It’s essential for investors - particularly those who are new to digital currencies, to develop a sense of how the digital currency world works before investing. Take time to learn about the different currencies offered. With thousands of different coins and tokens available, it’s crucial to look beyond the biggest names like Bitcoin or Ether.
In addition, it’s important to explore blockchain technology to get a sense of how this aspect of the cryptocurrency world works. For example, every blockchain has a consensus protocol to ensure the integrity of the ledger. However, there are different types of consensus protocols. For example, proof-of-work protocols are those that require substantial mining set-ups to validate transactions. Meanwhile, proof-of-stake protocols reward holders with the highest stakes with validation rewards.
Understanding different aspects of this may impact your investment. For instance, you may be able to stake your cryptocurrency to generate rewards and increase your holdings. On the other hand, proof-of-stake coins may be inflationary if the rewards given to validators is not closely monitored.