What is Cryptocurrency | Best Guide to Cryptocurrency

Say hello to the new normal, a.k.a ‘Cryptocurrency’ also known as ‘Digital Cash.’

‘Cryptocurrency’ is one of the most widely used terms in today’s era. One out of every five people is bouncing between the ups and downs of the crypto world. While many more are busy learning about it. The rising popularity of this virtual cash pounds all of us. And this is what brings us here.

Many questions pop up into an amateur’s mind before entering the crypto world. We all are muddled between what to do, How to do it, will it work, or will I be able to make money through it? And many more.

Although the outcome is expected to be positive, it usually puzzles and muddles all of us. Jumping from one page to another does nothing but make us weary and exhausted. Hence, we are here to mark a full stop to all these snags.

We will help you understand Cryptocurrency and share various tips and tricks that will allow you to make major profits. These strategies will lead your way and push you towards the desired results.

To begin with, let us first understand the meaning of cryptocurrency

What is Cryptocurrency?

Cryptocurrency is a virtual payment or digital cash that is accepted online for goods and services. It is a currency with a value of its own i.e generally more than many actual currencies.

However, there is a need to exchange Cryptocurrency for real currency to access online goods or services. Different companies have their tokens. These include bitcoin, Dogecoin, Ethereum, stellar, Chain Link, etc.

Here, we are having a detailed discussion of some of its types.

Types of Cryptocurrency

You will be surprised to know that currently there are about 6000 cryptocurrencies. Hence, mentioning all of them here is not possible. But, here are some of them-

Bitcoin:

It is the world’s largest Cryptocurrency by market capitalization. It was launched in 2009. There are no physical bitcoins. It is a physical currency that facilitates P2P services for instant transactions.

Ethereum:

Ether or Ethereum is second to Bitcoin in market value. It denotes itself as ‘the world’s programmable blockchain.’ It is a hub for financial services, games, and apps. Payment for all these is made in ether cryptocurrency.

Dogecoin:

Dogecoin evolved from a viral internet meme in 2013. It was an outcome of the mutual efforts of an Australian entrepreneur and a software engineer.

Cosmos:

Cosmos is considered as the internet of Blockchains. It enables quick transactions and helps in the communication of different blockchains in the ecosystem.

Stellar:

Stellar enables cross-border transactions between currencies. It was marked 13th in market capitalization at the IBM partnership.

Working of Cryptocurrency

The Cryptocurrency market works entirely on computers. Its existence is fully virtual as all the transactions are made through digital wallets. Any transaction is not complete until it is added to the blockchain. The process is popularly termed mining.

Mining enables the creation of new cryptocurrency tokens that are considered more secure because of blockchain technology.

Investing in Cryptocurrency

Nowadays, investment in Cryptocurrency or altcoins is considered highly profitable. However, it has its limitations. It may be hazardous for some newbies.

Thus, when you step into the crypto world, you should have proper research of the tokens that you wish to invest in. This can save you from the various shortcomings and loopholes of this unpredictable market. Cryptocurrency is not a bad investment. Yet, it is risky.

If you choose to invest in Cryptocurrency, keep in mind the following:

Try to know the market and then choose the crypto coin to invest in.
Start with small investments.
If you find it working, only then move on to more significant investments.
Work slowly and efficiently to attain better results.

Which Cryptocurrency to buy?

This is undoubtedly the most common question that arises in the mind of every person. Even the most experienced ones deal with this issue. However, the question does not have an appropriate answer.

This is because its prices fluctuate every second. You will have to keep an eye on the past and present of the crypto coin to predict its most veracious future. Or, you can rely on an expert for the same.

Introduction to Blockchain

Now, let us have a look at the mother of all altcoins i.e ‘Blockchain’. It is the system through which all cryptocurrencies are operated. It is the most secure way to record information. Blockchain is a ledger of transactions that are directed to all the networks present and is updated whenever a new transaction is made.

The primary objective of blockchain technology is to safeguard data storage so that it cannot be controlled or manipulated by any source. It assures the protection of all the blocks in the network. If any block in the chain is tampered with, the authorities will get the information immediately.

Hence, it is almost impossible for hackers to cause any harm to the blockchain.

Now, let us have a look at some of the major characteristics of Blockchain-

Features of Blockchain Technology

Fixed Records:

This is the most amazing feature of blockchain technology. It says that all data stored in the blockchain cannot be touched or changed by anyone. It is added only when everyone in the network approves that transaction.

All those who confirm these transactions are known as miners. They ensure the safety and security of all these additions. Consequently, the records stored in the blockchain are fixed and protected.

Well-organized ledger:

Another most authentic availability of blockchain technology is the fully-organized and well-maintained ledger. The ledger shows the record of transactions made in the network. It is open to all, but cannot be controlled by anyone. This way it renders efficient outcomes.

Supports peer to peer network:

Blockchain’s peer-to-peer service removes the third parties and any commissions held by them. It facilitates direct transactions.

Everyone present in the network can authorize the transactions themselves. As a result, the transactions are made faster and cheaper. It also builds trust between the sender and recipient.

Decentralized:

Decentralization is another perk of blockchain technology. It does not have any central control, but a group of nodes that maintain the system. Every holder in the network has full control over his assets. He is free to make all his transactions.

Minting:

Minting means creating a block in the chain. Miners create the blocks when they enter into the blockchain network.

Consensus Algorithm:

Blockchains work because of the consensus algorithm. The consensus helps the network to make decisions. Consensus Algorithm is at the core of the smartly designed blockchain architecture

Security:

All digital platforms are usually prone to hackers. However, this is not the case in Blockchain. Blockchain networks are operated by various computers. These computers record and confirm every transaction before letting it enter the network. Thus, blockchain has the most efficient security services.

Future of Cryptocurrency

Now, when we are well-versed in the crypto world, let us discuss the future of cryptocurrencies. Investments in cryptocurrencies are experiencing an increase every moment. Every second, there are new investors.

Also, many experienced players are earning huge profits through cryptocurrencies. Hence, we can say that crypto tokens are expected to have a bright future.

However, there is always a risk of uncertainties. You cannot completely rely on these investments to earn a living. It is a good time to start investing here but slowly and efficiently. This way you can attain fruitful results.

Safety measures while trading

Investing in Cryptocurrency is never risk-free. Many times, it pushes you to some severe situations. Thus, you should always try to play a safe game. Keep in mind the following points to always be on a safer side:

Before investing, find out the owner and the company’s reputation in the market. Make sure that it is a reliable firm.
Also, try to know what type of investors the company holds. Are they the major ones or just newcomers?
Keep in mind that more developed companies are less risky to work with. It should be of a standard market value.
Another important distinction that you should make is whether you will be the stake owner in the company or are allowed to use the tokens. This plays a crucial role as it determines your place in the company.
Be well aware of every single detail of the token you wish to invest in.

Even after all these peculiarities, you should monitor all your accounts and transactions regularly. This will help you stay away from hackers.

These are some of the pillars of security and safety. It is essential to protect yourself while investing in cryptocurrencies.

Wrapping up

‘A little knowledge is a Dangerous thing.’

The quote perfectly fits in the case of Cryptocurrency.

Do not always rely on what you read. Keep an eye on the fluctuations in the market. Also, research efficiently before entering the market. The market has both bearish and bullish people. Be safe and work bit by bit. This way, virtual cash will never let you down.

Contributer:

Get to know him

Satya Prakash Mourya

Satya is a digital enthusiast, who has a unique perspective of looking at the world