What is Cryptocurrency?
In the past few years, the term Cryptocurrency has circled around quite a bit. But you have to wonder, what is a Cryptocurrency and why should you start using these? It’s clear that there’s a lot of buzz around the term, so let’s find out what it is.
The definition of Cryptocurrency
A Cryptocurrency is an internet-based exchange medium that relies on cryptographical functions to complete transactions. Simply put, this is a virtual/digital currency fully secured by cryptography. This helps enhance the security and it also makes it close to impossible to double-spend or counterfeit. Since Cryptocurrencies are not issued by any government or authority, they don’t have anything to do with government manipulation or interference. That makes them very good for a lot of people.
How can you get Cryptocurrency?
Although the process itself is a bit complicated, you can split it into a few smaller steps. That being said, you first need a computer/series of computers and a mining program. Most Cryptocurrencies are acquired via mining, a process that basically solves complex algorithms in order to generate currency. Depending on the Cryptocurrency, that process can take a lot of time to generate a token or it can generate that very easily.
At first, generating a bitcoin was very easy, but nowadays it’s extremely hard to do that since the competition is fierce and you need extremely complicated machines for mining. The generated tokens/coins are then sent to your Cryptocurrency wallet. There are multiple types of wallets, such as mobile, desktop wallets, hardware wallets and so on.
Of course, you can also acquire Cryptocurrency via online transactions. You can buy virtual currencies like these from a variety of exchanges like Coinbase for example. You can even buy and sell Cryptocurrency for a profit if you want.
Is Cryptocurrency a good investment?
One of the challenges that come with Cryptocurrencies is that they are known to fluctuate in price. While prices have stabilized here and there, the reality is that investing in Cryptocurrencies can be a gamble most of the time. This is not a long term investment, but it can be a short term investment if you want.
However, if you plan on sending currencies around the globe fast and without having to deal with paperwork from banks, Cryptocurrencies can help you. It’s a lot better and more convenient to use them. Plus, since everything is encrypted, you never have to worry about any problems!
Which are the most popular cryptocurrencies (aside from Bitcoin)?
While Bitcoin is a great cryptocurrency, the reality is that there are many others you can invest in. So it all comes down to you to find which one suits your needs the most. With so many options out there, it can easily become rather overwhelming. Here are some of the most important cryptocurrencies you can start using today.
Ethereum is similar to Bitcoin in many ways, it has smart contracts and it also comes with a wide array of improvements. For example, it has 5X higher transactions per second when compared to Bitcoin. It’s an extremely popular cryptocurrency and a lot of people enjoy using it because it maintains a rather stable value. It’s great for investing in crypto, especially for beginners.
Litecoin has a very similar infrastructure to Bitcoin too. However, the transaction fees are far less and the number of transactions per second is higher. On top of that, Litecoin has an $81 million cap on coins. So you might be able to see some price increases in the long run, which is very interesting.
Ripple makes it easier for companies to send money internationally. Before Ripple, banks had to rely on third parties for the cross-border transactions, now this cryptocurrency helps make the process easier. It also lowers the currency exchange rate and you can do the exchange in real-time without waiting for anything.
Zcash is great because it has full anonymity when it comes to transactions. Bitcoin still retains the transaction information in the blockchain. So your transaction, while anonymous, is still public. With Zcash you don’t have to worry about that. It climbed quite fast when it comes to value, and a lot of people use it because you get to exchange money and perform payments without any records.
This is a fork from Bitcoin. The idea here is to solve some of the issues with Bitcoin such as transaction fees and scalability. So the transaction speeds are faster, the network rungs without congestion, fees are lower and security is very good.
As you can see, you still have some alternatives when you want to trade crypto online. You are free to choose what option suits your needs the most, but the possibilities are limitless here. Just make sure that you give them a try too, as these cryptocurrencies can be a very good investment.
What is Bitcoin and how does it work?
Bitcoin is one of the most popular cryptocurrencies in the world. It was created in January 2009 by Satoshi Nakamoto and its focus was to offer people a way to lower the transaction fees while also being able to transfer funds and receive money online anonymously. While you can’t have any physical bitcoins, you can have your Bitcoin balance kept online on a public ledger. And you can have your Bitcoin in a dedicated cryptocurrency wallet too, which is a very important aspect to keep in mind.
What is Bitcoin mining?
Mining is a process through which Bitcoins are released into the world. What it does is it solves very difficult algorithms and puzzles to uncover a new block. Once that is done, a new block is added to the blockchain. Aside from that, the mining process will also verify and add transaction records throughout the entire network. As that happens, the miner will receive a reward. However, the reward is halved every 210000 blocks. Initially, you got 50 new bitcoins in 2009, now it’s way lower. The more Bitcoins are created, the more computing power is needed to generate them.
Bitcoins are not limitless. There are only 21 million bitcoins that can be mined in the world. Once that number is reached, you can only use or trade the bitcoins available and that’s it. Most cryptocurrencies have a limited amount, but out of all the important ones, Bitcoin tends to be the scariest out there.
Can you reverse Bitcoin transactions?
Unlike the regular currency transactions, Bitcoin transactions can’t be reversed. The reason is simple, you don’t have a bank or another third party that handles the transaction. In fact, if the transaction is recorded in the network and 1h passed, it can’t be modified. It might be an issue for some, but then again this shows you can’t tamper with the network and that helps quite a lot.
Using Bitcoin is very popular right now and there are even websites that allow you to purchase items with this virtual currency. Some even invest in or trade Bitcoin. However, investing in Bitcoin can be tricky since the value is always changing. Even so, Bitcoin is still one of the best and most important cryptocurrencies out there, so you should consider giving it a shot. It’s a great way to get into cryptocurrencies and unlike most others, Bitcoin is actually quite stable, although it does have its crashes at times.
What are the benefits you get from using cryptocurrencies?
Using cryptocurrencies is very popular right now, and a lot of people started using these virtual currencies more than they ever did. Which does bring in the question, what are the benefits of cryptocurrencies? Why should you use these and if so, what benefits can you get from using digital currencies like these?
One of the best things about cryptocurrencies is that they offer instant payments. So if you want to transfer money to someone, you can do that instantly. Once you press the button to transfer, the other party will receive your money. It’s that simple.
All payments are encrypted, and that brings in a major security layer. It’s a lot better and certainly easier to invest and spend money this way. You will find it incredibly helpful especially if you want to transfer a large amount of money.
Even if the transaction record is public and found in the blockchain, no one will know your name. The only thing you can see is the amount paid and that’s it. That means you can easily avoid sharing your name and you can remain anonymous while still paying other people.
Small or no fees
Depending on cryptocurrency, you will notice that some of them have no fees or the fees themselves are very small. That means a lot, especially if you are looking to avoid overspending. It certainly helps if you want to send money often as the fees can rack up.
On top of that, you don’t have to worry about answering to a banking authority or anything similar to that. You are always in control, and that means you are the one that will choose when and how payments are made. Which is great, because you can focus on your payments and that’s it.
Faster and better international trade
When you want to transfer money to another country, banks need to use middlemen and that means the transactions can be costly and time-consuming. With help from cryptocurrencies, you can avoid that. You can easily transfer money anywhere in the world without any worries or extra fees. It’s convenient, amazing and it will deliver an astonishing experience every time.
One thing is certain, using cryptocurrencies can be a good idea if you want to transfer money fast while also paying for items online. With more than 1200+ cryptocurrencies out there, you have a wide range of currencies to choose from and invest in. So all you have to do is to pick the right one for you!
How can you choose the best cryptocurrency wallet?
If you want to invest or spend cryptocurrencies online, you need a cryptocurrency wallet. That being said, a wallet is one of the most secure ways you can use and store cryptocurrency. In fact, the wallet allows you to manage keys, it interacts with the blockchains and you can easily check your balance here in no time. Here are the best types of cryptocurrency wallets.
A lot of people consider these to be the best cryptocurrency wallet. The reason is simple, private keys are stored on a hardware device offline, so there’s no risk to deal with intruders. If you want to check your wallet or just initiate a transaction, you plug in the wallet, enter the pin and then send the coins.
Paper wallets are basically a printout of the public keys. That means you can have it written down and when you initiate a transaction you just write the numbers on your wallet, that’s it. This is a good way to keep your wallet private, although it might not always be safe.
Since most of us have a phone nowadays, mobile cryptocurrency wallets are extremely popular. They make it easy for you to check on and use cryptocurrencies at any given time. Plus, you can initiate payments fast, you can even pay at retail stores. The downside is that you have less security since the private keys are controlled by the wallet creator. So unless you trust the app creator, it’s better to avoid this.
Online wallets are a good idea for a lot of people because they are super easy to use and adapt to your needs. You can access them anywhere as long as you have a browser. The downside to all of this, however, is that online cryptocurrency wallets are prone to hacking attacks.
Desktop wallets are basically applications installed on your computer that store your private key information. While still prone to attackers, they are a bit more secure when compared to mobile and online wallets.
It’s very important to find a good cryptocurrency wallet that suits your needs. Some people prefer mobility, others want more security. Thankfully there’s an option for everyone, so you just have to find what works for you the most. Give these a try and then you can easily see which one suits your style the most.
Cryptocurrency investment tips
Investing in cryptocurrency sounds like a great idea, at least in the beginning. But the true challenge here is that most cryptocurrencies tend to fluctuate in price, so it can be very difficult to find a currency on which you can make money. It’s challenging but possible. Here are some tips to help you!
Invest a low amount of money
The idea here is to invest in cryptocurrency only money that you can afford to lose. This is a gamble, you never really know how the market prices fluctuate. So don’t take loans to invest in cryptocurrency, just invest a small amount and then you go from there.
Document yourself about the cryptocurrency prices
Studying the previous prices for the past month or year will give you a good idea of what you can expect. You can also figure out a possible price for the near future, so that’s something to keep in mind.
Always diversify investments
You can’t invest all your money in cryptocurrency. You can invest some here, others on actions and then some money in real estate. Even if the cryptocurrency field is not going to give you good profits, others might do that. Or the other way around, sometimes you can have crazy cryptocurrency profits and less from other places. Either way, you should never place all the eggs in a single basket.
Invest just in 3 currencies at first
It’s easy to get invested and bring in a lot of money to buy lots of cryptocurrencies. But a good idea is to invest in the 3 most popular ones or maybe currencies that are growing right now. Don’t invest in too many at once, especially in the beginning.
Study the market cap
When you invest in cryptocurrency, a very good idea is to see the market cap of that currency. If the market cap is low, the chances are the currency is not really a good investment. So these are all things that you must consider at all times for the best results.
One thing is certain, cryptocurrency investments are not going to be easy all the time. That’s why you need to study the market a lot and see what options suit your needs the most. There are challenges that can arise, but if you know where and how to invest, you can obtain some amazing results. So don’t hesitate, take your time and you will get some pretty impressive results.