META: If you’re thinking about investing in cryptocurrency, take a look at our guide to understanding what you’re getting into.

Are you as confused as the rest of us when it comes to Bitcoin, Dogecoin and any other coin that isn’t a nickel? Take a look at this guide to understanding cryptocurrencies for the basics of the market.

What is it?

Cryptocurrency can have people feeling like they’re on the outside looking in. Like stocks, it makes the people in the know a lot of money while purposefully keeping the people who need it in the dark.

To put it simply, cryptocurrency is a digital payment system that, crucially, doesn’t need the banks to verify transactions. They are known as ‘decentralized’, as there is no hierarchy, meaning there is no one institution or entity printing and determining the money. Instead, a peer-to-peer system is used to validate transactions.

Cryptocurrency can be tailored to a specific company and can be swapped for goods and services online. It uses strong cryptography to ensure secure online transactions. This extreme security is its main appeal over regular bank-verified transactions.

What are the biggest cryptocurrencies worth?

By far the most famous and widely used currency, Bitcoin has a market capitalization of $892 billion. Behind it is Ethereum, which is worth $399 billion and then Cardano at £89 billion. The ten largest trading cryptocurrencies also include Binance Coin at $72 billion, Tether at $64 billion, XRP at $53 billion, Dogecoin at $36 billion, Solana at $35 billion, Polkadot at $30 billion and Uniswap at $14 billion.

What are the merits of cryptocurrency?

Supporters of cryptocurrency see it as the way of the future, free from the control of the banks due to the fact that it removes central banks from being integral to the flow and value of the money. It is seen as the little man’s way to make and transfer money.

Crypto is also secured with blockchain technology, which is a decentralized technology that manages transactions over many computers and is well-trusted with the security of transactions.

How do I buy cryptocurrency?

If you’re looking to invest in XRP, Bitcoin or any other cryptocurrencies, there are things to consider. For example, some cryptocurrencies like Bitcoin, allow for their purchase with U.S. dollars, but others require another cryptocurrency to buy them.

Before you can buy anything, however, you will need a “wallet” mobile app to hold your currency. Applications like Coinbase or Trust will allow you to transfer real money to buy cryptocurrencies.

Once you have these, be sure to do your research. Learn about cryptocurrency exchanges and choose which one feels best to you. Look at who owns the company, are there any other major investors, will you own a stake in the company or just currency? And is the currency developed or looking to develop? Remember, the more developed a currency is, the less risky your investment is likely to be.

Instead of putting all of your money into Bitcoin just because it’s the most famous and richest, opt to make many smaller investments. That way, if anything goes wrong, you haven’t lost everything. Remember that a mention of the wrong thing from Elon Musk has been known to tank Bitcoin, for example. A lot of things can affect stocks. Prepare for very high highs and very low lows.

Who offers cryptocurrency?

Cryptocurrencies can be bought from online brokerages like Binance.US, Coinbase, eToro, and Gemini.

What scams should I look for?

We’re talking about your money here, so there are naturally a lot of greedy people looking to take it off you. Stay alert for red flags and make sure you’re 100 percent sure before you buy.

There are a lot of fake websites that have been created to look like original start-up companies. Always make sure to check for the lock in the address bar that will prove it is a legitimate website. The lock will show you that the website is secure, as will a website with “https” in the address. If a website is missing that, it’s probably a scam. It is also possible for you to be directed to another website for payment, so keep an eye on that lock for every page.

There are also a lot of fake mobile apps popping up in Google Play and the Apple App Store. Stakeholders are usually quick to shut them down, but it is often not quick enough for the thousands of people downloading them into their phones. Make sure to check the reviews, which are just as suspicious if there are none.

Finally, be careful who you trust on social media. Even a pseudo-celebrity can be a scam artist, and, in fact, there is a string of “pump and dump” schemes by YouTubers currently being uncovered. Plus, you can’t be sure you aren’t following imposter accounts or hacked accounts. If you have doubts about an email from a company, ask someone in the company and keep your company choices to those who staff real people. An automated message system is likely hiding something.

Buying cryptocurrency is a risk, so be sure to really think through your choices before you go spending all your hard-earned money.