What Is Cryptocurrency?

Cryptocurrency is virtual money that can be bought and sold on an encrypted network called the blockchain or used꧅ to pay for a growing number of goods and services. It is not issued by any government and it has no physical existence. ꦓMany rival cryptocurrencies have been created, from Bitcoin to Ethereum and Doge.

Many Americans believe that crypto is the future of finance, makin✱g it a reasonable subject for young peo🔜ple to learn about. But should they be investing in it? There are no current regulations preventing minors from investing in cryptocurrencies, though they face barriers to entry.

Can Teens Invest in Cryptocurrency?

Yes, teenagers can 澳洲幸运5开奖号码历史查询:invest in cryptocurrency legally. While many U.S.-based investments aren’t sold to minors, there are no laws forbidding anyone to invest in cryptocurrencies.

The most popular way to buy cryptocurrency is through a centralized exchange like Coinbase or 澳洲幸运5开奖号码历史查询:Binance.US. These exchanges allow you to deposit U.S. d🥀ollars and purchase crypto. But most exchanges require registrants to be at l🐼east 18 years of age.

If you are a 澳洲幸运5开奖号码历史查询:t❀een who wants to invest in cryptocurrency, there are a few ways to go about it.

What It Means to Invest in Cryptocurrency

Cryptocurrency is a decentralized currency, meaning that it is not issued by a government's central bank.

Cryptocurrency is desi💎gned to be ultra-secure, using cryptography🔴 techniques and encryption algorithms to secure the blockchain networks on which it is exchanged.

Nevertheless, crypto traders can be exposed to hacks or fraud. The blockchಞain is run by independent computers that exist outside the control of any government or regulatory authority.

Cryptocurrency gets its value the same way any other asset does: The 澳洲幸运5开奖号码历史查询:law of supply and demand determines its price.

This means that you can invest in any given crypto asset, and the price will fluctuate based on market demand. Cryptocurrencies are 澳洲幸运5开奖号码历史查询:speculative investments,𒀰 meaning they are at risk of extreme price fluctuations. Investors can lose most or all of the money they put 🉐in. "Dead coins" that have dropped out of existence are common.

ജEven the best-known survivors tend to fluctua🌱te wildly in value.

Bitcoin

Bitcoin (BTC) was the first cryptocurrency. It was created in 2009 by a programmer using the alias Satoshi Nakamoto. Bitcoins were given as a reward to users for processing and verifying transactions on the original blockchain network.

As it grew in popularity, more began 澳洲幸运5开奖号码历史查询:mining Bitcoin, and ev♎entually exchanges were established for the sole purpose of buying and trading Bitcoin. 

澳洲幸运5开奖号码历史查询:Bitcoin’s price rose from a few cents in 2010 to more than $20,000 in 2017. It suffered a period of declining prices before surging to a record high of more than $68,000 in 2021. Bitcoin prices fell from those levels, falling sharply below $20,000 before crossing that milestone again in 2023.

Ethereum

Ethereum (its native token is called Ether, or ETH) is the second-most popular cryptocurrency today. It pioneered 澳洲幸运5开奖号码历史查询:smart contract functionality on the blockchain, providin💦g another practical use for the blockchain beyond verifying cryptocurrency transactions.

Ethereum has thousands of apps built on its blockchain that use these smart contracts, and it offers higher transaction speeds than the standard Bitcoin network.

Ethereum is programmable, so it’s seen as the operating system on which many decentralized crypto apps are being built today. Ethereum can be bought or sold on most major crypto exchanges, 澳洲幸运5开奖号码历史查询:some brokerages, and some finance apps.

What Is a Crypto Wallet?

When anyone of any age buys cryptocurrency, it needs to be stored somewhere. In most cases, if you buy a cryptocurrency♒ on a public exchange, the crypto will be held for you 💜in a built-in exchange wallet.

If you want to take custody of the cryptocur꧒rency, you create a personal crypto wallet and transfer the💜 cryptocurrency to it.

A 澳洲幸运5开奖号码历史查询:crypto wallet holds the keys to your cryptocurrency. While the word wallet suggests a pl♛ace to keep money, a crypto wallet keeps only the keys to your money. A🅷ll cryptocurrencies live on the blockchain, and using them requires access to those keys.

Types of Cryptocurrency

There are thousands of cryptocurrencies in existence. While many of them don’t hold much value, the global cryptocurrency market cap is roughly $2.5 trillion as of April 2024. All fall into two main categories:

• Coins: Crypto coins are the native cryptocurrencies that exist within a specific blockchain’s code. Each cryptocurrency has its own blockchain network, which is used to exchange the coins. Some examples of crypto coins are Bitcoin, Litecoin, and Dogecoin.
• Tokens: Tokens are cryptocurrencies built on top of an existing blockchain network. Tokens can be used for more than just exchange—they can also be used in blockchain applications to manage access, track products, or verify actions within the app. Examples of these include Tether and 澳洲幸运5开奖号码历史查询:Chainlink.

There are ꦺmany ways to 🐲use each type of cryptocurrency, with more being developed each year.

Ways Teens Can Invest in Crypto

Teens investing in the crypto market are no different from adults in the choices they have for transacting digital ꦛassets. The following are the main ways that you can set up and manage crypto trading accounts.

Crypto Custodial Account

A 澳洲幸运5开奖号码历史查询:custodial account is an adult-managed investment account that allows a parent or other guardian t🅺o open an account on behalf of a child. They give parents or families the ability to invest for their minor children, but the assets legally belong to the child.

For example, EarlyBird is on🐓e of the first custodial accounts to offer crypto investing. You can deposit funds to your child’s EarlyBird account, and within the account, you can choose to invest in Bitcoin or Ethereum.

EarlyBird also supports investing in 澳洲幸运5开奖号码历史查询:exchange-traded funds (ETFs) and other traditional investment choices.

Crypto Apps

Some crypto apps allow kids to earn crypto. Apps like Step offer a simple way to buy and sell Bitcoin for a flat fee. Step offers a secured credit card for teens and a finance app that lets your kids buy and sell Bitcoin within the app.

Step requires an adult sponsor to open an account for a minor.

Decentralized Exchange

Crypto exchanges that are 澳洲幸运5开奖号码历史查询:decentralized process transactions directly on the blockchain. Because 💛these exchanges 🧔are currently unregulated, there are no age limits on their use and teens can connect their own digital wallets and trade cryptocurrencies.

These exchanges are highly risky, and there is no way to exchange 澳洲幸运5开奖号码历史查询:fiat currency (♑such as U.S. dollars) for crypto. You must already have crypto in a digital wallet to use them.

Risks of Investing in Cryptocurrency

Crypto investing is risky, period. It is considered a speculative investment, and yo▨u should never invest more than you are willing to lose.

Here are a few of the basic risks of investing in cryptocurrenc💎y, for teens as well as everyone else:

Volatility

Crypto is volatile by nature. As a new 澳洲幸运5开奖号码历史查询:asset class, there remain a lot of ups and downs in price as more and more 澳洲幸运5开奖号码历史查询:investors enter the market. This 澳洲幸运5开奖号码历史查询:volatility means you could lose some or all of your investment, and you should expect to see 澳洲幸运5开奖号码历史查询:50% or greater drops in your crypto value at times.

Regulatory Uncertainty

The crypto industry currently enjoys relative freedom from regulation. There is a risk that some crꦡyptocurrencies could be banned oꦓutright and that some governments will restrict their use.

These๊ events could significantly affect the value of your investment or erase it.

Security

While crypto itself is secured through encryption and cryptography, scams and hacks have cost investors billions of dollars since the creatꦅion of crypto in 2009. 

Alternative Investments to Cryptocurrency

While investing in crypto is an attractive option to many, there are other speculative investments that can help you diversify your portfolio without some of the risks that come with cry꧒pto investing.

Real Estate

While buying real estate can be expensive, you can invest in 澳洲幸运5开奖号码历史查询:real estate investment trusts (REITs) or real estate-focused ETFs to gain exposure while re♋ducing risk.

REITs offer an opportunity ෴to invest directly i💟n commercial and residential real estate projects, with some paying out regular dividends from rents collected.

Precious Metals

澳洲幸运5开奖号码历史查询:Precious metals such as gold, silver, and platinum offer another way to invest outside the stock market. Gold is seen as a 澳洲幸运5开奖号码历史查询:store of value, with its purchasing power remaining relatively stable over time while other precious metals can provide high r🉐et𒀰urns or high losses.

Precious metals haven’t had a great return as of late, but they can be another way to diversify your investments.

Collectibles

澳洲幸运5开奖号码历史查询:Collectibles have made a comeback in the past few years, with baseball cards,澳洲幸运5开奖号码历史查询: Pokémon cards, c✤lassic cars, and artwork gaining all-time-high demand.

Collectibles can be a good way to invest a small portion of your money with the potential for outsized returns, but there is also a significant risk o🎃f 🐼loss if you buy the wrong thing at the wrong time.

Collectible prices are very volatile, but the best of🦄 them grow in value over the long term.

The Bottom Line

Cryptocurrency is a new and disruptive techn🦩ology that offers another way to transact business as well as to invest. Bitcoin and other top cryptocur🔯rencies have at times provided impressive returns.

Investi💛ng in crypto remains very speculative, and the potential for loss is much greater than with most other investments.

If you are a teenager, the best thing you can do is to continue learning about cryptocurrency and how it’s changing the financial world. If you want to invest a small amount of your money in this new asset, you can do so through a custodial account or approved crypto app.