Do You Even Need To Understand The Technology If You Want To Buy Cryptocurrency?
By CryptoCurrency on ALTCOIN MAGAZINE
In this section, we are going to explore the questions of whether anyone, who is interested in buying cryptocurrency needs to understand the technological background of it at all?
Since this is a yes or no question, the simplest answer you can think of is no, you don’t. You can even make a substantial profit without having any understanding of the blockchain technology and the workings of cryptocurrency exchange, etc. If someone chooses to make investments without this knowledge, they should be they should also be aware that the risks are significantly higher in their case.
Let’s see, as far as investments are concerned, what priority and what parts should someone familiarize themselves with before getting into it.
The blockchain technology is the basis for all cryptocurrencies, and it is the soul of the whole operation. The essence is called distributed ledger technology — if someones do not have a basic grasp of this concept, they will fail to understand cryptocurrencies themselves. This, of course, doesn’t mean that you cannot make successful investments in these fields.
Stock Exchanges, Brokers
In order to buy cryptocurrency, you need to, at least on a basic level, become familiar with how the stock exchange works and what the roles of the brokers are. Unless you have someone you trust with up-to-date, working knowledge of this topic, you should take the time and get to know this topic as well in order to use it successfully.
Specific Features Of Cryptocurrencies
Even if you are not well-versed in the general characteristics of cryptocurrencies, you should definitely know the specific features that are related to the kind of cryptocurrency you want to trade with. However, you are not going to understand the workings of Litecoin without having some basic knowledge about the nature of these items.
You cannot understand a cryptocurrency without having some basic knowledge of the outlines of blockchain. It's like wanting to delve into tuning cars without having any knowledge of combustion engines.
Since this is a new area, many frauds try to make money on people's gullibility and greed. It is essential to be able to differentiate between a legitimate crypto-project and a simple con. Therefore, we need to know some basic concepts and be able to use the tools that rank cryptocurrencies according to their different features. Also, you need to recognize when someone wants to scam you before investing in a project. If the people that want to do business with you are rarely available and you find no information on them, their introductory materials are full of empty phrases without any substance.
Movements Of The Market
While this is not closely related to the technology itself, this may be one of the most crucial elements of your knowledge. When do people buy? When do they sell? What is it like when the market panics, how do you recognize when it is happening?
Does who have prior experience with stock exchange definitely have an advantage — no wonder that many veterans of the exchange switched to dealing with cryptocurrencies in the past years. Also, it is worth mentioning that although cryptocurrencies and the way the move have many common features with the classic stock exchange, dealing with cryptocurrency is still completely new are and it is hard to see in advance what will happen in a few years’ time. Check the latest market details at cryptocurrency.org.
The History Of The Technology And The Market
You can also benefit from being able to put the whole cryptocurrency-scene into context. You may want to check out the origin story of Bitcoin, when it first appeared, the first followers, what phrases as an altcoin or shitcoin mean — and so on.
So, as you can see, with some luck, you can have successful investments in this field without knowing next to nothing about the underlying technology or all the things that are connected to it. Sure enough, someone who is digging for gold with just a shovel in its hand may have a lucky day and find a good place.
However, if you want to increase your chances for a successful investment, you need to understand the essence of blockchain, be familiar with the unique properties of certain cryptocurrencies and be aware — as much as possible — about how the market behaves in certain situations.