Crypto 101 Your Guide to Investing & Cryptocurrency
Understanding Digital Assets
A digital asset is anything you can own or trade in a digital form. Cryptocurrency is one type, but digital assets also include things like NFTs, digital art, or even tokenized real estate. They’re stored electronically and can represent value or ownership.
What is Cryptocurrency?
Cryptocurrency—often called “crypto”—is a form of digital money that isn’t controlled by banks or governments. Instead, it’s run by networks of computers that verify transactions through secure technology called cryptography. These transactions are recorded on a blockchain, a transparent digital ledger. Anyone with internet access can use crypto, making it a globally accessible form of finance. Some cryptos, like Bitcoin, have a fixed supply, while others manage how much exists to keep the system balanced.
How Cryptocurrency Gains Value
Unlike cash or stocks, cryptocurrency doesn’t have a physical form. Its value comes from trust, adoption, and usefulness. Coins like Bitcoin are scarce, which can make them attractive as a potential hedge against inflation. Platforms like Ethereum gain value by enabling smart contracts, digital collectibles, and other applications. Market demand and community support play a big role in determining value.
Pros of Using Cryptocurrency
- Quick, low-cost transactions worldwide
- Secure and transparent record-keeping
- Access for people without traditional bank accounts
- Options for privacy and anonymity
- Opportunities for technological and financial innovation
Cons of Using Cryptocurrency
- Prices can fluctuate dramatically
- Risk of hacking, scams, or mistakes
- Rules and regulations can vary by country
- Some technical knowledge is needed to use safely
- Certain systems use a lot of energy to operate
Why People Invest in Crypto
Investors are drawn to crypto for potential growth, the ability to own small fractions of coins, and as a possible hedge against inflation. Some cryptocurrencies have outperformed traditional investments in the past, but they remain speculative and can be risky.
Bitcoin: The First Cryptocurrency
Bitcoin is the most recognized cryptocurrency and was created in 2009 by someone using the name Satoshi Nakamoto. Only 21 million Bitcoins will ever exist, making it a limited digital resource. Its network is decentralized, meaning no single entity controls it, and cryptography keeps it secure.
Bitcoin vs. Other Cryptocurrencies
- Purpose: Bitcoin was made as digital money. Other coins may focus on privacy, faster transactions, or powering apps on their platforms.
- Technology: Different cryptocurrencies use different systems. Ethereum, for example, allows developers to build apps and contracts directly on its network, while Bitcoin focuses on secure peer-to-peer payments.
Who Is Eligible to Trade?
Only account holders over the age of 18 and in good standing with the financial institution can buy, sell, or hold assets. Trust Account Holders and Commercial Accounts are not supported. Account holders residing in TX, ID, or NY are unable to trade.