It might feel like you’ve missed the boat if you’re still not investing in cryptocurrency in 2022. Every time you hear about someone who’s earned thousands (or in some cases millions) from their investments, you probably feel pain in your chest from all that missed opportunity.
The words “cryptocurrencies” and “blockchain” tend to come together, and that’s because cryptocurrency protocols are built on the blockchain. A blockchain is effectively a database that stores all data related to transactions in a chain of blocks.
“proof-of-work” framework: miners are competing to validate transactions by mining. But not every cryptocurrency relies on mining to function.proof-of-stake: instead of users competing, they verify transactions at random and are incentivized to be honest by staking, meaning they lose collateral if they attempt to cheat the system.
So, in summary: yes, cryptocurrencies still carry more risk than more established assets with longer histories, like real estate and index funds. But we’re not talking about a crazy level of risk in the crypto world — there are plenty of signs that cryptocurrencies are going to be around for quite some time.
You need to head to an exchange to buy bitcoin or other cryptocurrencies. But make sure you choose wisely — consider factors like transaction fees, security processes, and insurance funds (money put aside to refund users if they get hacked).
This is where the processes of buying cryptocurrencies versus other investment assets start to really diverge. Although you can keep your crypto investments sitting in an exchange, it’s far better to transfer them to a wallet for better security.