Sep 1, 2021

How do digital currencies work-beginners guide 2021

How do digital currencies work-beginners guide 2021

Digital currencies are money that exists in digital form. It can be used to buy goods or trade for profit. There is a question popping in our mind ‘ Are digital currencies putting an end to traditional money?’ In the future, it might be but now cannot predict that would happen.

Digital currency is a form of money which can transfer securely, without any middleman, and also in less time. It is not the kind of asset like cash, gold, or any other commodities, it is an electronic form of money transfer by mobile or computers. Types of digital currency are cryptocurrencies, bitcoin.

Cryptocurrency is becoming famous throughout the world. Some of us may not know about crypto but it is time to know about digital currencies.


Cryptocurrency is maintained by a network of computers. Cryptocurrency uses decentralized technology. It lets the user store money without any name and secure payment without any middleman. Many people are now interested in investing in crypto, like bitcoin, Ethereom. But they are confused about how it works and afraid of scams.

In cryptocurrency, there is no physical money involved so the person who doesn’t know much about programs and code or technology might feel afraid to invest. In this article, we are going to talk about how it works and if it's going to change future money!

Why does cryptocurrency consider it a good investment?

Supporters think cryptocurrency is going to be the future money. For that, they continued to buy and trade because it became valuable.

” To make our world a better place, we need to build products that the corrupt cannot abuse - Bitcoin is the best example of that.” ― Olawale Daniel

For investing in cryptocurrency you need to create a wallet. One could be super rich investing in crypto 2021 or you could lose all of your money both are possible. The Crypto world is new, it is considered riskier than investing in the stock market. It doesn’t make cryptocurrency a bad investment. It can get real-life value in the future and also can change world view to money. So if you invest in crypto now you could gain a lot of money in the future. If you are willing to take risks it could work great for you. Some investors also say that currency needs stability to determine the fair price.

Advantage of digital currency

One of the advantages of crypto is it allows the transfer of money cheaper, easier and faster even if international transfer. There are no third parties involved so it gets cheaper and safer. Cryptocurrency follows decentralization which means there is no authority involved. It is a peer-to-peer procedure. And there is a fixed number for bitcoin 21 million, no authority can change that. By transferring money through cryptocurrency you can protect your privacy. You won't be forced to give your details, name, or address. It can be dangerous to give your personal info to a third party online, in crypto it's safer.

International business is increasing day by day. It takes much less time to transfer money or make a payment through crypto.

Disadvantage of digital currency

Cryptocurrency has strong volatility because it is unpredictable. Its value changes rapidly. For that, it is hard to handle. Predicting the time of investment is important. The price is always changing. For that some people compare it with “ the greater fool” theory of investment.

One of things is that it didn’t get the respect it deserves, some investors don't see it as future money because they said that currencies need stability to know the fair price to pay. Over a couple of years it is getting recognition, now in 2021 it is quite famous but there is always a lack of trust. Though bitcoin is the largest name in the game still it is not the only cryptocurrency, many digital currencies are out there most of them are still a startup.

How does one buy cryptocurrency?

If you are new, it could be hard to figure out how to buy. Once you learn it gets better. First, you have to choose an exchange. A cryptocurrency exchange is a platform where cryptocurrency can be sold, bought and held. And also allow you to withdraw currency into your wallet. There are many well-known cryptocurrency exchange platforms such as Kraken, Gemini, and Coinbase. These three are possibly the easiest path to enter the crypto world.

After opening an exchange account you have to add a payment option. It needs some personal information like social security numbers. You can add your bank account. There are some fees to deposit in the bank, it could be great to research fees. After everything is set up you can start to buy cryptocurrency. There are hundreds of currencies, you have to decide which one you want to buy.

“ Cryptocurrency is such a powerful concept it can almost Overturn governments”


Though cryptocurrency looks promising, paper money still has a long way to go. It has many benefits, but also has some problems such as insufficiency. The future value of cryptocurrencies is unpredictable. It depends on how much people believe in digital currency. So there is quite a good chance it gets more value. But right now we don’t know what the future may hold.

For the volatility, many people don’t suggest investing in crypto. Some governments are trying to build their own digital currency. So we can say that there is a possible future for cryptocurrencies.

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