What is a cryptocurrency? Cryptocurrencies are digital currency built on blockchain technology. Essentially, cryptocurrencies are decentralized and digital money or assets that can be used by anyone and sent freely and directly between people. The word "crypto" comes from the fact that the concept of cryptography is central to blockchain technology.
Yes. Cryptocurrencies are legal. You have the right to buy and sell what you want, whether it is shares, crypto, a used car or most other things. The only thing you need to keep in mind is to pay taxes if you sell your crypto at a profit.
Yes, cryptocurrency is taxable. You can read more about crypto and taxes here.
It depends on which cryptocurrency you invest in and when you bought it. Both Bitcoin and Ethereum have proven to be very good investments over the last 10 years. But prices can fluctuate a lot in the short term, and there are also other cryptocurrencies that have not been good investments. Think long term if you are going to invest in cryptocurrency. It is both safest and easiest.
Bitcoin is the first and largest cryptocurrency. You can read more about Bitcoin here.
Cryptocurrencies are based on blockchain technology. They may work a little differently, but have blockchain technology in common. You should start by reading about how Bitcoin works here. All the other cryptocurrencies are based on the technology that was introduced with Bitcoin.
No. A good thing about cryptocurrencies is that you can buy for exactly the amount you want. You can buy 0.0001 of a cryptocurrency if you wish. The amount you want to buy for is completely up to you.
How to buy cryptocurrencies?
Here at Firi, we make it easy for you to get started with crypto. You can click here to get started, or you can read this guide on how to buy crypto.
NO. Cryptocurrency is a category of digital currencies that contains thousands of different "coins" and "tokens". Some of these cryptocurrencies may be pyramid schemes or scams. But not the whole "cryptocurrency" category. It is a generalization people make due to a lack of knowledge.
The reason why people claim that crypto is a pyramid scheme is related to the following:
Still a bit unsure? If you use the same example with shares, you can say that some shares can be a scam. There are thousands of companies to choose from. Perhaps there is the occasional company that is being run illegally and defrauding investors. Maybe that particular company is a pyramid scheme. But the concept of "stocks" or the "stock market" as a whole is not a pyramid scheme.
Finally - How can you avoid getting defrauded by crypto scams and pyramid schemes? Learn the basics of cryptocurrency and investing. Then you will be able to reveal the vast majority of fraud attempts. Furthermore; Don't take too many risks or blindly trust what others say. Especially not on social media.
Yes, if you learn the basics of how it works. But remember that buying and selling cryptocurrency involves risk, and that historical returns are never a guarantee of future returns.
Since this is a new market and a new technology, there are some pitfalls. One can, for example, send money to the wrong crypto wallet, be exposed to fraud attempts, or make bad investment decisions that result in one losing money. But that being said, much of this applies in the world outside of crypto as well. For example, if you are going to invest in funds, shares, start a business or something else. The conclusion is that you cannot achieve a return without taking a certain amount of risk. If you think long-term, you can also limit the risk.
Fortunately, we make it easier for you to get started with crypto here at Firi. For example, you don't have to deal with the storage of your cryptocurrency, and your money is insured against cybercrime. That's good to know.
It is wise to buy cryptocurrency when you get a good price and the price trend is about to turn upwards. But you have to decide for yourself when you think the prices will rise. Since it is difficult to know when this will happen, the easiest way for many people will be to buy a little at regular intervals. Then you even out the price fluctuations. Read more here.
NB! Remember that historical returns are not a guarantee of future returns. You should not take a greater risk than you can handle.
With shares, you own a part of a company and are thus entitled to a part of this company's profits. Not so with crypto. Bitcoin, for example, is not a limited company. There is no CEO or board of directors for Bitcoin.
It is true that you can get passive income on some cryptocurrencies by locking up your crypto in so-called crypto "staking". You will then receive a yield on your locked up crypto. How this income is generated can vary, but it is usually a result of the so-called "proof-of-stake" mechanism which is utilized by many crypto projects. A cryptocurrency can often be more similar to a commodity such as silver and gold than to a share.
A cryptocurrency is often linked to a blockchain network and will be affected by the value this network creates. Ethereum is one such example.
For example, imagine the following: Do you want to say that the Internet is valuable? Many will answer yes, but at the same time there is no single company that rules the internet. You cannot look at the accounts of the internet and calculate a reasonable price. The Internet's value comes from its network of users around the world. We know that the internet has value because it is used by almost all people. But it only has value when we use it together. An internet with 1 single user will not be able to exist and will have no value. It is all people who use the internet who collectively decide how it should work and how it should develop. And it's a bit like that with blockchains and cryptocurrency.
In addition, cryptocurrency is often called "programmable money" because it can be programmed to do many different things. Therefore, there can be many different things that affect the value, and this is up to the crypto project in question. At the end of the day, it will always be demand that determines the price, and demand will be driven by how many people use the cryptocurrency, the blockchain, or want to invest. NB! Remember that large price increases in cryptocurrencies can also be due to pure speculation rather than value creation.