DUMMIES GUIDE TO CRYPTO

Cryptocurrency for beginners

Photo by Kanchanara on Unsplash

This is just for them, who just heard the word crypto, who are curious about what the heck is cryptocurrency.

Let’s begin…..

What is Crypto Currency?

Crypto currency is a digital payment mechanism that does not rely on the bank for verification of transactions. It’s a P2P network that allows people to transfer money across the world.

Instead of a physical entity, crypto payments are fully digital depends on an online database that describes transactions. This is being stored in a public ledger.

Crypto’s got this name due to its encryption when the verification of transaction comes. This encryption provides safety and security for the currency.

Bitcoin, the first and the most in demand cryptocurrency, started it’s journey in 2009. There are various currencies out there. Bitcoin Cash, Litecoin, Ethereum are the most popular after Bitcoin. Other well known currencies are Classic, Stellar Lumen, Ethereum, Chainlink, Tether, Binance Coin, USD Coin, Solana, XRP, Terra, Cardano, Avalanche, Polkadot & Dogecoin .

How it works!

Cryptocurrency is based on the creation of blocks and the recording of transactions in a ledger. The transaction can’t be faked or rewritten.

The ledger is a database that is:

1. Public
2. 24/7 Online
3. Decentralized; It’s not controlled by either bank or government

The term “crypto” refers to the fact that transactions are protected by cryptography, which is a sort of exceedingly tough coding that is impossible to crack.

If you spend 10 Dollars, your bank records the transactions and for crypto, if you spend 100 satoshis (the smaller unit of money for bitcoin) online and the transaction is recorded in a block added to the blockchain technology.

To make a transaction, you must exchange with a peer using a digital wallet of crypto. A crypto wallet becomes the medium to exchange from one account to another.

When you buy a digital currency, you will get a private key which will be used like a bank account. You can own multiple keys. If you loose this key, you will lose access of your money. There is no replacement of this loss.

What’s the difference between crypto from traditional money?

To understand crypto, you have to know about cryptography and blockchain.

1. Block Chain Technology: Blockchain is a database which keeps record of transactions and totals. Like traditional currency, Crypto does not have central authority. It is a distributed ledger which can be viewed only by crypto users. To make any transactions more secure and validate, “proof of work” are often established into the system.
2. Cryptography: Cryptography makes the blockchain impenetrable to hackers. Cryptographic code does this work actually. The codes are called “hashes’’ which is like a secure password. It’s a easy task to create one but much harder to guess by a stranger.

How to Use Cryptocurrency

The biggest question is can you use it like a physical one?

You can’t get the same advantage like the physical one but you can do purchase and investment at crypto.

1. Purchasing, Selling & Storing : In today's world, you can buy crypto from central exchange,brokers or individual owners or sell it to them. Coinbase is one of the most convenient exchange option to buy and sell it.
2. Investing or Trading: You can choose from the following alternatives once you have crypto.

a) Buy goods or service

b) Trade

c) Exchange for cash

Some country has ATM options, where you can cash your cryptocurrency by using your debit card.

Where It comes from ?

Cryptocurrency are generally comes from a process called “Mining”. Miners have to solve complex certain mathematical problems over special computers to get bitcoin in exchange.

In an ideal world, it would require 10 days for a person to mine one bitcoin but in reality it takes 30 days to complete the process.

Can People mine at Home?

In earlier days, People can mine it at home but as days goes, the puzzles get more harder to solve. So, now specialized computer is required to solve it.

For example, Argo Blockchain is planning to open a Texas based mining company which is capable of 200MW mining- enough to lit up 200,000 UK homes.

How does it work for a beginner?

If you are a beginner, don’t do more than the following:

1. Think cryptocurrency like other physical currencies like dollar.
2. You can buy stuff across the world without a exchange fee and low transaction fees.
3. You can keep track of your assets so easily.
4. You can store currencies at Digital Wallet.
5. You have all digital currencies, so you don’t have hustle for physical cards.
6. You are the authority of your money as there is no central banks
7. It’s not really that complicated.

Hi, I am Rajesh Ghosh, a Freelance Content Writer. I am writing on versatile topic specially on Finance,Health, Wellness, Travel, Psychology and Cryptocurrency.

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