As the crypto market expands, new opportunities for investing in cryptocurrency emerge daily. But getting started can be overwhelming for first-time investors, and the endless jargon can make it difficult to keep up with developments.
A cryptocurrency is a digital asset that is designed to function as a medium of exchange for both virtual and real-world goods and services, without the need for a central authority. Bitcoin is the most famous example of a cryptocurrency, but there are many others with their own unique features.
Cryptocurrency prices have been highly volatile in recent years, which has fueled interest from both traders and ordinary consumers. But despite the rapid price increases, a significant amount of activity in the crypto markets appears to be speculative (buying cryptocurrencies for financial gain) rather than driven by demand for the specific technologies behind them.
One of the most important things to understand about the crypto market is how pricing is determined. Unlike stocks or bonds, which are valued by their underlying companies’ assets and debts, cryptocurrencies are priced based on the interplay between supply and demand.
To buy or sell a cryptocurrency, you’ll need to use a crypto exchange platform. These platforms act as middlemen, connecting buyers and sellers and holding your deposited money until the exchange is completed. Each platform has its own set of features, including different trading pairs and fees structures.
You’ll also need to know about market metrics, such as trading volume and price changes. The amount of a currency that’s traded over a certain period is an indicator of its activity and liquidity. And price changes can reveal trends that might impact future investment decisions.