6 apps to get you started on crypto

The cryptocurrency investment field seems complex, full of professional terms and security risks, but you can easily get started as long as you do your homework.

First, it is necessary to emphasize the volatility of cryptocurrencies. Never invest in huge amounts of money that are beyond your ability to bear, especially in the short term, because of severe exchange rate fluctuations. It is recommended that you spend a few months observing the market before considering investment.

How does cryptocurrency work

There are multiple cryptocurrencies on the market, with Bitcoin and Ethereum being the most well-known, but they are all based on similar technologies. These currencies are digital and do not need to deal with banknotes or coins. They are also protected by encryption (hence the name), meaning transactions are encoded in highly complex ways, greatly preventing forgery.

Most cryptocurrencies are built on what is called blockchain, a term you will encounter frequently. Simply put, it is a digital ledger: records all past and current transactions and protects the transactions from security. The blockchain is anonymous – it doesn’t show the details of the buyer or what they purchased, but you can easily view the cryptocurrency’s currents (how assets go hand in hand). No one can edit this record without breaking the entire system.

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Strong security is one of the main advantages of cryptocurrencies. But this does not mean there is no risk – large hacker attacks and thefts do happen, mainly because of security breaches in exchanges, or fraudulent means of cheating users to leak login information. It can be compared to Gmail: Google has deployed advanced security measures that make it difficult to hack its servers, but there are still people who may trick you into sharing your username and password.

Cryptocurrencies are also decentralized, meaning they are not stored in any single location and are not controlled by any government. There are pros and cons – although they are not interfered by authorities and banks, they are also highly volatile and are not officially recognized by most institutions. Before investing in cryptocurrencies, you must understand that the exchange rate between cryptocurrencies and traditional currencies can rise or fall very rapidly.

This is cryptocurrency 101. Of course, you can dig deeper into the nuances of different currencies. You can find a lot of information online about different cryptocurrencies, current exchange rates, and whether they are suitable for your investment.

How to get cryptocurrency

For many of the most famous cryptocurrencies, people must obtain them through mining. This means they will receive cryptocurrency as a reward for verifying the security of the network, a work that has become increasingly complex over time and the growth of blockchain. To do this verification, miners need high-performance computers, which is why you see large bitcoin mines packed with machines used to process the calculations needed to process transactions.

Currently, verification requires a lot of computing power, not to mention a considerable amount of energy. This makes setting up a mine very expensive and no longer worth participating in for individuals. In addition, environmental impact issues of these digital currencies (even the more environmentally friendly versions) may also prompt more climate-focused users to stick to buying and selling.

The cryptocurrency app you need

Since mining is no longer the choice for most people, most cryptocurrency apps focus on buying and selling. On the one hand, some apps give you more control over your purchases, offering more currency and more options. On the other hand, some apps are easier to use, but limit the cryptocurrencies you can buy and what you can do with them.

If you want to be fully involved in cryptocurrency, you can look for cryptocurrency trading apps like Coinbase or Gemini, which are two of the most popular and reliable apps available right now. These apps provide you with a personal cryptocurrency wallet that you can use to save your cryptocurrency, use it to pay for the goods anywhere this option is provided, and transfer it to others.

Simpler applications like PayPal and Venmo, on the other hand, manage a variety of digital payment transactions, including cryptocurrencies. You won't get a cryptocurrency wallet, just like you use these apps to manage traditional currencies, you don't actually own cryptocurrency forever -- the app keeps it for you. The downside is that you can only use a limited range of currencies and you basically just buy and sell on these platforms, so you can't transfer your assets elsewhere. But if you already have these apps, they are a great way to quickly understand what cryptocurrencies are.

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Stand between these two extremes are dedicated trading and brokerage applications such as Robinhood and eToro. These platforms offer more currencies and options than PayPal and Venmo, but they work the same way, which means you only have cryptocurrencies in your hands, and you can only do it with your digital currency except for selling it in-app. In September, Robinhood announced that it would add a crypto wallet sometime next year — so you can actually own crypto and buy it with it — so if you like the app, it could be a one-stop shop for all your cryptocurrency needs.

These apps charge you a small transaction fee based on current market conditions, the cryptocurrency you receive, and the amount you purchase. In some cases, you can only see the fees after previewing the transaction, but usually between 1% and 2% each time. Converting cryptocurrency to regular currency may incur another fee.

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