Beginners GuideInformation

Cryptocurrency Guide

Well!! You have decided to start cryptocurrency trading as a career, probably you’re thinking about how you’re going to invest your earnings. There’s no doubt that at present crypto space is very exciting for investors.

So, if you are new to the cryptocurrency world and you are interested in cryptocurrency then you are welcome, you have landed on the right page. To ease your way into the world of crypto, In this guide, you’ll get the complete answers for your questions.

So, let’s route through the basic..

What Is Cryptocurrency?

It’s 2019 !! By this time I bet many of you might have come across the term cryptocurrency. But possibly only a few really know what is it all about. Well, no worries, let’s take a look at what does cryptocurrency actually mean.

The word crypto means ‘hidden’, so cryptocurrency means hidden currency. Cryptocurrency is a virtual currency or digital currency which works as a medium of exchange which uses cryptography to secure transactions, verify the transfer of assets and control the creation of new currency units.

Moreover, cryptocurrency is a decentralized control of each cryptocurrency through distributed ledger called blockchain, which serves as a public financial transaction database.

History Of Cryptocurrency

After knowing about cryptocurrency,  I am sure you are very much excited to know the history behind this popular invention.

Back in the years there has been a lot of attempts in creating digital currencies but failed due to fraud and lack of trust. In 1983 American cryptographer David Chaum invented anonymous cryptographic electronic money called e-cash. later in 1995, David Chaum executed via digital cash framework, which allowed the virtual currency or digital currency to be untraceable by the issuing bank, government, or any other third party.

In the year 1996 national security agency published a paper entitled ‘how to make a mint’ a  cryptography anonymous electronic cash describing it as a cryptocurrency.

In 2008 the world witnessed a severe financial crisis- businesses failed, banks faltered, a lot of people were in financial predicaments, unable to pay off loans and other investments.

This made developers to think a new way of trading without any dependencies on banks. In 2009, Satoshi Nakamoto released a document on open source software on blockchain technology, this is how cryptocurrencies came into existence. Further, the first bitcoin transaction is said to be done by Satoshi Nakamoto (a group of people or a person) in 2009.  Moreover, the history of cryptocurrency is not too long but it is an interesting and eventful history.

How Does Cryptocurrency Work?

Probably, as a beginner, this is the first question that strikes your mind before you move further for trading.  So, let’s take a quick look at a simple explanation.

Basically, the cryptocurrency system makes use of blockchain technology to create a digital currency, at a specific controlled rate, and to track transactions. Further, the digital currency can be transferred from one account, or digital wallet, to another account to purchase goods or services from companies.

Unlike fiat currency like US dollars and many more, cryptocurrency is decentralised, which means it’s not regulated and monitored by any central authority such as a bank or government. Instead, the system and users together control and regulate the ledger.

While anyone can view and access the ledger, the identities of individuals are encrypted by unique sets of keys called public key and private key.

In particular Private Key is the secret key used to encrypt and decrypt messages between communicators. It’s a form of symmetric encryption. On the other hand, Public Key functions on the basis of asymmetric encryption. An asymmetric encryption functions on the basis of both public and private key. These unique sets of keys connect the individual to an account and to the cryptocurrency in the account.

Anyways, the Transactions made between peers are encrypted and then broadcast to the cryptocurrency network and queued up to be added to the public ledger. Transactions are then recorded on the public ledger through a process called “mining”.

Why use cryptocurrency?

At present, cryptocurrency has grown exponentially because of its attractiveness to people looking to use this alternative money. The buzz of virtual currency is all around, people started accepting cryptos for daily expenses.

You might be wondering why to choose digital coins when you have a fiat currency. So, Here are a few reasons to prefer cryptocurrency.

No Fraud: Cryptocurrencies are virtual it cannot be counterfeit or cheated while processing transactions between two persons.

Instant Settlement: It’s complicated to get funds into your bank accounts, and in case of cryptocurrencies, you don’t have to wait for funds to get into your accounts. The transactions are processed instantly within a few seconds.

You Are The Owner: There’s no involvement of any third party for the transactions, it is only you who can have control over your currency.

Low Fees: The most well-known benefits of using crypto is sending and receiving payments costs low fees.

Accepted Worldwide: Cryptocurrencies do not have any border limit, the users can send and receive payments anywhere and anytime.

How Many Cryptocurrencies Exist On The Web?

Probably you aren’t aware of this when the bitcoin value reached the highlights of popularity in the crypto world. From then every year lot of cryptocurrencies are emerging in crypto space. According to coinmarketcap data, currently, there are 2146 cryptocurrencies available in the crypto market.

When Is The Best Time To Invest In Cryptocurrency?

Like the stock market and Sensex, digital currencies are also subjected to demand and supply. So, the price may inflate and deflate as per the demand and supply of digital currencies.

Studying the whole crypto market, forecasts of cryptomarket and future predictions of particular cryptocurrency before investing is worth the work.

More importantly, just like other financial market-investing in cryptocurrency, the risk is inevitable so every investor should learn to balance potential risks with greater rewards.

When Is The Right Time To Sell A Cryptocurrency?

When it comes to selling crypto, all you need to consider is the factors like current market value, future market predictions and much more. Just like the stock market, crypto markets open 24×7 where you can sell currency at any time and from anywhere. Moreover, the simplest way to sell your cryptocurrency is through exchange platforms like coinbase, coinmama and many more top crypto exchanges.

What Was The First Cryptocurrency?

When it comes to cryptocurrency the first thing that triggers every individual is “Bitcoin”.

Obviously! Bitcoin is the first blockchain-based virtual currency, today Bitcoin still remains most popular and most valuable crypto in the market. However, bitcoin was worth $0.39 in 2009 during its first existence in the crypto market.

What Are The Most Common Cryptocurrencies?

So, here are the most common cryptocurrencies other than bitcoin.

Ethereum: Ethereum is cryptocurrency as well as a decentralized computing platform, it was developed by vitalik buterin is a Russian-Canadian programmer in 2015. Currently, ethereum is on 2nd position…

Ripple: Ripple is both a cryptocurrency and computing platform. It was invented by Chris Larsen and Jed McCaleb in 2012. Currently, ripple (XRP) ranks in 3rd position.

Litecoin: litecoin is a peer to peer virtual currency which enables instant payment to anyone in the world. It was found by Charlie lee in 2011. Currently, litecoin ranks in 4th position as per coinmarketcap.

How Is Cryptocurrency Different From Fiat Currency?

Which Is The Best Cryptocurrency?

‘Bitcoin’ is one of the best and leading digital currencies in the crypto market, also it is one of the most promising currency. Currently, it is performing exceptionally very well in the crypto market.

It’s been a few days when most of the virtual currencies are enjoying green days. The price of bitcoin is increasing, at the time of writing, the price of bitcoin was $4,975.91

The Future of Cryptocurrency

The future of digital currencies is uncertain,  it is a top trending topic right now globally. However, in the near future, it may be used on a large scale worldwide. Because every development of recent technologies includes the financial market to ease for the user to the bottom level.

The ICO is the fundamental part of an independent project that is still in the development phase. So, with time and development of these projects, the currency can offer several benefits for these projects as well as for investors too.

Crypto is one of the most independent currencies in the financial world. Moreover, only the future can show us how crypto influences in our lives.

How Is The Cryptocurrency Value Determined?

Crypto value is determined on the basis of two big factors supply and demand.

If the cryptocurrency has a higher token supply with the lesser demand from buyers and traders, results in deflation of the currency value. On the other hand, if the supply of particular digital currency is limited and demand is higher, results in inflation of the currency value.

What Are Centralized And Decentralized Cryptocurrencies?

Centralized:

The concentration of control of an activity or organization under a single authority.

A centralized currency has an individual entity that takes the decision on the aspects of the currency. The future of the centralized cryptocurrency coin completely depends upon the organization itself.  

For example, Ripple’s XRP is a centralized cryptocurrency. Here the private company based out of San Francisco take the decision on xrp. This is unlike BTC and ETH, in which the community forms the decision.

Decentralized :

The movement of departments of a large organization away from a single administrative centre to other locations.

The decentralized control of each digital currency works through distributed ledger technology, typically a blockchain, that serves as a public financial transaction database. Moreover, being decentralized has a lot of advantages with it.

For Example, Bitcoin is decentralized cryptocurrency, with bitcoin, the protocol and the network are what control direction. Anyone can propose changes to the Bitcoin protocol, however, the network must agree.

What Is The Main Difference Between Tokens And Cryptocurrencies?

Cryptocurrencies and Tokens are not exactly the same thing, Both are quite interrelated. In fact, Cryptocurrencies or “coins” means Blockchain based electronic money.

Each cryptocurrency operates on its own blockchain, Independently of any other platforms.  For instance, Bitcoin has its own blockchain, Ethereum has its own, IOTA has its own Tangible based distributed ledger, and so on. In short, we can say a coin ledger( usually with Blockchain)

Tokens are used to represent the digital assets, The Digital tokens or tokens are hosted by any other cryptocurrency existing blockchain platforms, rather than operating on their own blockchain.  

The most popular tokens are (BNB) Binance Coin, EOS & recently, (TRX) Tron. as well as the Venezuelan Petro is a token, issued on the NEM blockchain.

Once issued, A token can then converted into the coin. For example, TRX token was issued on the ethereum blockchain. Once all of its tokens were converted into coin, Tron has launched its own network (a mainnet) with his own ledger. And now all of its tokens are now stored in the Tron Distributed ledger.

How To Buy And Trade Cryptocurrencies?

To buy and sell cryptocurrency first you need to choose one of the most popular and leading crypto exchange platforms.

The first thing you have to do is sign up in the crypto exchange platform, which will provide a place to store your digital currency as well as payment methods.

Once you’ve verified your account, you need to connect your bank account and then a credit card and debit card. There are several verification steps that you need a pass in order to utilize your account using credit cards.

Finally, the exchange platform will allow you to buy and sell cryptocurrencies with your bank accounts and use them with debit cards or credit cards. Moreover, the exchange platform also displays real-time currency exchange rates.

Final Words

Ultimately, over the last few years digital currency has gained a lot of visibility around the globe, cryptocurrency is massively becoming essential for the people who value privacy. Moreover, cryptocurrency is an amazing innovation which can revolutionize the world.

We hope that the answers we provided in this guide are enough to give you the basic knowledge of cryptocurrency.

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Qadir AK

Qadir Ak - Co-founder of Coinpedia Blog - His interest as crypto Author, Editor, Speaker at cryptocurrency conference has made him known as passionate blogger and startup in Asia.

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