What is Cryptocurrency 2021: All Your Questions Answered

Cryptocurrency is fast becoming mainstream. With over 291,000 daily transactions in April 2021, it’s becoming difficult to ignore investing in crypto. Numbers like this show that cryptocurrency is gaining more acceptance in the business world. The future looks bright for digital coins and assets, and you should take crypto more seriously.

Despite crypto’s many successes in the last decade, many people hardly understand what it’s all about. Often, we find that most people misunderstand crypto because they don’t have information about it. With the pace at which the crypto world advanced in the last decade, it can be challenging for newbies to keep up.  

Are you looking to dip a toe into the giant ocean that’s cryptocurrency? We can help you make that body of water look smaller. Most people just want to go with the trend and invest in cryptocurrencies without first knowing the background. However, if you don’t learn the basics, you won’t grasp the intricacies fully and may chicken out when things don’t pan out well. 

If you’re new to the crypto world and wondering what the fuss about it is all about, this article is for you. This article is the one-stop guide to cryptocurrency you have always wanted. Keep reading for answers to all the questions you have about crypto.

What is Cryptocurrency? 

A cryptocurrency is a digital and decentralized currency. Being digital or virtual means the currency is only available in electronic or digital form and not accessible physically. The word decentralized means crypto is not reliant on government control or manipulation. 

The term “crypto” means complicated cryptography. It’s a process that enables the creation and processing of virtual currencies. Crypto also allows the transaction of these currencies across decentralized systems. 

A decentralized ledger records these crypto transactions. The decentralized ledger is known as a Blockchain. 

Whenever a crypto investor buys or sells cryptocurrency, the transaction gets recorded in the blockchain. A blockchain is a public database where all crypto transactions are accessible. Other crypto investors have access to the public database, and anyone can join the blockchain. 

Although the blockchain is accessible to everyone, cryptography secures the data on individual transactions. Every transaction recorded on the blockchain undergoes a digital validation that verifies the transaction and ensures zero fraud. 

How Does Cryptocurrency Work? 

Cryptocurrencies function without a government or central authority’s regulations. This decentralization is a major difference between cryptocurrencies and traditional currencies like the pound sterling. Instead of government control, blockchain technology backs cryptocurrencies. Hence, cryptocurrencies exist on the internet and not as physical coins or notes. 

There are thousands of cryptocurrencies available in the world today, with Bitcoin being the most popular and valuable. Bitcoin is the largest cryptocurrency in terms of market capitalization. The most valuable cryptocurrency holds 45% of the cryptocurrency market capitalization of $1.46 trillion.

Other popular cryptocurrencies include Ethereum, Ripple, Tether, Cardano, Stellar, and so much more. 

You can buy cryptocurrency with traditional currencies like the pounds sterling. You can also use your cryptocurrency to purchase other goods and services. Many businesses and companies are beginning to accept cryptocurrencies as means of payment. 

One of the upsides to cryptocurrency is the ability to transact with anyone in the world. Crypto has the same value worldwide. Therefore, you don’t have to worry about exchange rates during transactions. 

You can also invest in cryptocurrencies. Cryptocurrency investing is a significant reason digital assets are gaining more popularity. Investors can choose to buy crypto coins at low values and keep them hoping their values rise over time. When the prices of crypto coons rise, investors can make huge profits. 

Due to the relative infancy of various cryptocurrencies, the market can be volatile. Some crypto investors take advantage of the volatility to make profits. These investors buy coins when prices slump and sell when they rise. 

How Do I Make Money by Investing in Cryptocurrency?

One of the main questions people ask about crypto is how they can make money by buying, holding, or selling virtual currencies. You can buy and sell these virtual coins on various crypto exchange platforms available on App Store, Google Play Store, or the internet. 

After downloading these crypto exchange apps, you need to sign up with your credentials. As soon as you sign up and verify your details, you’ll have a crypto wallet. 

Proceed to transfer money to your wallet using various payment methods on the exchange app or website. Then, buy cryptocurrencies by exchanging pounds for any digital asset of choice.

You can purchase Bitcoin, Ethereum, Dogecoin, Litecoin, or other available cryptocurrencies with the money you transfer. 

Some of the most popular cryptocurrency exchange and trading platforms in the UK include: 

  • Binance
  • Coinbase
  • Luno
  • Huobi Global
  • Kraken
  • CoinOne
  • Okex
  • eToroX
  • Bitfinex
  • Bithumb

After buying a crypto coin, you can either hold it or sell it when its value rises. Holding your cryptocurrency means leave it untouched for a period in the hope that its value increases. For example, say you buy Ethereum when its value is $100 and hold it for about six months. 

If, after six months, its value is now $200, it means you made a 100% return on your investment. Hence, if you purchase $200 worth of Ethereum at its $100 value, you will have $400 worth of Ethereum after six months at its $200 value. 

Another way to invest in cryptocurrencies is by buying and selling coins. One feature of cryptocurrencies is their volatility. The volatility of the market means a coin can fall by about 15% today and rise by 50% tomorrow. Hence, crypto traders analyze the market and take advantage of speculations. If they perceive a coin will rise, they buy large volumes of it and sell when it reaches a perceived peak value. 

To make a profit on your crypto investments, you need a solid knowledge of the market. You should know when a coin is likely to fall or rise and take the necessary steps to take advantage of the situation. 

For newbies, the best bet may be to buy and hold. You can begin daily trading after gaining more experience and learning how to read the market. 

Should I Invest in Cryptocurrency? 

Investing in cryptocurrencies provides a huge opportunity. Bitcoin’s rise in value over the years and the surge in Ethereum’s value in 2021 show that investors can reap the rewards from their investments. However, there’s a high risk associated with crypto investments. Its volatility means that things can go south very quickly and sometimes unexpectedly. 

Here are some helpful tips for investing in crypto:

  • If you’re someone who gets jittery over drops in your investment, crypto may not be good for you. There are scenarios when a coin’s value crashes by over 80%. If you’re the kind of person who is likely to lose their mind over such a scenario, you should avoid crypto altogether.
  • Ensure you have a stable financial situation before investing in cryptocurrency. Don’t invest with money you can’t afford to lose. Only invest with cash you can spare. Investing spare cash means you won’t spend money from your crypto investments during emergencies. 
  • Have a diversified portfolio. Cryptocurrency shouldn’t be the only investments in your portfolio. Have multiple income streams so you always have something to fall back on if things go wrong. 
  • Analyze the market as well as you can. Follow trends and news about the crypto world. Sometimes, things happen unexpectedly in the crypto market, but being abreast of happenings pays off. 

Cryptocurrency in the UK

Recent data from the Financial Conduct Authority, FCA, UK’s financial regulator, states that the number of people holding crypto assets is 2.3 million. The data also showed that 78% of adults said they have heard of cryptocurrencies. 

Though the FCA advises customers to stay away from crypto assets, these figures show people have an appetite for the cryptocurrency market  About half of the U.K.’s crypto users plan to buy more assets in the future. 

A similar number believe they’ll make money from their investments. However, the data also shows that the overall understanding of the crypto industry has declined. Hence, ensure you understand the industry and its workings before going on to invest. 

Does Cryptocurrency Have a Good Future? 

In recent years, the value of major cryptocurrencies like Bitcoin and Ethereum reached peak highs. These highs caused excitement among investors and asset holders. However, recent price falls in Bitcoin, Ethereum, and Dogecoin has come with a reduction in enthusiasm about cryptocurrencies, with many people doubting their sustainability. 

This is where you have to look at the big picture. History shows that cryptocurrencies will always bounce back. For example, Bitcoin survived many slumps to reach peak highs. Though it is currently in the midst of a price fall, it will be foolhardy to write it, and other crypto coins off. 

Besides cryptocurrencies’ comeback potential, more economy big wigs and industry players are beginning to approve digital currency. Crypto exchange platform, Coinbase recently became the first of its kind to enter the stock market. 

Brands like PayPal, Sotheby’s, and Time are also adopting online payments via crypto. These are still early days, but recent developments show cryptocurrencies are likely to stay. 

Cryptocurrency Terms You Should Know

In the crypto world, there are multiple terms investors use when interacting with each other. To get a good grasp of how things go on in the market, you should know these terms too. 

Here are some of the most common terms you will hear in the cryptocurrency industry:


Every crypto asset holder has a wallet with a unique address. Your wallet address allows you to own crypto coins. It’s also a unique identifier on the blockchain. 


Altcoins are crypto coins other than Bitcoin. Hence, Ethereum, Dogecoin, Litecoin, and many more are altcoins. 


Blockchain s a digital ledger comprising every transaction on a cryptocurrency. 

Decentralized Finance (DeFi)

DeFi refers to all decentralized alternatives to traditional or centralized finance. DeFi consists of banking, insurance and, payment processing tools. These products and services allow people to have democratized access to the finance industry which is known to be historically exclusive. 

Initial Coin Offering (ICO)

An initial coin offering is similar to the common Initial Public Offering (IPO). It’s a new way for startups and projects to get funding. ICOs are open to anyone. 


Mining refers to the process of confirming new transactions on a cryptocurrency blockchain. If you donate computer power to a crypto coin miner to aid an encryption challenge’s completion, you’ll receive crypto. 

Crypto Wallet

A cryptocurrency wallet is where you store your coins. 


$hitcoin refers to a crypto coin with minimal financial value or one with no immediate purpose. 


HODL means to hold your crypto asset rather than selling it off. 


Rekt means to suffer losses after a particular coin crashes in value. 


A whale is a crypto investor who owns about 5% or more of a cryptocurrency. 

Final Thoughts

At this point, you should already have a good understanding of the meaning of cryptocurrency. You now have answers to those mind-boggling questions you had before reading this article. Now, you know there is much to gain by investing in cryptocurrencies. However, you can also lose a lot if you don’t invest cautiously.

If you decide to invest in a particular cryptocurrency or cryptocurrencies, follow up by staying ahead of news related to your crypto assets. You should do so to avoid making financial decisions that may cost you a fortune. 

The crypto market is difficult to predict and can experience dramatic changes within a short period. Therefore, you must avoid putting all your eggs in one basket. 

Staying informed of happenings and changes is a great way to ensure success in the crypto market. 

Ensure you never miss out on anything by checking our website for cryptocurrency-related news, signals, and trading help. Our site is great for newbies like you and will help you find your feet quickly. 

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