modal-dialog modal-dialog-centered modal-lg\" role=\"document\">\n <div class=\"modal-content\">\n <div class=\"modal-body p-0\">\n <button type=\"button\" class=\"video-modal-close close\" data-dismiss=\"modal\" aria-label=\"Close\">\n <i aria-hidden=\"true\" class=\"fas fa-times\"><\/i>\n <\/button>\n <div id=\"iframe\"><\/div>\n <\/div>\n <a class=\"text-decoration-none\"\n href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n rel=\"nofollow noopener noindex\" target=\"_blank\">\n <div class=\"modal-footer p-0 d-block bg-white\">\n <div class=\"row justify-content-center m-0\">\n <div class=\"col-3 col-md-4 col-lg-2 p-0\">\n <img class=\"w-100 h-100\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//crypto-subscribe.jpg/" alt=\"Subscribe\">\n <\/div>\n <div class=\"col-9 col-md-8 col-lg-2 px-0 d-flex\">\n <div class=\"modal-subscribe w-100\">\n <p class=\"m-0 mt-1 mr-3\">SUBSCRIBE<br>\n <span class=\"m-0\">ON YOUTUBE<\/span>\n <\/p>\n <\/div>\n <\/div>\n <div class=\"col-12 col-md-12 col-lg-8 p-0 text-center d-flex justify-content-center align-items-center\">\n <div class=\"modal-subscribe-text\">\n <h4 class=\"m-0\">Understand crypto with ease<\/h4>\n <span>New explainer videos every week!<\/span>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n<\/div>\n<h2>What’s the Appeal of Investing in Crypto?<\/h2>\n<p>So, naturally, the first question that we should look into is this - what’s the actual appeal of investing in crypto, and why do so many people do it nowadays?<\/p>\n<p>Well, as you might probably expect, there isn’t a single answer to this question. Let’s still look at some of the more-common ones, however.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Is cryptocurrency a good investment: What's the appeal of investing in crypto?\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//should_you_invest_in_crypto_01.o.jpg/" alt=\"Is cryptocurrency a good investment: What's the appeal of investing in crypto?\" width=\"1000\" height=\"393\"><\/p>\n<p>First of all, cryptocurrencies are still relatively new. This opens them up to being <strong>a very speculatory asset class<\/strong> - no one really knows how much a crypto asset “should” be worth, and thus, there’s potentially some money to be made, if you’re lucky enough!<\/p>\n<p>Imagine it like this - let’s say that scientists have just discovered a new form of apples. These apples are super-healthy, juicy, delicious, and can stay fresh for a very long period of time. How much would an apple like that be worth?<\/p>\n<p>Well, straight off the bat, no one would know! Do these apples have any downsides? Are they rare, and difficult to grow, or maybe in a year or so, everyone will have this type of an apple tree in their garden? Again - there’s a lot of speculation involved, and the price of that apple might sway quite a bit!<\/p>\n<p>Same as with those apples, <strong>people love to speculate about certain cryptocurrencies<\/strong>, as well. Which of them will grow in price, and which will fall? How can you maximize your potential returns? These and many more questions lead people to wonder - is cryptocurrency a good investment?<\/p>\n<p>Another big reason why certain individuals might want to invest in the space is simply because <strong>it’s an innovation.<\/strong> As I’ve pointed out a few times already, crypto is still very new - as time goes on, though, it’s becoming increasingly more adopted, by the day. Some people might simply enjoy being “ahead of the curve”, and want to participate in this technological advancement, as early as possible.<\/p>\n<p>A common example here would be the internet, in the early 2000s. When it just came about, there were countless numbers of skeptics who thought that it’s just a fad, and that it would go away in a few months or years. Well, as you probably know, the reality is very different! Many people hope that the same will be true with crypto, too.<\/p>\n<p>There are multiple additional reasons for why individuals are wondering - is cryptocurrency a good investment? That being said, though, if you’re one of those people who strive to be an early investor, simply because you love the technology behind the concept, <strong>make sure to check out other sections on our Crypto 101 Handbook<\/strong> - there are countless sections about all-things-crypto, to help you understand the space better!<\/p>\n<h2>The Pros & Cons of Investing in Crypto<\/h2>\n<p>Moving on, let’s now take a look at some of the biggest pros and cons of investing in cryptocurrencies. Once you have them laid out clearly, in front of you, the decision will be much simpler to make!<\/p>\n<p><strong>Let’s start with the pros.<\/strong><\/p>\n<p>The very first benefit of investing in cryptocurrencies is the joint <strong>anonymity & transparency<\/strong> factor. When you invest in crypto, you are able to remain completely anonymous while doing so, if you wish to.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Is cryptocurrency a good investment: Anonymity & Transparency.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//should_you_invest_in_crypto_02.o.jpg/" alt=\"Is cryptocurrency a good investment: Anonymity & Transparency.\" width=\"1000\" height=\"489\"><\/p>\n<p>These days, with regulations getting stricter, it’s something that’s becoming increasingly more difficult to do. However, crypto enthusiasts still find ways to achieve at least partial <strong>anonymity<\/strong> - it all depends on just how far you’re willing to go!<\/p>\n<p><strong>Transparency<\/strong> is another key factor to consider, in that equation. Cryptocurrencies are based on blockchain technology, which is, by default, transparent. Unless we’re talking about some niche private blockchain, public ledgers will allow everyone to come in and check the code behind them, and search for various potential bugs and issues.<\/p>\n<p>All crypto transactions that are performed on such blockchains are public, as well. However, they won’t have your name attached to them - instead, only your <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//crypto-terms//what-is-address/">wallet address<\/strong><\/a> will be shown to the observer, which does, once again, prove the anonymity aspect of the entire ordeal.<\/p>\n<p>If you’d like to learn more about how all of this works, you can check out the section on <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//decentralized-blockchain/">blockchain decentralization and anonymity<\/strong><\/a> - I go more in-depth into this topic there.<\/p>\n<p>Next up - <strong>the chance to earn huge returns on your investment.<\/strong><\/p>\n<p>Yes, this one’s a bit obvious, but it can still be considered somewhat of a benefit, or a “pro” of investing in crypto. That’s simply because there isn’t any other popular financial field that would allow you to earn such potential returns!<\/p>\n<p>A large part of the crypto appeal is the fact that this industry has managed to <strong>turn multiple people into millionaires, overnight.<\/strong> It’s like you playing in a lottery, but one that would allow you to increase and decrease your odds, depending on how well you’ve done your research.<\/p>\n<p>Of course, everything is never as simple as it seems, and there are huge downsides that accompany this factor, as well. We’ll talk about them later, though - for now, just keep in mind that many people would answer the question of “should you invest in crypto?” by giving you this very reason to do so - <strong>the potential for huge returns.<\/strong><\/p>\n<p>Moving on, another huge pro of investing in cryptocurrencies is the fact that, as I’ve pointed out earlier, there are seemingly <strong>countless ways to do so.<\/strong> And no, I’m not talking about using different exchange platforms to buy your crypto - instead, I’m referencing the variety of choices that this space houses.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Is cryptocurrency a good investment: Variety of choices.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//should_you_invest_in_crypto_03.o.jpg/" alt=\"Is cryptocurrency a good investment: Variety of choices.\" width=\"1000\" height=\"539\"><\/p>\n<p>If you want to take the “traditional” path, you COULD go ahead, register on an exchange, and purchase crypto this way. On the other hand, there’s also the <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//what-is-defi/">DeFi (or, decentralized finance) space to explore, with all of the different services that it offers. Then, there are <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//learn//what-are-nfts/">NFTs, which are a whole separate world, in of themselves.<\/p>\n<p><strong>These few categories then split off into a huge array of smaller subcategories<\/strong> - crypto borrowing and lending, advanced trading tools, royalty earnings with NFTs, different investment strategies, DAOs, and so on, and so forth. Each of these topics deserve a separate section of their own - I’ve already covered quite a few of them in our Crypto 101 Handbook, so don’t forget to check it out!<\/p>\n<p>One more huge “pro” of investing in cryptocurrencies is the fact that this financial field is often considered to be <strong>much more approachable than traditional finance<\/strong>, at least for the younger generation. That’s due to the fact that crypto is constantly popping up in various pop-culture events, especially when it comes to memes.<\/p>\n<p>Think about it yourself - Elon Musk and his support for Dogecoin, the surge of animal-themed coins and tokens, that whole situation with the WallStreetBets subreddit, and so on. Combine that with the fact that you can start investing in crypto with as little as a few dollars, and you can see why many people from the younger generation are wondering - <em>should I buy crypto?!<\/em><\/p>\n<p>With all of that being said, however, we couldn’t really finish off this section without talking about the negative aspects of investing in space, too. At the very top of these cons, you will find <strong>market volatility.<\/strong><\/p>\n<p><strong><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Is cryptocurrency a good investment: Market volatility.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//should_you_invest_in_crypto_04.o.jpg/" alt=\"Is cryptocurrency a good investment: Market volatility.\" width=\"1000\" height=\"1067\"><\/strong><\/p>\n<p>It’s something that I’ve explored earlier when talking about the appeal of crypto. Remember that example with the special apple? Well, sure - the price (or, worth) of that apple could go up, and make you a lot of money! However, it could also crash down, when you find out that all of your friends and neighbors have also acquired a huge amount of these apples.<\/p>\n<p>The same is true with crypto, as well. With it being so new and, frankly, still poorly regulated, <strong>no one really knows how much this technology is worth<\/strong>, and the speculatory nature of this ordeal can really put a dent in your wallet! Say, you decide to buy <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bitcoin-btc/">BTC when it’s worth $60,000, only to find that it has crashed all the way down to $30,000 the next week. That’s not a nice feeling to experience, especially if you only wanted to make a bit of profit, and aren’t “in it” for the long run!<\/p>\n<p>Another big con that you should consider before investing in crypto is that this space is still <strong>not properly regulated<\/strong>, in most areas around the world. Governments are trying to change this, but these bureaucratic processes are usually very slow and tedious.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Is cryptocurrency a good investment: Poorly regulated.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//should_you_invest_in_crypto_05.o.jpg/" alt=\"Is cryptocurrency a good investment: Poorly regulated.\" width=\"1000\" height=\"1045\"><\/p>\n<p>Why does this matter? Well, <strong>it’s very easy to get scammed<\/strong>, or face tax-related issues when you’re dealing with an unregulated financial market. There are little-to-no fail-safes, and you become completely responsible for whatever happens to your assets. It requires a lot of knowledge and time in the market in order to make the smartest possible decisions!<\/p>\n<h2>Final Thoughts<\/h2>\n<p>To finish off, let’s wrap it up by stepping back, and taking a look at the question - <strong>should you invest in crypto?<\/strong><\/p>\n<p>Well, I believe that cryptocurrencies & crypto technology is a really cool innovation, and one that’s still very young. This means that there are going to be a lot of issues associated with it, and a lot of things that still need to be figured out. I mean, you could say that one of the cons of investing in crypto today is the fact that there are still very limited use cases for this technology!<\/p>\n<p>As time goes on, though, it’s obvious that crypto is becoming more and more adapted into our everyday lives. If you’re a fan of innovations, this is super-exciting! Whatever the case might be, however, and whatever you might decide to do, just keep in mind that, as of me writing this section, the space is still quite unpredictable, and <strong>you need to be very cautious with everything that you do!<\/strong><\/p>","youtube_video":{"id":36,"channel_id":1,"sort":60,"video_title":"Is Cryptocurrency a Good Investment? (5 PROS & CONS!)","description":"Is cryptocurrency a good investment, and what are the pros & cons of doing it?\n\nWith cryptocurrencies becoming as popular as they are, it\u2019s no wonder that more and more people ask - is crypto a good investment? Additionally, what about the pros and cons associated with this activity - which outweighs which?\n\nIn this video, I\u2019ll be addressing all of those questions, and a couple more. I will tell you about what makes crypto such an appealing field for investors, as well as cover some of the biggest benefits and shortcomings of this particular financial market.\n\nDo you think investing in crypto is worth it? Or are you someone who stays away from doing it? Share your opinions, in the comments below!\n\nVideo Time Table:\n\n0:00 Introduction to Is Cryptocurrency a Good Investment\n0:59 What's the Appeal of Investing in Crypto?\n3:07 The Pros & Cons of Investing in Crypto\n08:03 Wrap-up: Is Cryptocurrency a Good Investment?\n\nMore Related Videos:\n\n? How to Avoid Rug Pulls in Crypto?\nhttps:\/\/www.youtube.com\/watch?v=tNPU6AY4o74\n? How to Get Free Crypto?\nhttps:\/\/www.youtube.com\/watch?v=aNjehGx3WqM\n? How to Avoid Crypto Taxes?\nhttps:\/\/www.youtube.com\/watch?v=ERzU_Xz_P-o\n? What Does Staking Mean in Crypto?\nhttps:\/\/www.youtube.com\/watch?v=irhlfrCrywo \n\nGet Quick Crypto Tips on Twitter - Follow:\nhttps:\/\/twitter.com\/crypto_xplained\n\n#IsCryptocurrencyaGoodInvestment #IsCryptoaGoodInvestment #ShouldIBuyCrypto","video_id":"cqVkgcEa5NI","duration":543,"view_count":343,"thumbnail_url":"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/is-cryptocurrency-a-good-investment-5-pros-cons.jpg","thumbnail_width":1280,"thumbnail_height":720,"published_at":"2022-09-08T15:03:30.000000Z","created_at":"2022-09-08T23:00:02.000000Z","updated_at":"2024-01-09T23:00:04.000000Z","channel":{"id":1,"title":"CryptoFinallyExplained","channel_id":"UCOryUY0yxC08eJtK23mNgiA","main_playlist_id":"UUOryUY0yxC08eJtK23mNgiA"}},"featured_image":{"id":3066,"uuid":"7472f7b8-a7b9-4e2a-a0a3-cbb8c8b88566","name":"is-cryptocurrency-a-good-investment-featured-image.o.jpg","url":"https:\/\/assets.bitdegree.org\/crypto\/storage\/media\/is-cryptocurrency-a-good-investment-featured-image.o.jpg","path":"crypto\/storage\/media\/is-cryptocurrency-a-good-investment-featured-image.o.jpg","mime_type":"image\/jpeg","disk":"digitalOceanSpaces","size":100985,"width":768,"height":478,"custom_properties":null,"created_at":"2023-06-19T06:58:36.000000Z","updated_at":"2023-06-19T06:58:36.000000Z"}}"
:chapter-list="[{"id":1,"title":"Blockchain","slug":"blockchain","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-blockchain.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/blockchain-101.jpg","rating":100,"sections":[{"chapter_id":1,"order":1,"slug":"what-is-blockchain","title":"What is the Blockchain?","status":"published","modified_content":null},{"chapter_id":1,"order":2,"slug":"decentralized-blockchain","title":"Anonymous & Decentralized Blockchains: The Cornerstone of Crypto","status":"published","modified_content":null},{"chapter_id":1,"order":3,"slug":"blockchain-transaction","title":"What is a Blockchain Transaction in Crypto?","status":"published","modified_content":null},{"chapter_id":1,"order":4,"slug":"crypto-fees","title":"The Different Types of Crypto Fees Explained","status":"published","modified_content":null},{"chapter_id":1,"order":5,"slug":"what-is-bridging-in-crypto","title":"The Key Notion Behind the Concept of Bridging in Crypto","status":"published","modified_content":null},{"chapter_id":1,"order":6,"slug":"types-of-blockchains","title":"Different Types of Blockchains: What to Look Out For?","status":"published","modified_content":null}]},{"id":2,"title":"Cryptocurrencies","slug":"cryptocurrencies","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-cryptocurrencies.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/cryptocurrencies-101.jpg","rating":100,"sections":[{"chapter_id":2,"order":1,"slug":"what-is-a-cryptocurrency","title":"What is a Cryptocurrency?","status":"published","modified_content":null},{"chapter_id":2,"order":2,"slug":"how-does-cryptocurrency-work","title":"How Does Cryptocurrency Work?","status":"published","modified_content":null},{"chapter_id":2,"order":3,"slug":"is-cryptocurrency-a-good-investment","title":"Is Cryptocurrency a Good Investment? The Pros & Cons","status":"published","modified_content":null},{"chapter_id":2,"order":4,"slug":"coin-vs-token","title":"Coin VS Token: How Do They Differ?","status":"published","modified_content":null},{"chapter_id":2,"order":5,"slug":"what-are-stablecoins","title":"What are Stablecoins, Altcoins & Wrapped Coins?","status":"published","modified_content":null},{"chapter_id":2,"order":6,"slug":"what-is-a-bitcoin","title":"Bitcoin: the Pioneer of the Crypto World","status":"published","modified_content":null},{"chapter_id":2,"order":7,"slug":"what-is-ethereum","title":"The Ultimate Blockchain for dApp Creation: Ethereum","status":"published","modified_content":null},{"chapter_id":2,"order":8,"slug":"what-is-cardano-in-crypto","title":"What is Cardano and What is It Used For?","status":"published","modified_content":null},{"chapter_id":2,"order":9,"slug":"what-is-shiba-inu-coin","title":"Shiba Inu: the Dogecoin Killer","status":"published","modified_content":null},{"chapter_id":2,"order":10,"slug":"what-is-solana-in-crypto","title":"Is Solana an Improved Version of Ethereum?","status":"published","modified_content":null},{"chapter_id":2,"order":11,"slug":"what-is-polkadot-in-crypto","title":"The Bridge Between Blockchains: Polkadot","status":"published","modified_content":null},{"chapter_id":2,"order":12,"slug":"what-is-polygon-in-crypto","title":"Polygon: the Essential Scaling Solution for Ethereum","status":"published","modified_content":null},{"chapter_id":2,"order":13,"slug":"what-is-luna-crypto","title":"The Bumpy Road of Terra (LUNA)","status":"published","modified_content":null},{"chapter_id":2,"order":14,"slug":"what-is-fantom-crypto","title":"Is Fantom (FTM) Yet Another Ethereum Killer?","status":"published","modified_content":null},{"chapter_id":2,"order":15,"slug":"what-is-aave-crypto","title":"Aave: Crypto Lending Trailblazer","status":"published","modified_content":null},{"chapter_id":2,"order":16,"slug":"what-is-algorand-crypto","title":"Did Algorand Truly Solve the Blockchain Trilemma?","status":"published","modified_content":null},{"chapter_id":2,"order":17,"slug":"what-is-olympus-dao","title":"Does Olympus DAO Have Anything to Do With Mythology?","status":"published","modified_content":null},{"chapter_id":2,"order":18,"slug":"what-is-avax","title":"Is Avalanche Network (AVAX) Rightfully Called the Future of DeFi?","status":"published","modified_content":null},{"chapter_id":2,"order":19,"slug":"what-is-monero-coin","title":"Monero: Where Cryptocurrency Meets Cryptography","status":"published","modified_content":null},{"chapter_id":2,"order":20,"slug":"what-is-ripple-xrp","title":"Is Ripple \"it\" When it Comes to Cross-Border Transactions?","status":"published","modified_content":null},{"chapter_id":2,"order":21,"slug":"practical-use-of-cryptocurrencies","title":"The Practical Use of Crypto","status":"published","modified_content":null}]},{"id":3,"title":"Crypto Exchanges","slug":"crypto-exchanges","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-crypto-exchanges.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-exchanges-101.jpg","rating":80,"sections":[{"chapter_id":3,"order":1,"slug":"how-do-cryptocurrency-exchanges-work","title":"How do Cryptocurrency Exchanges Work?","status":"published","modified_content":null},{"chapter_id":3,"order":2,"slug":"dex-vs-cex","title":"DEX VS CEX: Two Sides of the Crypto Exchange Industry","status":"published","modified_content":null},{"chapter_id":3,"order":3,"slug":"crypto-day-trading","title":"Crypto Day Trading: The Difference Between Buying, Trading, and Swapping","status":"published","modified_content":null},{"chapter_id":3,"order":4,"slug":"kyc-crypto","title":"KYC & AML: The Key to Complying With Legal Industry Standards","status":"published","modified_content":null},{"chapter_id":3,"order":5,"slug":"how-to-buy-crypto","title":"From Fiat to Crypto: How to Buy Crypto for the First Time","status":"published","modified_content":null},{"chapter_id":3,"order":6,"slug":"fiat-to-crypto","title":"Taking Profits: Turning Crypto Into Fiat","status":"published","modified_content":null},{"chapter_id":3,"order":7,"slug":"how-to-use-crypto","title":"You\u2019ve Got Crypto: What Can You Do With It?","status":"published","modified_content":null}]},{"id":4,"title":"Crypto Wallets","slug":"crypto-wallets","updated":false,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-crypto-wallets.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-wallets-101.jpg","rating":80,"sections":[{"chapter_id":4,"order":1,"slug":"what-is-a-crypto-wallet","title":"What is a Crypto Wallet?","status":"published","modified_content":null},{"chapter_id":4,"order":2,"slug":"hot-wallet-vs-cold-wallet","title":"Hot Wallet VS Cold Wallet: Which One to Pick?","status":"published","modified_content":null},{"chapter_id":4,"order":3,"slug":"non-custodial-wallet","title":"What are Non-Custodial Crypto Wallets?","status":"published","modified_content":null},{"chapter_id":4,"order":4,"slug":"what-is-metamask","title":"Metamask: The Leading Non-Custodial Wallet","status":"published","modified_content":null},{"chapter_id":4,"order":37,"slug":"how-safe-is-cryptocurrency","title":"The Key Crypto Wallet Safety Practices: How Safe Can Crypto Be?","status":"published","modified_content":null}]},{"id":5,"title":"NFTs","slug":"nfts","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-nfts.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/nfts-101.jpg","rating":100,"sections":[{"chapter_id":5,"order":2,"slug":"how-to-trade-nfts","title":"NFT Trading: The Ins and Outs","status":"published","modified_content":null},{"chapter_id":5,"order":3,"slug":"buying-nft","title":"Tips and Tricks of Choosing the Right NFTs","status":"published","modified_content":null},{"chapter_id":5,"order":4,"slug":"how-to-store-nft","title":"How to Store NFTs: Best Practices","status":"published","modified_content":null},{"chapter_id":5,"order":5,"slug":"how-to-create-an-nft","title":"How to Create Your Own NFTs?","status":"published","modified_content":null},{"chapter_id":5,"order":6,"slug":"how-to-make-passive-money-with-nft","title":"Making Passive Money with NFTs","status":"published","modified_content":null}]},{"id":6,"title":"dApps & Defi","slug":"dapps-and-defi","updated":true,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-dapps.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/dapps-defi-101.jpg","rating":80,"sections":[{"chapter_id":6,"order":1,"slug":"what-are-nfts","title":"What are Non-Fungible Tokens (NFTs)?","status":"published","modified_content":null},{"chapter_id":6,"order":1,"slug":"what-is-defi","title":"What is Decentralized Finance (DeFi)?","status":"published","modified_content":null},{"chapter_id":6,"order":2,"slug":"what-is-defi-2-0","title":"DeFi 2.0: The New Version of Decentralized Finance","status":"published","modified_content":null},{"chapter_id":6,"order":3,"slug":"what-are-dapps-in-crypto","title":"What Are dApps and How Do They Work?","status":"published","modified_content":null},{"chapter_id":6,"order":4,"slug":"defi-dapps","title":"Picking the Right dApps: Dos and Don'ts","status":"published","modified_content":null},{"chapter_id":6,"order":5,"slug":"what-is-web-3-0","title":"Web 3.0: The Future of the Internet","status":"published","modified_content":null},{"chapter_id":6,"order":6,"slug":"what-are-smart-contracts","title":"What is the Core Purpose of Smart Contracts?","status":"published","modified_content":null},{"chapter_id":6,"order":7,"slug":"what-is-a-dao-in-crypto","title":"The Notion of a Decentralized Autonomous Ogranization (DAO)","status":"published","modified_content":null},{"chapter_id":6,"order":8,"slug":"what-is-staking-in-crypto","title":"What is the Goal of Staking Crypto Assets?","status":"published","modified_content":null},{"chapter_id":6,"order":9,"slug":"what-is-liquidity-pool-in-crypto","title":"What is a Liquidity Pool and How Does It Work?","status":"published","modified_content":null},{"chapter_id":6,"order":10,"slug":"what-is-automated-market-maker","title":"Automated Market Maker: the Cornerstone of the Decentralized Crypto Exchange Industry","status":"published","modified_content":null},{"chapter_id":6,"order":11,"slug":"what-is-yield-farming-in-crypto","title":"The Main Yield Farming Techniques","status":"published","modified_content":null},{"chapter_id":6,"order":12,"slug":"what-is-an-oracle-in-crypto","title":"Crypto Oracles: The Link Between Blockchain and Outside World Data","status":"published","modified_content":null},{"chapter_id":6,"order":13,"slug":"crypto-gambling","title":"The Peculiarities of Decentralized Crypto Gambling","status":"published","modified_content":null},{"chapter_id":6,"order":14,"slug":"what-is-the-metaverse","title":"Metaverse: A New Perception of Reality","status":"published","modified_content":null}]},{"id":7,"title":"Trading & Investing","slug":"trading-and-investing","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-crypto-trading.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-trading-101.jpg","rating":80,"sections":[{"chapter_id":7,"order":1,"slug":"where-to-trade-crypto","title":"Where Can You Trade Cryptocurrencies?","status":"published","modified_content":null},{"chapter_id":7,"order":2,"slug":"how-to-invest-in-crypto","title":"Investing in Crypto: What Investing Options Do You Have?","status":"published","modified_content":null},{"chapter_id":7,"order":3,"slug":"ico-vs-ido","title":"ICO vs IDO vs IEO: Which One is the One?","status":"published","modified_content":null},{"chapter_id":7,"order":4,"slug":"what-is-an-airdrop","title":"What are Crypto Airdrops and How to Get Them?","status":"published","modified_content":null},{"chapter_id":7,"order":5,"slug":"how-to-get-free-crypto","title":"How to Get Free Crypto Assets?","status":"published","modified_content":null},{"chapter_id":7,"order":6,"slug":"how-to-arbitrage-crypto","title":"What is Crypto Arbitrage: The Main Principles","status":"published","modified_content":null},{"chapter_id":7,"order":7,"slug":"what-is-a-perpetual-contract","title":"Perpetual Contracts: Futures Contracts Without an Expiration Date","status":"published","modified_content":null},{"chapter_id":7,"order":8,"slug":"what-is-fud","title":"What is FUD: How to Use It to Your Advantage While Investing in Crypto?","status":"published","modified_content":null},{"chapter_id":7,"order":9,"slug":"investing-in-cryptocurrency","title":"Investing in Cryptocurrency: How to Manage Your Risks?","status":"published","modified_content":null},{"chapter_id":7,"order":10,"slug":"what-is-a-rug-pull-in-crypto","title":"What is a Rug Pull in Crypto?","status":"published","modified_content":null},{"chapter_id":7,"order":11,"slug":"how-to-avoid-rug-pulls-in-crypto","title":"How to Spot and Avoid Rug Pulls?","status":"published","modified_content":null},{"chapter_id":7,"order":12,"slug":"how-to-avoid-crypto-taxes","title":"The Key Legal Techniques of Avoiding Crypto Taxes","status":"published","modified_content":null}]},{"id":8,"title":"Crypto Analysis","slug":"crypto-analysis","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-crypto-analysis.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-analysis-101.jpg","rating":100,"sections":[{"chapter_id":8,"order":1,"slug":"what-is-bullish-and-bearish","title":"Bearish and Bullish Markets: Do They Matter?","status":"published","modified_content":null},{"chapter_id":8,"order":2,"slug":"best-technical-analysis-indicators-for-crypto","title":"5 Best Crypto Technical Analysis Indicators You Must Know About","status":"published","modified_content":null},{"chapter_id":8,"order":3,"slug":"what-is-candlesticks","title":"Technical Analysis: What are Candlesticks, Trendlines, and Patterns?","status":"published","modified_content":null},{"chapter_id":8,"order":4,"slug":"how-to-track-new-crypto-coins","title":"Crypto Tracking: How to Track Your Favorite Coins & Tokens?","status":"published","modified_content":null},{"chapter_id":8,"order":5,"slug":"how-to-research-crypto","title":"Crypto Research Fundamentals & Social Signals: Your Daily Trading Strategy","status":"published","modified_content":null},{"chapter_id":8,"order":46,"slug":"portfolio-diversification-definition","title":"Portfolio Diversification: The Whats, the Whys, and the Hows","status":"published","modified_content":null}]},{"id":9,"title":"Mining","slug":"mining","updated":false,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-crypto-mining.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-mining-101.jpg","rating":80,"sections":[{"chapter_id":9,"order":1,"slug":"what-is-crypto-mining","title":"Crypto Mining: What It is and How Does It Work?","status":"published","modified_content":null},{"chapter_id":9,"order":2,"slug":"what-is-a-mining-pool","title":"Mining Pools: Is Collective Mining Better Than Solo Mining?","status":"published","modified_content":null},{"chapter_id":9,"order":3,"slug":"what-is-staking-crypto","title":"An Advanced Look into What is Staking Crypto","status":"published","modified_content":null},{"chapter_id":9,"order":4,"slug":"what-is-proof-of-stake-vs-proof-of-work","title":"Proof-of-Work VS Proof-of-Stake: The Differences That Matter","status":"published","modified_content":null},{"chapter_id":9,"order":5,"slug":"what-is-crypto-mining-rig","title":"Crypto Mining Rig: What It is and How to Build One?","status":"published","modified_content":null}]},{"id":10,"title":"Crypto Terms","updated":false,"chapter":"crypto\/assets\/crypto-book\/chapters\/crypto-101-glossary.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-glossary-101.jpg","rating":100,"sections":["A","B","C","D","E","F","G","H","I","J","K","L","M","N","O","P","Q","R","S","T","U","V","W","X","Y","Z"]}]"
current-chapter="cryptocurrencies"
current-section="is-cryptocurrency-a-good-investment">