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Here’s everything you need to know about cryptocurrency

The world is going digital, and just like you have different currencies across the globe, the digital world has crypto. Dubai has also integrated crypto and if you’re unsure how to buy/sell or even invest in it, let us break it down for you.

What is Cryptocurrency?

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Essentially, cryptocurrencies are digital assets created using computer networking software, enabling secure trading and ownership.

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Bitcoin and most other crypto are supported by technology dubbed the “blockchain”, which maintains a tamper-resistant record of transactions and keeps track of who owns what. Public blockchains are typically decentralised, which means they operate with a central authority, i.e., no bank or government.

Individual units of crypto can be referred to as coins or tokens, depending on how they’re used. Some are intended to be units of exchange for products and services, while others are stores of value, and some are designed to help run computer networks that carry out more complex financial transactions.

Since you don’t have to physically print it, where do they come from?

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The most common way crypto is created is through a process called mining, which is used by Bitcoin. Mining can be an energy-intensive process where computers solve complex puzzles to verify the authenticity of transactions on the network. As a reward, those computer owners can receive newly ‘minted’ cryptocurrency.

Other cryptocurrencies use different methods to create and distribute tokens, and many have a significantly lighter environmental impact. 

Now that you’ve understood what crypto is, let’s get into the good stuff-

How do you buy crypto?

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a. Decide where to buy it

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There are many ways to buy cryptocurrency, though the most accessible method for beginners is likely to be a centralised exchange. Centralised exchanges act as a third party, overseeing transactions to give customers the confidence to get what they pay for. These exchanges typically sell crypto at market rates, and they make money on fees for various aspects of their services. Fair warning: Though centralized exchanges are relatively easy to use, they also can be an attractive target for hackers, given the volume of crypto that flows through them.

There are decentralised exchanges whose fees can be lower than those charged by centralised platforms for more advanced users. Those can be more difficult to use and demand more technical know-how, but they may also offer some security benefits because there is no single cyber attack target. Cryptocurrencies can also be traded through peer-to-peer transactions. 

b. Choose how you’ll pay

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While thousands of cryptocurrencies are being traded worldwide, you’ll find that the most popular options are widely available for purchase in fiat currencies such as the UAE Dirham and the US dollar. If you’re a first-time buyer, you’ll very likely have to use regular money to buy cryptocurrency.

If you’re a more experienced investor, you may want to trade some of your existing crypto holdings for another type of cryptocurrency — for instance, Bitcoin for Ethereum.

c. Select a cryptocurrency

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There are many options for cryptocurrency investors, though none are likely suitable for everyone. Before you buy, ask yourself what your goals are for that particular investment. Are you hoping it will increase in value? Are you interested in carrying out transactions using cryptocurrency? Are you interested in using the underlying technology via decentralized apps? These may help you make your decision.

This is a little background on the most popular coins around:

Bitcoin is the first and most valuable cryptocurrency.

Ethereum is commonly used to carry out financial transactions more complex than those supported by Bitcoin.

Cardano is a competitor to Ethereum, led by one of its co-founders.

Solana is another competitor to Ethereum that emphasizes speed and cost-effectiveness.

Dogecoin began as a joke but has become among the most valuable cryptocurrencies.

Stablecoins are a class of cryptocurrencies whose values are designed to stay stable relative to real-world assets such as the dollar.

How do you keep your crypto safe from hackers?

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Once you’ve decided to buy crypto and determined which cryptocurrencies you want to invest in, your next decision will be how you want to store it.

This is a crucial choice. Crypto assets require a private key, which proves ownership of cryptocurrencies and is necessary for transactions. If you lose your private keys, you’ve lost your cryptocurrency. If someone gets your private keys, they can dispense with your cryptocurrencies any way they want.

12,853 Crypto Wallet Stock Photos, Pictures & Royalty-Free Images - iStock

Crypto owners use digital wallets to store their holdings safely. There are multiple options to consider when it comes to digital wallets.

Whew, that was a lot to outline, but while you’re thinking about your crypto-moves, let us know if you believe in crypto taking over regular currency in the future.

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