Cryptocurrency is one of the most exciting investment opportunities, if not the most. In simple terms, cryptocurrencies are digital currencies used for various purposes, from running a network to regular transactions like fiat currency. More and more investors are displaying interest in crypto ever since the bitcoin boom of 2017. Experts believe that cryptocurrency has the potential to replace regular currency in the coming years.
Getting started with crypto is as simple as it can be. You can even start investing in some stable coins with just the basic knowledge of how crypto works. In this article, we’ll see everything you need to know about cryptocurrencies.
What is Cryptocurrency
Any digital currency that uses a cryptographic network is called a cryptocurrency. Generally, cryptocurrencies use a technology called blockchain to maintain transactions. Blockchain is a digital ledger and is one of the most secure technologies in the world.
Introduced by Satoshi Nakamoto in 2009, bitcoin is the first and the most popular cryptocurrency in the world. Blockchain technology was also introduced in the same whitepaper. Cryptocurrency is safer than regular currency for a lot of reasons.
One of the major safety features of cryptocurrencies is that they make hacking the network an implausible task. Of course, these networks can still be hacked, but the hacker can gain more advantages by contributing to the network’s security than hacking it, which removes the motive from the equation.
Cryptocurrencies have a lot of use cases. Bitcoin, the most popular crypto, is used as an alternative payment token. That’s the most basic use case of a cryptocurrency. Tokens like Ether, Polka Dot, Ada can be used to run entire networks and are used as governance tokens for these networks.
Other cryptocurrencies are used to play games, exchange assets, stream videos, speed up Torrent downloads, etc. There is a genuine possibility that we may see cryptocurrencies being used for almost everything digital. Major retailers like PayPal are already accepting crypto as a form of payment.
How Do Cryptocurrencies Work?
The working of cryptocurrencies is quite simple. In their most basic form, users can use crypto as a form of payment. Just like how we use physical wallets to store money, cryptocurrencies are also stored in wallets. These wallets are digital and come with a wide range of features.
Whenever someone sends some crypto over a network, the transaction is stored in the blockchain. The network checks the total transactions from the wallet and ensures that the wallet does have enough funds to make that transaction happen.
If the funds are insufficient, the transaction will not proceed, and you will have to repeat the whole process. When transacting, you pay a small gas fee to help maintain the network. The gas fee not only helps prevent inflation but also rewards the nodes that are maintaining the network.
Cryptocurrencies are virtual currencies that you can use for numerous things. You can start trading crypto by registering with any authorized cryptocurrency exchange.