If you have ever wanted an informative guide to cryptocurrency, the drawbacks, the benefits, the dictionary, and how it can be beneficial, you’re in the right place! When most people hear about cryptocurrency, apps like Paypal, Venmo, or Cashapp may come to mind, because it is all digital currency exchange, right? Wrong.
Yes, cryptocurrency is a digital exchange, however, it is an entirely different form of exchange with an entirely new form of currency. It can be hard to understand at times, but with this informative guide, you will be a cryptocurrency pro in no time at all! How does a new, basically invisible currency actually work and what can you buy? Anyway, there are plenty of questions to be asked and answered.
Cryptocurrency is pretty complex and an ever-changing thing, so to keep up, you have to stay informed. It can affect investors, business owners, and even consumers alike. Highlighted below are some important topics explained and hopefully by the end of this article you will have gained a significant understanding so that you can finally chime in at the work Christmas party!
What is cryptocurrency?
To first understand the art and industry of cryptocurrency, you must first understand what it is. Cryptocurrency is essentially digitally encrypted money that is decentralized and stored on and validated by blockchain technology. This means that it is not regulated by banks or government entities/ financial institutions.
You may have gained an introduction to cryptocurrency when Bitcoin became the name on everyone’s tongues back in 2009, and since then, the industry has completely taken off. However, it hasn’t been without its ups and downs. There have been great achievements and a wealthy amount of failures, however, as said above, it is an everchanging art.
The cryptocurrency dictionary
So, now we at least have a brief understanding of cryptocurrency, however, this is where the more complicated part comes in. That’s right, an entire dictionary that you will have to learn and understand if you want to gain an understanding into cryptocurrency and all it entails.
Altcoin is a slang word for ‘alternative coins’. This word is used to refer to other forms of cryptocurrency other than Bitcoin.
With every single transaction recorded, it is done by Blockchain technology. Blockchain is a highly intelligent technology that is used to verify digital currency transaction and works hard to prevent scams. Transactions are readily recorded on blocks and every ten minutes a new block is added to the chain, hence Blockchain.
Writing or deciphering a code is known as Cryptography. It is essentially a form of mathematics that creates secure transactions and online environments. For example, encrypted accounts or currency.
Paper money, such as the US dollar or Euro is referred to as Fiat.
The mining of cryptocurrency is a system where qualified miners solve significant math problems that validate every single cryptocurrency transaction. Then, to compensate, the miners are given cryptocurrency in change for their resources and time. Because of the complicated and highly intelligent mathematical calculations, the value, the security, and the transparency of cryptocurrency is heavily increased.
Nodes are computers that are an essential part of the global cryptocurrency blockchain network. Their main use is to verify transactions that have been recorded on blockchain.
Think of a private key as a password, because that is basically what it is. It gives cryptocurrency owners exclusive access to their wallet. Each wallet has a private key and without it, you will not gain access to your coins.
This is very similar to an email or even a physical house address. To be able to send currency you will require the recipient’s address.
How is cryptocurrency created?
Through the mining process, cryptocurrency is released. However, there is a certain way that cryptocurrency must become a legitimate form of currency. Below is how cryptocurrency is created.
- First off, you need a community of people who are willing to evangelize it and believe in the purpose of the coin and people who will eventually mine it.
- A code must be created to encrypt the software and blockchain network on which the currency will operate.
- Another huge part of it is confidence. Merchant must want to value and do business with the currency. Then that will work to build trust amongst consumers, the general public, and even investors.
Clearly, there is plenty more that goes into creating cryptocurrency, however, these three main elements are the ones that particularly matter in the process of creating cryptocurrency. Some third parties will even create cryptocurrency for you.
The different types of cryptocurrency
There are plenty of different types of cryptocurrency, over 2500 active right now. However, here are three that particularly stand out.
The first and most obvious choice for people is Bitcoin. When it was first established in 2009, it gained significant popularity, however, it has had its fair share of highs and lows. It has now been around for almost 10 years and has been named as ’digital gold’ within the industry. It is certainly the most popular choice. With the Bitcoin Era trading system, you can start a new life today and gain significant financial security.
Pertaining to the name, Litecoin is essentially a lite form of Bitcoin. It was created in 2011 and was introduced as silver compared to Bitcoins gold. It is designed to be a lite version and while similar to Bitcoin, it does vary slightly depending. While it is on a much smaller scale, it is also far faster to mine and operates on a far better algorithm as opposed to Bitcoin.
XRP by Ripple
XRP is a cryptocurrency that was released by Ripple. It was founded after both Bitcoin and Litecoin in 2012 and was designed to expedite and improve cross-border payments and the general global payments as a whole. It is designed to function on a unique blockchain technology that validates its transactions far quicker than Bitcoin does.
There is plenty to know and understand about cryptocurrency and all of the surrounding details, however, it is becoming more and more established in our economy.