What Is Cryptocurrency? Here’s What You Should Know
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WHAT’S INSIDE
- What is cryptocurrency?
- How do I invest in cryptocurrency?
- How many cryptocurrencies are there? What are they worth?
SHOW MORE - What is cryptocurrency?
A cryptocurrency (or “crypto”) is a form of payment that can circulate without the need for a central monetary authority such as a government or bank. Instead, cryptocurrencies are created using cryptographic techniques that enable people to buy, sell or trade them securely.
Cryptocurrencies can be exchanged for goods and services, though they often are used as investment vehicles. Cryptocurrency is also a key part of the operation of some decentralized financial networks, where digital tokens are an important tool for carrying out transactions.
The most popular cryptocurrency, Bitcoin, has had a historically volatile price. In 2021, it hit an all-time high above $65,000 before falling back. (You can check the current price to buy Bitcoin here.)
» Learn more: What is blockchain, and how does it work?
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- How do I invest in cryptocurrency?
While some cryptocurrencies, including Bitcoin, are available for purchase with U.S. dollars, others require that you pay with bitcoins or another cryptocurrency.
To buy cryptocurrencies, you’ll need a “wallet” — an online app that can hold your currency. Generally, you create an account on an exchange, and then you can transfer real money to buy cryptocurrencies such as Bitcoin or Ethereum. Here's more on how to invest in Bitcoin.
» Learn more: Bitcoin wallet: How to choose the best for you.
What online brokers offer cryptocurrencies?
If you're more accustomed to traditional brokerage accounts, there are a few online brokers that offer access to cryptocurrencies as well as stocks. Of the online brokers reviewed by NerdWallet, these include Robinhood, Webull, SoFi Active Investing and TradeStation. If you're looking for an exchange that operates solely within the cryptocurrency world, look for pure-play crypto exchanges. These platforms, such as Coinbase, Gemini and Kraken, won't give you access to core assets like stocks and bonds, but they typically have a much better selection of cryptocurrencies, and more wallet functionality.
» Investing in cryptocurrency? Here are our picks for best cryptocurrency exchanges and platforms.
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- How many cryptocurrencies are there? What are they worth?
About 16,000 different cryptocurrencies are traded publicly, according to CoinMarketCap.com, a market research website. And cryptocurrencies continue to proliferate. The total value of all cryptocurrencies on Dec. 23 2021, was about $2.3 trillion, having fallen off an all-time high above $2.9 trillion weeks earlier.