Cryptocurrency has taken the world by storm, and even if you don’t think it can have an impact on your life, it probably already has. You may not understand how or why, but chances are that you’ve heard of the mysterious new digital currency and have likely even used it once or twice. If you’re looking to go further down the rabbit hole, this guide will help you learn everything there is to know about cryptocurrency and why you should care about this technology that has everyone excited.
What is blockchain technology?
Blockchain technology is a decentralized, distributed ledger that allows for secure, transparent and tamper-proof record-keeping. In other words, it’s a digital ledger of transactions that is shared among a network of computers, rather than being stored in a central location. This makes it incredibly difficult for anyone to tamper with the data. To edit or change anything on the blockchain, someone would need to make sure they were altering every copy of the blockchain on every computer at precisely the same time. Not impossible but extremely unlikely. What is cryptocurrency? A cryptocurrency is any kind of peer-to-peer digital currency powered by cryptography. It uses strong security features and math to create reliable money systems. Basically, cryptocurrencies are designed to be fast, easy, safe and anonymous so you can have fun purchasing goods without your credit card number or identity revealed. For example, if you want to buy something from a site online like eBay or Craigslist, you’ll typically have to use some form of payment. Bitcoin provides a way around this.
For example, say I wanted to buy an iPhone from eBay for $500 US dollars but I don’t want my bank account linked directly with eBay because then my financial information will be vulnerable and available on their servers where it could get hacked into. With bitcoin, all I have to do is find somebody who has bitcoin and wants to trade them for cash. If they’re not interested in exchanging them straight up, I might offer them a 10% discount on what they’re selling just so long as they’ll take the bitcoin instead of cash. Once I’ve agreed upon terms with the seller, we simply agree upon a place to meet (typically somewhere public) and complete our transaction there. All that’s left after that is waiting until my new iPhone arrives!
How can you get involved in the world of cryptocurrency?
One way to get involved in the world of cryptocurrency is to start mining. Mining is how new Bitcoin and other cryptocurrencies are created. Miners are rewarded with cryptocurrency for verifying and committing transactions to the blockchain, a distributed public ledger. In order to start mining, you need to set up a mining rig with a specialized computer and join a mining pool. Another way to get involved in cryptocurrency is to trade on a cryptocurrency exchange. You can buy and sell different cryptocurrencies on these exchanges. Finally, you can also develop blockchain applications or invest in ICOs. It’s like an IPO but instead of stocks, they offer digital coins called tokens. Blockchain developers use them to raise money from investors without any regulatory agencies or centralized authority governing them. These startups are often focused on specific sectors such as law, real estate, finance, or even gaming. If investing isn’t your thing then you could always just trade cryptocurrency pairs based on their volatility and momentum indicators (i.e., technical analysis). With this approach to trading cryptocurrency pairs; it’s not enough just to study price movements – there are patterns that form over time across markets due to sentiment changes that affect traders’ emotions which makes it hard for beginners who don’t have sufficient data points yet
Buying your first cryptocurrency coins/tokens
So, you’ve decided to venture into the world of cryptocurrency. Since then, thousands of other cryptocurrencies have been created. These are often called altcoins, as a play on Bitcoin’s name. Each cryptocurrency has its own blockchain, which is a digital ledger of all transactions made with that currency. When you buy cryptocurrency, you are essentially buying a piece of that blockchain. In order to do this, you need a cryptocurrency wallet. This is where you will store your coins/tokens. There are many types of wallets, but some of the more popular ones include hardware wallets like Ledger Nano S and Trezor, online wallets like Exodus or Jaxx Liberty, desktop wallets like Exodus (desktop) and Mist (desktop), paper wallets like MyEtherWallet (paper) or CoinPaper. For beginners, we recommend an online wallet because it can be accessed from any device anywhere with internet access. You can find instructions for setting up an account at Exodus or Jaxx Liberty. We also recommend purchasing Ethers at Coinbase before you start investing in any other coins/tokens so that if anything happens to your account (such as if it gets hacked), you still have some money to work with. With Ethereum, you can purchase various tokens and use those tokens to participate in ICOs (Initial Coin Offerings).
Learning more about cryptocurrencies
Unlike dollars, euros, or yen which are controlled by central banks, cryptocrurrencies aren’t under a single governing entity. Bitcoin is one of the most popular cryptocrurrencies in existence. Bitcoin was introduced in 2009 and is popular around the world for making international transactions. Other cryptocurrencies that emerged after that include Ethereum, Litecoin, Ripple, and Monero. Without a governing body regulating these cryptocurrencies, their volatility makes them subject to strong change. Cryptocurrencies allow for a fast and simple transfer of funds between two parties of a transaction. since these transfers do not require an intermediary like with traditional forms of payment like wire transfers or credit cards, they happen quickly and are relatively inexpensive. On the downside, this anonymity has made cryptocurrency a good option for dark web users who want to purchase illegal goods from sites. In other words, you need a wallet app on your phone that you can store your cryptocurrencies on, otherwise if you don’t know what you’re doing you could lose your digital coins. You also need to make sure that the exchange you choose is legit before exchanging money. For example, there have been cases where people were told they were buying bitcoin when it was actually ethereum because of name confusion. So before choosing an exchange be sure it’s secure enough to invest.