The word cryptocurrency is everywhere in the news and on social media. Are you curious about cryptocurrency, its functions, what technology supports it, and how to utilize it? These digital assets might help you gain on your investment or you lose all your investment. Before diving into the crypto world, make sure to learn about how it works
What is cryptocurrency?
Cryptocurrency is an alternative to fiat currency, such as the USD and pounds. Like fiat currency, cryptocurrency is not controlled by a central bank or institutions. Crypto is owned by the community, and you are the real owner of your assets. You can send or receive without a centralized authority. All the transactions are recorded in the form of blocks in blockchain technology.
What is Blockchain?
Blockchain is a decentralized database where data or transactions are stored in blocks. The store data will not be changed and will be secure. All the transactions that occur on the blockchain can be viewed and verified.
For Example, A sends a message to B. It is visible to all networks, and the message is grouped with other data or transaction form a block and sent to miners a code they solve the complex problem to verify the transaction is valid and new block created added to blockchain and send your message to B.
Cryptocurrency Examples.
There are thousands of cryptocurrencies. Some of the best known are
- Bitcoin: Bitcoin was developed in 2009 by a mysterious individual or organization named Satoshi Nakamoto. Bitcoin is the most widely traded cryptocurrency.
- Ethereum: Developed in 2015. They are known for their smart contracts functionality. When paying gas fees, you use their native token name, ETHER(ETH). Eth is the second popular cryptocurrency after Bitcoin.
- Litecoin: similar to Bitcoin. but uses more quickly to innovation, known for the fast payment and less processing time to allow more transaction than bitcoin.
How to Buy Cryptocurrency?
Using cryptocurrency is not as difficult as it looks. You need to follow a few steps to buy your first cryptocurrency.
Select a Platform: There are many traditional brokers and cryptocurrency exchanges where you can buy and sell crypto.
- Traditional Broker: Many brokers allow you to buy different cryptocurrencies along with stocks, bonds, and ETFs. These platforms are mostly cost-effective but with limited crypto resources.
- Cryptocurrency Exchange: There are many cryptocurrency exchanges. Offers different cryptocurrency options, wallet features, and fees.
Before selecting any platform. Make sure to check their fee, deposit, and withdrawal options.
How to store cryptocurrency:
After buying your first cryptocurrency, you store it in a hot or cold wallet. Both have their pros and cons.
- Hot wallets: These refer to crypto storage that uses online access to secure your private keys. You can access your cryptocurrency anytime using platform apps. But using hot wallets. You are not in control of your assets. In case your passwords are compromised or your platform got hacked. You lose all your assets.
- Cold wallets: Consider the most secure way to store cryptocurrency. Like (Hot wallets) refer to crypto storage hardware devices. Where you safely secure your keys offline.
Conclusion:
Cryptocurrencies are now rapidly gaining acceptance and popularity. With proper research, secure storage, and a trusted platform. You can invest in cryptocurrency.