Cryptoassets summary

Bitcoin, like all other cryptoassets, is supported by blockchain technology – a term that is more often bandied about than actually understood.

So how do blockchains work?

Bitcoin is the most well-known cryptoasset, and its currency is worth the most because it was the first one on the market. But there are tons of other cryptoassets out there, and new ones are constantly being created.

Bitcoin’s genesis is tinged with mystery. Bitcoin’s – and, by extension, the blockchain technology’s – inventor is said to be a man named Satoshi Nakamoto. However, Nakamoto’s identity has yet to be verified, and there are those who believe “him” to be a group of people.

Have you ever considered putting money in the stock market? It’s scary – because, to the uninformed, and even to those in the know, it’s very hard to predict what will happen. One would think, therefore, that investing in cryptoassets, which are relatively young and volatile, would be extremely dicey. But it’s actually a pretty safe bet.

Cryptoassets such as Bitcoin, and the blockchain technology they’re supported by, may completely transform the financial world.

Hold your horses! Before you withdraw your life savings and invest it all in cryptoassets, let’s take a detailed look at some of the dangers that go hand in hand with investment.

Danger number one: the speculation of crowds problem. In less technical language, it’s the danger of monkey see, monkey do.

Now that you’re familiar with the dangers of investing let’s explore some of the finer points of investment. When building your investment portfolio, there are two things that should be at the forefront of your mind: correlation and diversification.

Investments should work together, with each asset complementing all the others.

Maybe you’re feeling ready to buy your first cryptoassets. It seems like the way of the future, and you have a clear enough idea of how to avoid the pitfalls of investment.

Well, to buy your first cryptoassets, you’ll have to get an account on an exchange site such as Bitstamp or GDAX.

Let’s imagine you did it – you took the plunge and bought your first cryptoasset. That’s very exciting, but what now? Where does it get stored and how do you access it?

Well, that’s partially up to you. Each cryptoasset has a private key that enables you to transfer it to other people who possess their own private keys, so all that storage really involves is keeping this key safe.

Let’s imagine you’ve bought a few cryptoassets by now, but you’re still not sure how to calculate the risk that each new investment poses.

If you truly want to be an innovative investor, you’ve got to do more than glance at a cryptoasset’s valuation; you must consider its white paper and decentralization edge as well.