Getting Started with Cryptocurrencies — 7 Big Questions Answered

There’s little doubt that cryptocurrency is one of the hottest topics in the financial sphere today, but this doesn’t necessarily mean that it’s easy to understand. Due to the sophisticated technology that powers it and the incredible speed with which it has evolved, cryptocurrency can be a confusing subject even for people with a good deal of financial knowledge, let alone for the average investor wondering about the best way to save for retirement.

To help demystify some of the current discussion around cryptocurrencies, New Century Planning Associates Inc. has just released a special presentation that aims to introduce the world of cryptocurrency to a general audience. Featuring New Century President Robert M. Ryerson and CUNY Professor Jose J. Cao Alvira, the presentation offers straightforward answers to some of the most common questions beginners have about cryptocurrency, including:

1. What are cryptocurrencies?

2. How does Bitcoin work?

The basic principle behind Bitcoin is the use of an online protocol to transfer value from one person to another via blockchain technology. Transfers may take place in exchange for goods and services-for example, you might buy something from another person and choose to pay them in Bitcoin-or simply for the purpose of transferring the value, much like a stock market trade.

3. How does mining work?

These miners monitor and confirm each transaction that is entered into the Bitcoin system, thus ensuring the validity and legitimacy of the system. For their efforts, miners are paid in Bitcoin. This provides an incentive to keep the whole system running efficiently and permanently, and it removes the need for a central authority to oversee the system.

4. How does blockchain work?

You can think of blockchain as a kind of virtual accounting ledger in which every transaction is publicly viewable, and that is distributed, or stored, across a vast network of highly-secured computer servers. The transactions are stored in chronological order, and they are irreversible, which means that it’s impossible to eliminate evidence of historical transactions.

5. How are cryptocurrencies purchased?

Wallets can be either “hot” (that is, connected to the internet) or “cold” (this is an external storage device with no internet connectivity). Because they are not connected to the internet, cold wallets offer increased security, but are less convenient to access; hot wallets, on the other hand, may be more vulnerable to security breaches but offer easy access to your assets.

6. What other cryptocurrencies are worth investigating?

7. Are cryptocurrencies right for you?

Originally published at http://robertryerson.com on May 19, 2021.

Robert Ryerson authored the 2016 book What’s the Deal With Identity Theft?: A Plain English Look at Our Fastest Growing Crime.

Robert Ryerson authored the 2016 book What’s the Deal With Identity Theft?: A Plain English Look at Our Fastest Growing Crime.