Do you know what is cryptocurrency?
Don’t say cryptocurrency is actually decentralized digital money. Because we know, it is digital money but what does that actually mean are there real coins and notes. Are they stored in banks or lockers and can we use them for purchasing daily life products?
All these questions may arise on your brain once you hear the word cryptocurrency. However, don’t put too much pressure on you as this guide will be your perfect guide in understanding the realm of cryptocurrency.
Define Cryptocurrency
One cannot define what exactly is cryptocurrency. However, every cryptocurrency must have these below mentioned things to be called cryptocurrency.
- These have existed only on the computer as there are no real coins and bank for storing them.
- These currencies are distributed across the network of more than thousands of computers and they don’t have a centralized server or computer.
- Cryptocurrencies are passed from one person to another and here you will not have to deal with the bank directly.
- You have full control over your money and have full information about that money at all times.
- You are given a unique code called cryptography which means no one can actually use your cryptocurrency or you can say it is impossible to hack.
- Cryptocurrencies are called currencies without any border and can be sent all over the world.
Understand Bitcoin
Cryptocurrency without Bitcoin? Not a chance! The first Bitcoin transaction of 10BTC was made in 2009. Moreover, then in the year 2011, one Bitcoin was equal to one USD. Eventually, it gained the attention of the people all around the world and in the year 2017, it was equal to 20,000 USD and its worth still growing. Blockchain technology is the thing that is making cryptocurrency different from fiat currency.
What is Blockchain Technology?
Distributed Ledger Technology is a shared database used by all cryptocurrencies so that they can successfully remove all third parties from their systems. One of the most used DLT used by cryptocurrencies is blockchain technology.
The database where you can find detail about every transaction done by a particular cryptocurrency is blockchain. You can even say that a blockchain is the linear chain of blocks where you cannot delete or change any information once they are added. All the database is stored on nodes i.e. network of thousands of computers and you can add new information on a node only when there is consensus. Moreover, this where cryptocurrency differs from normal banking. All the cryptocurrency is verified in the mining process. So, our next destination is a cryptocurrency mining
Cryptocurrency Mining
By hearing the term mining, you may think digging of gold or coal, however, it is the mining of new bitcoins. Here, miners usually try to encrypt the transaction information sent by one user to another. And once the transaction information is encrypted then it is hashed and sent again. This process stops when a miner guesses what the right code is and then, as a result, a new block is added to the blockchain.
How to Use Cryptocurrencies?
One cannot hold or use cryptocurrency like fiat currency. You can access your cryptocurrencies if you have codes that too public key and private keys. If someone is sending you cryptocurrency then they need your public key on the other private key is like a password that can be only seen by you. both these keys are kept in the wallets be it offline, online, hardware, software. If you have the key with you then only you can prove that you have the cryptocurrency so protect it wisely.
Rise of the Cryptocurrency Realm
After the success of Bitcoin, hundreds of new cryptocurrencies have been created be it Litecoin, Ethereum, Ripple, IOTA, and more. It is extremely important that you get a professional to help you with your Coinbase tax reporting, or any cryptocurrency for that matter.
If you want to learn more about cryptocurrency then you can join the BitMEX Trading Signals groups in Telegram. Here you will get connected with experts who can clarify all your doubts regarding this digital currency.
