Exploring Cryptocurrency? Then you are in the right place. Here is our guide on All about Cryptocurrency in quick and simple words. Let’s start with some basic questions.
What is cryptocurrency?
Cryptocurrency is a digital currency encrypted in a computer network. Blockchain monitors and organizes the cryptocurrency. Blockchains are a peer-to-peer network system. Which records the transactions done by any cryptocurrency. It maintains a secure database of transactions such as buying, selling, and transferring.
Cryptocurrencies are decentralized and therefore do not involve any third-party involvement like that of banks or any government financial institutions.
Cryptocurrencies exist as assets that are stored in online databases called ledgers which are strongly encrypted as well. These currencies cannot be physically handed to buy items offline but are rather exchanged only online. Cryptocurrency can be traded and kept in digital wallets that can be used to later buy goods or services.
Are cryptocurrencies safe?
Cryptocurrency literally translates to encrypted money. Also, it uses complex cryptic codes to track transactions. This also entails that the exchange of cryptocurrencies requires coding between storage digital wallets. The decentralized and public characteristics of distributed ledger technology. As well as the encryption process that every transaction goes through makes the blockchain technology that supports cryptocurrencies inherently secure. Therefore, we can say that cryptocurrencies are safe and secure to use.
What are the advantages of cryptocurrency?
- Cut off from banks and financial institutions
- Easier transfer of funds
- Faster transactions
- Cryptocurriencies generate profit
- Cheaper investment
What are the disadvantages of cryptocurrency?
- Crypto transactions claim to be anonymous. But government authorities can track it.
- Popular among criminals doing money laundering and illegal purchases
- Crypto in reality are concentrated
- Mining cryptocurrency is costly and energy-consuming
- It exchanges and wallets are prone to hacking
- These are highly volatile.
What are the various popular cryptocurrencies?
Some popular cryptocurrencies are-
- USD Coin
What are the steps to buying cryptocurrency?
The steps to buying cryptocurrency are as follows-
Step 1. Pick a good Crypto Exchange or a Broker.
Step 2. Create and verify your account.
Step 3. Create and verify your account,
Step 4. Deposit funds to invest.
Step 5. Choose a Method of Storage
How is cryptocurrency generated?
Cryptocurrencies are created by cryptographic methods that are maintained and confirmed in a process known as mining. Mining refers to a process by which transactions are processed and validated by a network of computers or specialized hardware such as application-specific integrated circuits (ASICs).
Firstly, the process of mining requires you to download software that provides a partial or complete history of transactions across the same network. The process is so simple that it can perform by anyone having a computer and an internet connection. But the mining business is mostly with large corporations because of its extensive use of resources.
How can you store cryptocurrency?
There are two ways in which you can store your cryptocurrencies-;
- Hot wallet storage: These are online software that stores your cryptocurrencies or assets.
- Cold wallet storage: These are offline stores electronic devices that store your assets.
Conclusion: Cryptocurrency is a virtual currency. Ledgers are used to store it. And it is exchanged using complex codes and hence is encrypted. Crypto is a decentralized entity. And does not involve any third party. The virtual currency can store in digital wallets. And it is useful to buy goods and services online.