The Everything Guide to Investing in Cryptocurrency by Ryan Derousseaeu

CHAPTER 1
Welcome to the Cryptocurrency
Craze
In a matter of only a few years, bitcoin has transformed from a
theory into one of the era’s most closely watched and intriguing
investment trends. Potential for the coin and other
cryptocurrencies now run the gamut, depending on whom you
talk to. Some prognosticators have argued that the price of
bitcoin will reach beyond $100,000. Many others claim it’s a
bubble on the level of the largest market mirages in history.
Such is the world of cryptocurrency investing where the truth
likely lies somewhere in the middle. Now that you’re thinking of
entering the space, make sure to embrace some of that
excitement, but also keep in mind what you’re buying when you
declare yourself a crypto investor. It’s far more than purchasing
a digital coin. This chapter offers an initial explanation of
cryptocurrencies and will serve as a first step on your new
journey.
What Are Cryptocurrencies?
At its basic level, cryptocurrencies are a very simple concept.
They’re digital coins, created online, and meant for online
spending. Developed via software code, cryptos are a way to
transfer value, most often via digital means, like when you’re
purchasing something online.

FACT

While the spending of bitcoins launched on the Internet has primarily
been relegated to the online world, there are ways in which you can
use them in your everyday shopping. The payment processor
company Square gives its merchants the option to accept bitcoins.
This allows any shop that uses Square’s functionality, from the
antique store to your local coffee shop, to accept bitcoins.

Take a very simple scenario, such as using a quarter to
purchase a piece of gum. When you buy that gum, you’re giving
the quarter to a shopkeeper in order to pay for the slice of
gum. The quarter is a tangible coin that a US shopkeeper
trusts. He knows that if he takes the quarter, it will cover the
cost of the gum and the profit that he expected to gain from the
sale. It’s a very predictable transaction. A quarter’s value
doesn’t change all that dramatically in a short time. What will
cost twenty-five cents today will likely run twenty-five cents
tomorrow. (Over many years, that quarter won’t buy you as
much, due to inflation, but for the short term, it does, which is
valuable for commerce.)
One bitcoin is essentially the same as a quarter except it’s
not tangible. It’s a piece of code, and only you, as the owner,
have the identifier, which is known as the coin’s key. You can
pass that identifier on to someone else, in order to purchase an
item. That person then receives a new identifier for the bitcoin,
and the old identifier becomes obsolete. You can’t actually hold
bitcoin. You can’t feel it. But when someone accepts bitcoin,
she is viewing it the same way as that quarter.
But one bitcoin has grown to become much more expensive
than one slice of gum. That’s because a whole community has
grown around the cryptocurrency craze, willing to give bitcoin
owners more and more for that one coin.
Why Would Anyone Want This Digital Coin?
If bitcoin and other cryptocurrencies function just like
regular money, then why would anyone want to use them
instead of the fiat currency (that is, the regular currency) that

The Everything Guide to Investing in Cryptocurrency by Ryan Derousseaeu