How to Buy Cryptocurrency? What Are its Types and Long-Term Usage?

What is Cryptocurrency?

Cryptocurrency is a digital or virtual currency that only exists in the digital world of databases with ledgers. It is a peer-to-peer decentralized system where there is no regulating authority like central banks or stock market exchange systems like NYSE.

The first virtual currency ever created was Bitcoin in 2009. As we already mentioned, it works like a ledger system; whatever transactions happen can be seen through this system without the need for central authority. This setup is called a blockchain.

The units of this system are called cryptocurrency and are obtained by the process of mining, which is done by solving complex mathematical problems. These currencies do not have intrinsic value like other national currencies via legislation, nor are they considered legal tender in most parts of the world for three reasons.

It requires enormous computing power to complete the mining process. These currencies are highly volatile; using them for any sort of legal transaction will affect the market prices of actual products.

And finally, this is a digital asset, specifically a key that tells you that this person owns this much cryptocurrency. If you lose that key or the device on which you have it, then you don't own that digital asset.

For this reason, the central bank is seeing this as risky. However central banks are considering a new currency called Central Bank Digital Currency (CBDC) to make them more reliable, which we will see in the later part of this topic. For now, there are various cryptocurrency types available, such as Bitcoin. Let's look at each of them. 

How to Buy Cryptocurrency? 

Cryptocurrency can be brought reliable on various platforms, like cryptocurrency exchanges, traditional investment platforms, and mobile payment platforms. These three are the most reliable platform types in a way that is more transparent to the users, where the money trail can be easily identified. 

Cryptocurrency exchanges

• Investors can buy cryptocurrency by opening an account through ID verification. And invest the amount via their bank accounts. All the major cryptocurrency exchanges on their websites mention the type of fee they collect from investors and how many pairs of coins they offer in the exchange's trade list.
• For most well-versed investors, the fees are called marker fees and taker fees. Marker fees are about to execute the order limit at a later time, essentially marking that currency and, in a way, adding liquidity to the market. 
• Taker Fees are about filling out the order immediately and taking the currency at the new available market price. In a way, it is taking away liquidity in the market. Apart from the fees and coin pairs, investors need to look for two more things, which are the traffic of particular cryptocurrency exchanges and allowing the cryptocurrencies to have cold digital wallets.
• As the crypto markets are highly volatile, storing them helps the investors and gives them some control instead of directly floating them in the market after being bought. Some examples of cryptocurrency exchanges are Coinbase, Gemini, and many others.

Traditional investment platforms 

• These are already established platforms that engage in selling stocks, investments, SIPs, and mutual funds. They are currently engaging in the sale of the cryptocurrency. These are very easy to access, as these platforms control most of the crypto-cybersecurity issues investors need to manage with just one account and a password.
• This type of platform is for users with less knowledge of cryptography and cybersecurity. Here also, investors need to look for a few things, like allowing cryptocurrencies in cold digital wallets, as it will be for the same discretionary investor reasons. Examples like Interactive Brokers LLC allow you to trade in cryptocurrency via their platform.

Mobile payment platforms

• The mobile payment platform allows investors to trade via their smartphones in an easy manner. This type of platform also has drawbacks, as some of the platforms do not allow users to have cold digital wallets for their cryptocurrency.
• These platforms have the most fees, like base fees and spread fees, which can be highly expensive. Among these three, this might be a highly expensive platform for users. To buy cryptocurrency, investors can use any of these platforms.
• But there is a lesser-known fourth way to buy cryptocurrency via credit and debit cards. These are highly risky because of the volatile nature of cryptocurrency assets, which can directly affect debt if you buy them using credit cards.

From this, we get the gist of how to buy a cryptocurrency in a reliable manner.  

What Are the Various Types of Cryptocurrency?

Cryptocurrency has various types of coins, some of the most popular being Bitcoin, Ethereum, Litecoin, and Ripple. Let us know about each of them.

Bitcoin

It was the first or founder coin, as it was part of the paper submitted with the name Satoshi Nakamoto pseudonym. This coin was founded in 2009. This coin is one of the longest-existing cryptocurrencies.

Litecoin 

Developed in 2011, this coin is most proficient for fast transactions in the payment process. This is done using mathematical prowess and open-source software that sort of augments Bitcoin. 

Ripple

Ripple is a blockchain platform that uses a distributed ledger system in real-time for cross-border payment systems in tie-ups with other financial banks. This was actually tested with the example of SBI Remit.

It got into a tie-up with Siam Commercial Bank (SCB) to help Thai nationals staying in Japan transfer their remittances faster to their families back home in Thailand. This shows the ripple ledger serves as a tool for people to move their disposable income across borders without much hindrance. 

Ethereum

Ethereum is a blockchain platform, and it was founded in 2015 with a cryptocurrency called Ether (ETH). ETH is programmable, allowing the establishment of smart contracts like NFT; in-game items sold using ETH; and the use of ETH in the war situation in Afghanistan and Ukraine are some examples of decentralized use of Ether.

There are many such cryptocurrencies currently available in the market; some of them have become memes, and others have become outright scams, so investors need to look for coins with reliable traffic and their histories before making up their minds to invest.

Mysterious Origins of the Cryptocurrency

As with everything new or old, as human beings, we are always curious to know the origins of everything presented to us, like the origin of the Corona virus. Likewise, Cryptocurrencies came to us in 2008 as a 9-page white paper document explaining peer-to-peer electronic cash currency without being governed by a central authority like a central bank.

The paper has the name Satoshi Nakamoto, but most of them actually don't know who came up with this idea. Is it a single persona or a group of people?. But many have claimed or identified with Satoshi Nakamoto, but the person behind this is still unknown.

The paper that was presented by Satoshi Nakamoto solved the problem of double spending on digital currency. Which was an earlier stumbling block in the electronic cash. We may never know the name of the person or group of people behind this.

Just like a person or group of people who might have perfected the use of fire in the early days that later on we all benefited from. Likewise, the anonymous origin of cryptocurrency still excites most people.

Volatile Nature of the Cryptocurrency

Cryptocurrency does not have intrinsic value, nor does it have the legal backing of legislation. Anything that has neither of these backings in market terms is called a speculative asset.

This means that if people are willing to buy things at face value without having the store value that can be traded at a later date with an amount of depreciation that remains non-predictable, then that financial asset remains highly speculative.

cryptocurrencies are also in that place of volatility; whether they will get that store value, unit of measure, and accepted form of payment, only future hurdles will tell.  

Reliability of the Cryptocurrency 

For the same reasons as the volatile nature of the cryptocurrency, many people are still not in favor of its reliability. Because the technical jargon still tells some people that they might be scammed.

Conversely, people do like the idea of decentralized currency, but the term ledger might be sending the wrong signal, as fiddling with the figures is the most associated term with ledger documents of the past.

People are a bit hesitant to learn how crypto encryption might work. But reliability will improve over time. As it has been over a decade, this reliability curve might already be plateauing, but the recent top scams involving FTX and Binance still have people having doubts about reliability.

For people to develop that tendency toward reliability on the cryptocurrency, the decentralized nodes of the ledger need to work and bring out the positives of it.

What is the Long-Term Use of Cryptocurrency?

The long-term use of cryptocurrency will be inadvertent competition with fiat currency and for credible reliability and legal acceptance among businesses and people alike. Cryptocurrency is used in large companies for two purposes.

The first is enabling payments for customer service via a third-party vendor; this is called the hands-off approach, which helps the company know which type of customers are buying their products and services and keeps those transactions off the books, meaning they won't come under this company but rather a third-party vendor.

The second type is a hands-on approach in which the company will enable the crypto operation to manage the day-to-day operations and Treasury functions using a third-party vendor. These are some of the uses for cryptocurrency by the business in the long term.