{"id":17843,"date":"2022-02-21T19:00:00","date_gmt":"2022-02-21T11:00:00","guid":{"rendered":"https:\/\/www.comparehero.my\/blog\/uncategorized\/crash-course-cryptocurrency.html"},"modified":"2026-03-26T16:00:19","modified_gmt":"2026-03-26T08:00:19","slug":"crash-course-cryptocurrency","status":"publish","type":"post","link":"https:\/\/www.comparehero.my\/blog\/investments\/crash-course-cryptocurrency.html","title":{"rendered":"A Crash Course on Cryptocurrency – Everything You Need to Know"},"content":{"rendered":"\n

It\u2019s become somewhat of a cliche phrase to say, \u201cunderstand the industry before starting a business.\u201d It\u2019s simple to say; anyone can do it, but nothing simple about actually going through with it. <\/p>\n\n

This, of course, goes for investing your hard-earned money into this world of magical money we so far know as cryptocurrencies. <\/p>\n

Beware, also, of those who promise you the world, because any investment with the word \u201cguaranteed\u201d is almost always the riskiest investment you can make. If a guaranteed investment did exist, we\u2019d all be quadrillionaires already, but still poor. That said, understanding where your risk is, and the greatest you stand to lose, will grant you the best chance of making it worthwhile. <\/p>\n

Here are the basics of cryptocurrency investing, explained in human language. <\/p>\n

What is Cryptocurrency? <\/h2>\n

By definition,  cryptocurrencies are a form of digital money that is decentralised and built on blockchain<\/a> technology. <\/p>\n

It’s a community system that enables anyone to send and receive payments from just about anywhere. <\/p>\n

The caveat? Internet. <\/p>\n

These transactions are digital entries to an online database representing specific transactions instead of actual (physical) cash carried around and exchanged in the real world.  This technology used to securely store and share data is known as the blockchain. And by secure, it means it cannot be changed later, tampered with, or amended in any way, shape, or form. <\/p>\n

Related: Is It Too Late to Invest in Cryptocurrencies?<\/a><\/p>\n

Advantages and Disadvantages of Cryptocurrency<\/h2>\n

Advantages: <\/h3>\n

Easy transaction with minimal fees <\/p>\n

The transaction process for cryptocurrency is relatively transparent and trouble-free \u2014 for instance, no lots of paperwork, lesser brokerage fees and commissions. <\/p>\n

Basically, it removes the need for a middleman to complete the transaction. <\/p>\n

The transactions would be explicit and one-to-one, and audit trails would be simpler to implement, removing the ambiguity about who would pay who. Along with it, the trouble of going through an intermediary bank, clearing firm, and whatnot before your funds reach<\/a> your account (wallet). <\/p>\n

Because of that, and evidently, cryptocurrency users are, in a sense, liberated from those pesky fees that can rack up to the hundreds. When using cryptocurrencies, the fees come in the form of what is called a \u201cgas fee\u201d. It varies differently depending on a wide variety of factors. It is a topic on its own with more technical terms, but it\u2019s worth noting that it is not entirely free. <\/p>\n

Confidential transaction: <\/p>\n

The transaction you make with the recipient will be one-of-a-kind. <\/p>\n

Every deal can lead to a term negotiation, as all the information is exchanged using a push method<\/a>. In simple terms, you have complete control over who you want to share the information with. If you want your financial information kept entirely private, it\u2019s up to you; if you want to share it with one person, it will only allow that specific person to see it.  <\/p>\n

Disadvantages:<\/h3>\n

Security concerns: <\/p>\n

Imagine having bought 7,002 Bitcoins many years ago, before the word Bitcoin even hit social media platforms. Then, imagine losing all of it.<\/p>\n

Why?<\/p>\n

Because you can\u2019t remember your password. <\/p>\n

This is the story of Stefan Thomas<\/a>, the man who lost over $256 million. <\/p>\n

Digital wallets are something new to our society. So, needless to say, they haven\u2019t evolved to withstand the billions of things that could go wrong. And to add, the permutations of these billion things. <\/p>\n

They\u2019re especially vulnerable to being thieved from insecure websites, cyber-attacks<\/a>, and of course, the good ol\u2019 friend of ours, online scams. <\/p>\n

Lack of regulations: <\/p>\n

Thankfully for us, average Joes, there have been loads of chatter around regulating the usage of these coins. Of course, we\u2019d like those regulations to protect us in the ideal world. But for now, owing to it being so new, these regulations<\/a> are still in development. <\/p>\n

With hope, it stays \u201ctwo steps forward, one step back.\u201d <\/p>\n

Case in point, when you get attacked by those malicious hackers or get scammed, there is no one to save you. No banker or company in the world is going to call you and ask if you want to file an investigation. <\/p>\n

And for investing in these cryptocurrencies, you\u2019re on your own as well. That means, there might be market manipulation, pump and dump schemes, and possibly even something labelled as a \u201crug pull\u201d, seen on the recent Squid coin<\/a>. <\/p>\n

The volatility of cryptocurrency: <\/p>\n

Investors hate it, traders love it, and others have a love-hate relationship with volatility. <\/p>\n

Today, you might be paying 0.0001 Bitcoin for a cup of coffee. Tomorrow, you might be paying 0.0005 for that same cup. <\/p>\n

From an investing perspective, today, you might be up to $1,000 on your Bitcoin position, but tomorrow, you can be down $1,000 and have no idea whether it will recover some time later. <\/p>\n

This especially needs attention if you\u2019re using margin to trade or invest in these assets. Because at any point, it can drop upwards of 10% in a day and you will be forced to liquidate your position, forcing you to take the loss whether you fancy it or not. <\/p>\n

How does crypto derive its value? <\/h2>\n

Supply and demand. <\/p>\n

Price goes up whenever there is more demand; the price goes down whenever there is more supply. <\/p>\n

Types of Crypto<\/h2>\n

Bitcoin is not the only cryptocurrency in the market; numerous cryptocurrencies were created after Bitcoin, collectively coined Altcoins. Pun intended. <\/p>\n

Besides serving as a payment method or transmitting value across the decentralised network, Altcoins<\/a> can also be used as a value token for different purposes. <\/p>\n