In simple terms, cryptocurrency is a digital currency that parallels traditional fiat currency, the cash that we’re so accustomed to. Controlled by peer-to-peer networks and transferred over the internet, you can operate crypto to pay for just about anything these days, thanks to its ever-rising popularity and adoption by payment giants like PayPal, Visa, and Mastercard.
And by now you’ve possibly heard of cryptocurrencies such as Bitcoin, Ethereum, and even Dogecoin that often govern the news because of their quickly increasing adoption by institutions and retail investors alike. But let’s part through all of the noise and fan-fare to get down to brass-tax. Why exactly are we getting to know more and more about this technology?
Well, since the Bitcoin whitepaper was published all the way back in 2008 and the technology subsequently released in 2009, we have had our eyes opened to the possibilities of a payment system that is inflation-proof, decentralised, and which can be sent all over the world without need for 3rd party financial institutions.
Cryptocurrency is a technology that offers people a secure way to transfer money without the need for intermediaries. This means that people can access financial services without financial institutions and at a fraction of the cost and time.
Why is it known as cryptocurrency?
The name cryptocurrency is a grip of cryptography and currency. This is due to the fact that crypto is created by its secure and safe concord mechanism called the blockchain, a sort of digital ledger that records transactions and is created in such a way that it cannot be changed at any cost.
What exactly is cryptography?
Cryptography is the study of and development of techniques that ensure the secure and safe transfer of data. With cryptocurrency, all transactions are encrypted, which means that senders and recipients can remain unnamed. While senders and recipients can access their own information and transaction history, these transactions are not connected to them while their record remains public, which means that transactions can be clear yet anonymous.
What is cryptocurrency mining?
Basically, everyone can be a miner, Since a decentralized network has no authority to delegate this task, a cryptocurrency needs some kind of mechanism to prevent one ruling party from abusing it. Visualise someone creating thousands of peers and spreading forged transactions. The system would break immediately.
So, SATOSHI NAKAMOTO, creator of bitcoin, set the rule that miners need to invest some work on their computers to qualify for this task. In fact, they have to search a hash of a product of a cryptographic function – that connects the new block with its predecessor. This is called the proof of work. Bitcoin is established on SHA 256 Hash Algorithm.
You don‘t need to understand the particulars about SHA 256. It‘s only prominent if you know that it can be the basis of a cryptologic puzzle the miners participate to solve. After finding an answer, a miner can create a block and add it to the blockchain. As an incentive, he has the right to add a so-called coinbase transaction that provides him a specific no. of bitcoins. This is the only lane to make valid bitcoins.
Bitcoins can only be designed if miners solve a cryptographic puzzle. Since the difficulty of this puzzle increases the amount of computer power the whole miner’s invest, there is only a certain amount of cryptocurrency token that can be created in a given amount of time. This is an aspect of the consensus no peer in the network can break.
What is Blockchain?
A blockchain holds a digital record of cryptocurrency transactions. It is unbending, meaning it can’t be changed, only added to. Run by a network of computers that are stimulated via rewards to check and confirm transactions, the blockchain is protected from bad actors and vulnerabilities like double spend. The blockchain is the cause why cryptocurrencies are a workable form of electronic currency.
Is this safe?
There is currently over but thousand different cryptocurrencies in the world . It’s safe Mostly because it also uses blockchain technology, which is use to secure from every type of fraud .
How is cryptocurrency used?
1. Everybody can become an investor:
Often, as you’ll read more about below, cryptocurrency is used in place of customary payments, as users hold the power and authority of sending and receiving it. But it goes deeper than that. With the power to send and receive in the hands of the people, they can invest more quickly and with less dispensable costs tacked-on. What this means is that there is a lower hurdle to entry for smaller and single investors to participate in the investment process.
And with adoption on the rise among a large number of various shops and companies, you can use your crypto to do things like buy a car, concert tickets, or tip your favourite Twitch streamer or content creator on Twitter!
For projects, cryptocurrency can display shares in their company, hence why ICOs, or initial coin offerings, have been a well liked vehicle for companies to go public and fundraise. Companies can more simply, easily and cheaply fundraise from a multitude of various investors from all over the world.
There is an expression that gets thrown around when individuals refer to cryptocurrency: “the democratisation of finance”. And for good reason! Investment opportunities are no longer only reserved for big firms or those with a high net worth, which makes more fundraising chances and a good opportunity for a company to fund its growth.
Gains of cryptocurrency over fiat currency:
One of the advantages of using crypto is its security that is baked in its transparency, decentralisation, and immutability on the blockchain.
Because cryptocurrency uses cryptography to confirm transactions, it removes the need to provide personal information when making a payment. One of the great use cases of crypto, its privacy gives users peace of mind that their sensitive financial information won’t be compromised and that their identity won’t be stolen.
Another benefit of cryptocurrency over fiat is that it is much faster and cheaper to transfer. Where a wire might take 3–4 days to process and reflect in the recipient’s account, cryptocurrency takes a tiny fraction of that time, and at a fraction of the cost thanks to its dispersed nature. That is, without a mediator and institutions running the show and owning the means by which one transfers money, it is we, the users, who own our own destiny!
As mentioned above, crypto can be sent anywhere with little to no problem. Thus, it has become the high choice for individuals sending remittances. Intermediaries take a lot of time and a cut for their services, making crypto the clear choice for cross-border payments.
How to buy cryptocurrency??
one of the simplest ways to buy cryptocurrency is via an exchange like Poloniex. We buttress trading of all major cryptocurrencies such as Bitcoin, Ethereum, Litecoin, USD Coin, and Cardano, as well as other exciting companies like TRON, Decentraland and Solana.
With exchanges, you can take advantage of the wallet that is created into the exchange in order to store your assets. All that’s left to do to begin trading is to either load in fiat, which just means national currency, or send cryptocurrency from another wallet to your exchange wallet. To know how to start investing in cryptocurrency Click here.
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