Final answer:
Investors buy, sell, and store cryptocurrencies using cryptocurrency exchanges, direct peer-to-peer transactions, and digital wallets (cold or hot storage). Cryptocurrencies need to be a store of value, a unit of account, and a medium of exchange to be considered money, but they are less commonly used for everyday transactions.
Step-by-step explanation:
Investors can buy, sell, and store cryptocurrencies through a variety of methods, which need to satisfy certain characteristics to be seen as money. Three popular methods are:
- Cryptocurrency exchanges: These platforms facilitate the buying and selling of cryptocurrencies using different currencies. They can also provide wallet services for storing cryptocurrencies.
- Direct peer-to-peer transactions: Investors can also partake in P2P exchanges, which allow direct transactions between users without the need for an intermediary.
- Cryptocurrency wallets: Cryptocurrencies are stored in digital wallets, which can be either cold storage (offline wallets) for enhanced security or hot wallets (online wallets) for convenience.
For a cryptocurrency to function effectively as money, it must be a store of value, a unit of account, and a medium of exchange. However, the use of cryptocurrency for regular payments, like groceries or rent, is less common despite its capabilities to maintain value and be countable.