Cryptocurrency is a digital system and asset which uses some encryption techniques by which it regulates the currency and even verifies the transfer of different funds. It uses Blockchain technology to gain the following things.
- Decentralization
- Immutability
- Transparency
With the right use of blockchain, all this is achieved. So, which organization controls it? One of the main benefits of Cryptocurrency is that no one controls it. It’s just like the internet, there isn’t any single person, organization, or government protecting it. Decentralization alone makes it non-prone to the old ways of government interference.
Cryptocurrency uses keys as a means of communication between the two parties. Keys can be public or private. Therefore, it’s really easy to transfer funds from one place to another. Moreover, the processing fee is really low. This results in avoiding the high transfer rates you pay.
In our world today, Cryptocurrency has become very popular. It’s almost known worldwide. Today, we are going to talk about everything you need to know about cryptocurrency. This guide will teach you everything about the Cryptocurrency. Sit back, relax, and follow the topic.
Banks and organizations are trying their best to research about Cryptocurrency. Even so, they have very limited knowledge about it. Therefore, they often fail to explain or even get some of the most basic concepts about it.
Let’s try to understand all the basic concepts of Cryptocurrency now, how they are used in our world. What are some of the best Cryptos out there right now? And should we invest in cryptocurrency or not. Therefore, I will be clearing each and every aspect of currency today.
What is Cryptocurrency?
The simplest concept of cryptocurrency is that two peers have to fulfill certain conditions in order to send or receive funds. This is exactly how you actually define cryptocurrency. It means, limited entries in the database that are not and that cannot be changed by anyone at all.
Let’s say you have money in your bank account. The money is just entries into the database that can only be changed, like withdrawn or deposited on some special conditions. Money is just a source of wealth, that has to be stored in some database. So cryptocurrency in simple words I just transferring money online without a central server.
How does it work?
In 2008, Satoshi Nakamoto developed “Peer to peer E-cash system“. Satoshi is the inventor of bitcoin. Moreover, he said that he never actually intended to invent Cryptocurrency. The actual goal was to create the E-Cash System that no one actually did.
One of the main focus of his invention was that he found the way to decentralize the whole system. In the past, the attempts have been made but one has actually been successful in doing so. So by attempting to make Peer peer e-cash system, he came alone something that is now called Cryptocurrency. This whole concept is a bit complex and difficult to understand. Therefore, let’s try to be as simple as possible.
To avoid double spending on payments, there is a need for “Central Server“. That server keeps a record of everything in the database. This double payment problem is with every payment network.
After the invention of the decentralized network, there is no central server. Now, peer to peer networking is the thing that solves it. Every single entity of the server is needed to actually solve this problem.
Nobody knows about this concept until it popped out of nowhere by Satoshi. Everyone was stunned and amazed. The major goal was to achieve the consent of both parties without any of the central parties involved. Therefore, it’s a pretty good invention. The cryptocurrency was the solution to this centralized problem. This solution has been proven to be quite successful and it’s still helping our world nowadays.
How Coins are Created
So, how coins are actually created? Now we are going to look at the databases of Cryptocurrency. Let’s take the example of the most famous Bitcoin. Every peer of the network contains complete knowledge of all the transactions that have been performed by every account.
If ‘A’ gives bitcoin to ‘B’. And it is signed by the private key of ‘A’ itself. It’s a basic cryptography. After that, the transaction is made into the network which is sent from one peer to all the other peers. Therefore, This can also be called Peer to Peer Technology.
Blockchain
After the transaction is performed. It is known by the whole network. But not for a long time. It only gets known for a specific amount of time.
Confirmation is one of the most important aspects of cryptocurrency. The sole concept of Cryptocurrency is actually based onto confirmation.
Therefore, if the transaction is not confirmed, it will remain pending and it might get canceled. But once it’s confirmed, it cannot be changed. There is no way to quit it or reverse it. All this historical transaction record is called as “Blockchain”
Who Confirms the transaction?
Miners are someone who has access to confirm transactions. This is part of their job to accept the transactions into the Cryptocurrency network.
They have to take the transactions and then make them legal. After that, it’s spread into the whole network. After a successful transaction which is confirmed by the miner. Each node is to add it to the database. That’s how it becomes the part of that blockchain.
Miners are rewarded with a token of cryptocurrency. For example bitcoin. Miners are a really important part of this whole network of Cryptocurrency. So now let’s talk about what is cryptocurrency mining.
What is Cryptocurrency mining?
We talked about the decentralized network just a while ago. Therefore, the fact that a decentralized network is controlled by no authority, anyone can be a miner. Yes! That’s a fact. No one has specific authority to delegate the cryptocurrency. But, how would abusing of the network be avoided? Imagine someone created a lot of peers then spamming it with rejected transactions? The whole system would go off immediately.
This needed some type of fixed mechanism. Satoshi gave an awesome idea. He set a rule where minors have to invest the work of their own computer, using their own power. To finish a task. In simple words, they have to find a hash. Therefore, it is based on SHA 256 Algorithm of Hash.
It’s a puzzle that they make the computer to solve. By providing the power of there computer. After finding the solution, miner adds the block to the blockchain. That transaction actually gives the miner a number of Bitcoins. This is how bitcoins are actually created. This is an only legit way to create bitcoins anyways.
The process of creating bitcoin involves miners solving a cryptographic puzzle. The more complex the puzzle, the more power it’ll take. It depends upon the power of the computer to generate a specific amount of token. This is part of the consensus. None of the peer into the network has access to break it.
Pros of Cryptocurrency
1) No Permission
In order to perform a transaction, you literally don’t need to ask anyone for cryptocurrency. It’s an open software that anyone can download for free. After the installation, you can send or receive cryptocurrencies such as bitcoin and others. No one has the right to stop what you’re doing. There’s no organization controlling cryptocurrency
2) Security
There’s a public key system in Cryptocurrency. Therefore, are the funds are locked into that public key. Moreover, only the owner has access to that private key. He can send cryptocurrency and no one else. Encryption of data and big numbers make it practically impossible to break this security. Bitcoin’s address is really secured.
3) Fastness and Availability
One of the main features and advantages of using Cryptocurrency is its fastness. Whenever a transaction is performed, it is confirmed in a couple of minutes. It exists on a global network and therefore, it’s a whole different approach than the physical place of office. Therefore, it doesn’t matter where you are, cryptocurrency is right by side of you.
4) Non-Stoppable
After a transaction is confirmed. No one in this whole world. Not even the founder of cryptocurrency himself can stop that transaction. That gives it a big edge in security and hackers cannot do anything.
If you send you money, it’s gone. Even if someone stole it from your computer or you accidentally sent it to someone, there’s no coming back.
5) No Physical Shape
The whole network of Cryptocurrency isn’t connected to the real world. When you send an receive bitcoins, you don’t actually get it by the hand of some stuff. You only get addresses. The addresses are chains containing 30 random characters. It is just not connected to the real-world identity of users. The whole concept occurs solely onto the internet. It’s more like a network than a currency. Everything is digital. Even currency like bitcoin is called as the Gold of Digital currency.
Cryptocurrency on Economy
Due to these awesome properties, cryptocurrency has become really successful because of the inventor, Satoshi Nakamoto. He didn’t even intend to create this monster. While all other attempts of creating digital cash failed. Bitcoin brought a whole new system along with it that was really revolutionary. It attracted a lot of people. It has become a whole network instead of some technology.
Cryptocurrency is like online gold. But it’s the money that is very secured from everyone. Therefore, it’s private money. It the money that guarantees to be secured and increasing value with time. Cryptocurrency has become a very fast and comfortable means of doing transactions all over the world. They are pretty private and anonymous.
With the rise of cryptocurrency, a whole new market of investors got created. There are hundreds of Exchanges available and every day the trade volume is increasing more and more. Ehtereum has given life to very successful crowdfunding projects. It is so vast that just an idea can generate millions of dollars.
But really, it depends on all upon your own luck. If you are lucky your coin will gain 10 percent one day and 100 people maybe, the next day. But who knows when bad time will come? Also, who knows when a good time will come?
Now let’s talk about some of the best coins in-game of Cryptocurrency.
Best Cryptocurrency Platforms
It’s not confirmed that Cryptocurrency will remain forever. Even so, it can really become a source of income for some people. Therefore, if you want to start off, you should look for some platforms that will allow you the trade of different coins. Now, we are going to talk about some of the most famous cryptocurrency platforms out there.
1) Coinbase
Coinbase is the most popular cryptocurrency trading platform as of now. Therefore, it provides you the service of managing your coins. It also provides the feature of connecting to your bank account. Moreover, you can also buy other coins used Credit or Debit Cards.
In Coinbase, you buy cryptocurrency using U.S Dollars and for the most part, it’s really simple. After buying you can trade that currency to further gain profit at some point into the future. The platform is very user-friendly and simple to use. It also packs a lot of features.
2) Binance
Binance, as the name says is related to Bitcoins. On balance, you trade bitcoin. It’s a very interesting platform. Binance is actually pretty popular in trading cryptocurrencies too. It allows you to trade bitcoins for other currencies.
The overall experience you get in binance is similar to Forex. Binance is available in the United States. It’s a user-friendly and awesome platform if you want to trade bitcoins for other cryptocurrencies.
3) Poloniex
Poloniex is another digit asset trading platform. In Poloniex, users can perform transactions of different cryptocurrencies all around the globe. Poloniex is one of the platforms that is getting better day by day.
What makes it unique is that Poloniex provides a platform only for exchanging currencies with other currencies. The user only performs the transaction in cryptocurrencies. Unlike Coinbase, the user only interacts with cryptocurrencies in poloniex. Since it’s inception, many design changes and improvements are made, adding a bunch of useful features.
4) Bitfinex
Bitfinex was found in 2012. It provides some advanced trading services for the people to trade cryptocurrencies. In addition to that, It is the world’s biggest exchange platform in which bitcoins are traded.
It provides Margin trading, Exchange Trading. In addition to it also provides Exchange Funding. So it’s an ideal platform if you want to start trading Bitcoins. It a great trading platform for buying and selling Digital Tokens.
5) Kraken
Kraken provides its services all over the world. It provides you greater liquidity for you to purchase and sell cryptocurrencies. This platform is mostly known for its low processing fee. You can access to margin accounts using Kraken too.
Not all features are available everywhere though. Even in the United States, there are some features that you just cannot use within the platform.
Cryptocurrency Coins
Bitcoin is the most famous coin no doubt. In addition to it, there are other cryptocurrencies that are really good. The era of Cryptocurrency is now and it will get better with the passage of time. Therefore, you should keep an eye on them too as they might become the next big thing. Here are some of the most popular ones as of today.
1) Bitcoin
The most famous cryptocurrency is Bitcoin. It was the first to be made in cryptocurrency. It is like a digital gold which has been basically standardized in the whole cryptocurrency industry now. Moreover, it is practically a de facto of the currency for global payments and cybercrime too. Most of the dealing that is done in Cybercrime or dark web is done onto Bitcoin. As it’s really safe with no outside interference.
From the time of its inception, the price of bitcoin has increased dramatically. One bitcoin as of right now it $10,208.60 USD. The daily transaction volume of bitcoin has increased more than 200,000 daily transactions.
The future of bitcoin is just really bright. Therefore, It is never going to fade away. Moreover, It will still be one and the best cryptocurrency out there. It’s the basis of all cryptocurrencies. Mostly you buy other coins by trading bitcoins itself. So that kind of blends in the importance of bitcoin.
2) Ethereum
Ethereum is mostly known for its flexibility. In addition of being a perfect blockchain application it not only process the transactions but it also does the complex programs. Flexibility makes it the second number on the list. After the hack of DAO, Ethereum classic emerged onto the scene. Ethereum is the host of several Tokens itself. For example DIGIXDAO and AUGUR. It’s more like a collection of cryptocurrencies rather than an independent one.
The future of Etherium is also very bright. Investors are keeping a keen eye on it. Also, ethereum is a multipurpose system so it’s quite fruitful now. Even in the future too.
3) Ripple
Ripple has a cryptocurrency called as “XRP”. It is not known for cryptocurrency that much but rather it is about the network to process the IOU. XRP is the token that protects it from spams onto the network.
Ripple coins are already mined. So there’s not mining of ripple at all unlike Bitcoin and other currencies. So in short, ripple is a network for processing. A lot of banks have already joined the ripple network as it provides a secure platform for everything.
4) Lite Coin
Believe me or not, LiteCoin has been one of the earliest cryptocurrencies. After bitcoin, it is tagged as silver rank to digital Bitcoin. It has a few advantages over bitcoin and is faster. It has a lot of new mining algorithms available.
Lite coin is all about innovation. It’s more like a cousin or brother to bitcoin. It’s very light as the name says. Dogecoin or Feathercoin are one of the main examples of it.
While not being able to complete it’s brother, bitcoin. Litecoin is still being developed actively. It’s a perfect solution as the backup of Bitcoin. It is still traded a lot.
5) Monero
By the use of the CryptoNight Algorithm, Monero rose up. This algorithm as developed as additional privacy features that were not present into bitcoin. At first, this approach was discouraged by everyone and got rejected by the community. It raised a lot of awareness about the missing privacy features of Bitcoin. Many other cryptocurrencies tried to achieve it but monero did it the best. And got popular eventually.
In 2016, Monero got a jump into its market. The darknet market decided to accept money as the currency as it provided even better privacy than Bitcoin. Still, the use of Monero is pretty small to this date.
How to Buy Cryptocurrency
Bitcoin is easily purchasable by the U.S Dollar. Therefore, anyone can buy bitcoin with ease. But on the other hand, other cryptocurrencies can only be bought using Bitcoin or other coins.
Now, to buy the coin, you will need an online app that might hold your coins. There are some Wallet apps available on IOS, Android, and Windows. In normal cases, you can create an account to buy coins from your money such as Bitcoins or Ehereums.
Coinbase is the number one popular coin trading exchange. In coinbase, you can create a wallet and buy coins. In addition to buying, you can also sell your coins. There is free online brokers such as Robinhood which offers free Cryptocurrency trades.
Is Cryptocurrency Legal?
Cryptocurrencies are legal in almost all counties. Moreover, in countries like China, the user is banned. So I will say that they are legal based on the country in which you living.
Also you should be very careful of fraud as many people nowadays are making business scamming other people. Always be aware of it.
Future of Cryptocurrency
Some analysts have already predicted that there will be a huge step up in the market of cryptocurrency. It will soon take over the world by storm. Imagine bitcoin being used instead of money itself. Moreover, there will be huge development in cryptocurrency’s game. More people will invest in bitcoin in the future. The future is almost bright. The decentralized system makes it so security friendly and private that people will prefer it anytime.
With the prices fluctuating every day, Cryptocurrency has become a business. People buy them, wait for their prices to increase and then sale them. Therefore, this comes to the conclusion that should you actually buy these coins?
Should we Invest?
Unless you have a sound knowledge about what is a cryptocurrency, which you should have by now, I can’t recommend buying them. Investing in the sense that you are going to treat it as a business. Right? However, there is always a chance of losing all your investment. Nothing is guaranteed. It’s almost like gambling. You either win or you either lose. Patience and persistence always win in my opinion.
You should always choose a coin which has a bright future. Take, for example, Ethereum and Bitcoin. They both have a very bright future. So it’s less risky investing in them.
The cryptocurrency market has been growing on a rapid rate for a while now. But to be honest, it’s not always about the money. Blockchain is a technology that can make our lives better. Cryptocurrencies have the potential to grow a lot. To be honest most people just don’t invest their money because of the complexities it causes.
Once Cryptocurrency will become mainstream in the media, there will be huge investments to make into the future. So why not invest now and chill in the future? Just think.
Conclusion
The market of Cypro is increasing. It’s fast and just really potentially strong. Every day new Currencies emerge on the scene. Some of them die. Some people get rich while some investors lose their money along with their will to ever invest in their life again. However, when a new currency emerges, it brings something, a meaning to it. Mostly, they are intended to make the world go round and round. No one actually wants to lose their money.
