Beginner’s guide to Cryptocurrency
This guide is for beginners who are interested in investing in the cryptocurrencies. After going through the entire guide, now you know what is the meaning of cryptocurrency, how to invest in it, is it secure to invest in it and what are the factors that you have to consider before investing.
What is Cryptocurrency Definition?
- It enables fast and direct transactions between the parties.
- The end user has Full control over the payments and balance and you can also earn and spend with much ease and transparency as there is no need to rely on the central authority to validate the transactions.
- All the validation is done by the Cryptocurrency network.
- Unlike banks, they are not even susceptible to hacking attacks and along with that,
- The transaction time is also much lesser.
- Usually, you trust various institutions like banks who protects your money and information and along with that, they manage all your transactions. In the case of cryptocurrencies, there is no requirement of any central authority and all the transactions are managed in a distributed fashion.
3 Minute What is CryptoCurrency Video
How does Cryptocurrency work?
It is a cryptographic invention which was developed on an application that supports multiple technologies and cryptocurrency is just one of them. A block refers to a complex problem based on cryptographic technology which computers solve and once it is solved the block is completed. In case any information of the block is changed then it becomes invalid. Therefore, whenever a new block is created then it takes data from the previous data creating a link which is termed as blockchain.
There are people known as miners who are responsible for bundling together the transactions and solving the puzzle. Sometimes it could be a difficult task and so they need powerful computers. Miners are even paid for their work either in form of coins or in form of transaction fees.
- Distribution of ledger
Whenever any miner solves a new block, then they inform it to the network for getting the acceptance of the new block. All other miners verify the transactions which are just a security measure to ensure that nobody else tries to facilitate invalid transactions.
Once the additional blocks are added up in the chain, the old transactions are considered as confirmed. A block is trusted on the basis of confirmation it receives. When the network verifies the ledger, then it is termed as distribution ledger.
How secure is Cryptocurrency?
Security is one of vital concern as you are dealing with money.
In order to ensure that individuals and entire network are secure, cryptocurrencies have numerous security measured in the technology.
Each one is made secure by a private key. The owner only has the access to that key.
Whenever you want to place a transaction you have to first sign in digitally with the private key and prove that you are authorizing the transaction then only you can digitally sign it using the key.
Various famous Cryptocurrencies
BTC is the original Cryptocurrency and it is the market leader due to the reputation it has got worldwide. The security and the huge community base powering it are some of the reasons due to which it holds an important place and receives the attention of the media across the world.
Many retailers accept payment through Bitcoin and some of them allow customers to purchase gift cards using it.
Currently, Bitcoin is the most valuable cryptocurrency in the world.
(ETH) is the currency which is designed for helping the companies to deploy the applications on the distributed blockchain. If the condition of Bitcoin is considered, then it acts simply as a digital currency cash system. Here the Ether acts mainly as the fuel for powering all these applications so it is considered as Swiss army knife.
(XRP) is that form of digital assets which aids in making the payments easy and cheap across the globe through various financial institutions. For meeting the demands of the institutions, this technology is particularly designed. It is capable to handle more transactions in less time in comparison to Bitcoin that’s why it has a strong list of customers across the world.
It was first released in the year 2012 as a ‘lite’ version of Bitcoin. It was built using much of the original Bitcoin code base so there were numerous advantages of using it as compared to Bitcoin. Few people even referred to it as ‘test bed’ for Bitcoin.
How to begin with Cryptocurrency?
Once you have understood the basic concept of cryptocurrencies, now you have to undergo a few simple steps to begin investing in it.
Before you are going to invest in the cryptocurrencies, it is essential that you get an overview of the market. Once you know the market, now you can visit a crypto site where you will get complete idea about the whole trading process. Below mentioned are some of the factors that you have to consider before beginning:
- Market cap
One of the most important factors that you have to consider is the market cap. It is the summation of total coins in circulation in comparison to the current price. Therefore, it tells you about the value of the coin by figuring out value according to the number of coins in circulation. If there is a blue line in market cap that means the market is doing well.
Another factor that has to be considered is a volume which is the fiat value of the currency traded in a day. This will enable to know the number of coins in circulation. Only after knowing the number of coins the actual value could be estimated.
Every time you go for investing, the price must be compared so that you select the best one for investing. On the simple theory of demand and supply, the price of the coins depends. Therefore, when the price increases you can sell and buy when it decreases.
- Buy Goods with Crypto
Many business are now accepting Crypto as a payment form. Therefore you can buy for goods and services using Crypto
- Invest with CryptoCurrency
Similar to investing in Stocks, Fund, FX you can invest CryptoCurrency as an investment.
- Receive Payment with Crypto
Many business are now accepting Crypto as a payment form
These are a few factors that you have to keep in mind while investing in cryptocurrencies. You will never get disappointed by the return that you receive from that investment that you have made after analyzing all the facts in detail. This guide is for beginners who are interested in investing in the cryptocurrencies. After going through the entire guide, now you know what is the meaning of cryptocurrency, how to invest in it, is it secure to invest in it and what are the factors that you have to consider before investing.