Of course, many of you would ask what Cryptocurrency is or how it works. The thought of investing in the stock market scares many too. But, don’t worry, you’re not alone! For one thing, this guide is yours. Now that individuals with very limited experience in stock investing are either terrified by horror stories of the average investor losing 50% of their portfolio value.
For example, let’s consider the two bear markets. In the two bear markets — that have already occurred in this millennium — or are beguiled by “hot tips” that bear the promise of huge rewards — but they seldom pay off. It is not surprising, then, that the pendulum of investment market sentiment is said to swing between fear and greed.
However, the reality is that investing in any stock market carries its own risks. But when approached in a disciplined manner, it is one of the most efficient ways to build up one’s net worth. While the value of one’s home typically accounts for most of the net worth of the average individual, most of the affluent and very rich generally have the majority of their wealth invested in stocks.
That’s why cryptocurrency such as Bitcoin really matters. Why? Simply, because most cryptocurrency enthusiasts are expecting more from it — Bitcoin has one of the best features in the cryptocurrency world. So, what is cryptocurrency really?
What Cryptocurrency Is All About (The Main Types)
Cryptocurrency (or “Crypto”) is a digital currency that can be used to buy goods and services. Whilst using its strong online Cryptography for secure online transactions. Much of the interest in these unregulated currencies is to trade for profit. Not to mention, with speculators at times driving prices skyward.
In short, a cryptocurrency is a form of payment that can be exchanged online for goods and services. Many companies have issued their own currencies, often called tokens. And more specifically, these can be traded for goods or services that the company provides. Perse, you can think of them as you would arcade tokens or casino chips.
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Whereby, you’ll need to exchange real currency for Cryptocurrency to access such goods or services. Normally, they work using a technology called a Blockchain. If you’ve been following banking, investing, or Cryptocurrency over the last ten years, you may have heard about the term “Blockchain.” This is the same record-keeping technology behind the Bitcoin network.
So, what is the role of Blockchain Technology in this case? To enumerate, a Blockchain is a decentralized technology spread across many computers to manage and record transactions. Whilst, keeping in mind, part of the appeal of this tech is its security.
At one point, the government wanted to put controls on cryptography similar to the legal restrictions on weapons. But the right for civilians to use cryptography was secured on grounds of freedom of speech. The first Blockchain-based cryptocurrency was Bitcoin. Bitcoin still remains the most popular and most valuable.
More Details: The 10 Most Important Cryptocurrencies Other Than Bitcoin
However, as of today, there are thousands of alternative Cryptos with various functions/specifications. Some are Bitcoin clones or forks of Bitcoin that have flooded the marketplace recently. While others are new currencies that were built from scratch.
Bitcoin was launched in 2009 by an individual/group known by the pseudonym “Satoshi Nakamoto” who is still a dark face to date. Notably, as of November 2019, there were over 18M Bitcoins in circulation. With a total market value of around $146B.
Some of the competing cryptocurrencies spawned by Bitcoin’s success, known as “altcoins,” include Litecoin, Peercoin, and Namecoin, as well as Ethereum, Cardano, EOS, and more. And as of today, the aggregate value of all the Cryptocurrencies in existence is around $214 billion. Currently, Bitcoin represents more than 68% of the total value.
How Does Cryptocurrency Work?
In basic terms, Cryptocurrency is a digital currency that isn’t regulated or controlled by any government or other financial authority. Cryptocurrency relies on secret codes to verify transactions. And while Bitcoin has entered the mainstream, there are actually more than 700 types of cryptocurrency. Perse, the future of the cryptocurrency world is very unpredictable.
Therefore, we can only anticipate a brighter future for this coin especially since the founders are experts in the cryptocurrency world. To start the cryptocurrency work, you’ll first buy some from an online exchange and choose a digital wallet to keep it secure. You can save it, or use it to purchase goods and services by exchanging your secret codes.
Learn More: Blockchain Vs Database: Understanding Their Main Difference
With that in mind, are you still wondering how to mine cryptocurrency? Well, you can read and learn more about what is cryptocurrency mining (how to mine cryptocurrencies) is all about through BitDegree in detail. And then also, discover other crypto types (as well as how to Mine Bitcoins for free) and trading options with the how-to beginner guides.
Simply put, Crypto Mining is a process in which a machine performs certain tasks to obtain a little bit of Cryptocurrency. Your PC would perform specific tasks that are required to be able to obtain even the slightest amounts of Cryptocurrency.
These tasks are called “Proof of Work”, and they are designed to create a fair playing field for all the different miners out there. The tasks themselves are Math Equations. And as a result, the more miners want to mine one, specific mining pool — the tougher the equations become. This brings balance to the pool, but it also motivates bigger and stronger machinery usage.
Resource Reference: How much power it takes to create a bitcoin by the balance
Many more subtle factors come into play while the mining process is happening. But, the general idea is that if your device contributes to the “mining”, you’ll get a share of the spoils. Some mining methods include Cloud Mining, CPU Mining, GPU Mining, ASIC Mining, and much more. Regardless of the number of miners, it still takes 10 minutes to mine one Bitcoin.
At 600 seconds (10 minutes), and all else being equal it will take 72,000 GW (or 72 Terawatts) of power for mining Bitcoin (BYC) according to finder.com. That’s using the average power usage provided by ASIC miners. By mining, you can earn Crypto without having to put down money for it.
For instance, Bitcoin miners receive Bitcoin as a reward for completing “blocks” of verified transactions that are added to the Blockchain. That’s a very short and simple way of defining what is Cryptocurrency mining. Unfortunately, for beginners, before you even think of Mining Crypto, below is a more simplified process you’ll need to consider:
1. Decide The Cryptocurrency Types
For your information, there’re many different Cryptocurrencies out there. The right Cryptocurrency for you depends to a large extent on what you want to do with it. As an example, Bitcoin was the first cryptocurrency. It’s the most well-known and the most valuable. If you want to use your Crypto to purchase goods and services, Litecoin may also be a good choice.
Generally, choose an exchange that offers the cryptocurrency you want for the lowest fees possible. All in all, if you’re looking at smaller niche Cryptocurrencies, do some research first to make sure it will suit your purposes.
2. Choose A Cryptocurrency Exchange
Technically, there’re hundreds of Cryptocurrency Exchanges, but not all exchanges work in all countries. Different exchanges also offer different types of Cryptocurrency. They also accept different methods of payment and charge different fees. And in that case, you can compare between 3 or 4 exchanges to choose the one that’s best for you.
But, make sure you understand the exchange’s interface and how to use it. Because exchanges are extremely vulnerable to hackers, carefully assess each exchange’s security. On crypto exchanges, higher fees don’t necessarily correspond to better service or more protection.
3. Create A Trading Account
To buy cryptocurrency, you must register as a user and verify your identity. And then, in order to start, you’ll provide basic information about yourself. Including your name, address, phone number, and email address. You’ll also need to scan both sides of a government-issued photo ID to verify your identity.
The exchange will send you a text or an email with a code that you’ll use to verify your email address in a few simple steps. Realistically, this code is part of Two-Factor Authentication (2FA) and makes your account secure. More than just simply entering your username and password.
4. Connect Your Payment Method + Place An Order
If it’s your first time buying Cryptocurrency, you’ll have to use fiat currency, which is a national currency such as dollars or euros. Most exchanges will allow you to pay by connecting your bank account, or by using a credit or debit card. Some crypto exchanges accept payment through other payment services, such as PayPal.
Typically, you’ll specify the type of cryptocurrency you want and the amount of “coins” (or fractions of a coin) you want to purchase. You may also have the option of specifying the amount of money you want to spend. The amount of cryptocurrency you get for that money depends on the value of that Cryptocurrency.
Similarly, the exchange works like that of the stock exchange. So, if you’re familiar with placing an order to buy or sell a stock, you shouldn’t have any trouble navigating orders for cryptocurrency. You can also buy one type of Cryptocurrency with another type of Cryptocurrency. The values of different Cryptocurrencies relative to each other fluctuate.
5. Learn The Cryptocurrency Pros & Cons
Central to the appeal and functionality of Bitcoin and other cryptocurrencies is all about blockchain technology which is used to keep an online ledger of all the transactions that have ever been conducted. Thus providing a data structure for this ledger that is quite secure. Consider the likes of Blockchain.com — a cryptocurrency blockchain explorer service.
As well as a cryptocurrency wallet and a cryptocurrency exchange supporting Bitcoin, Bitcoin Cash, and Ethereum. They also support the stock market and provide Bitcoin data charts/stats. In addition to offering other more useful market information (learn more). Every new block generated must be verified by each node before being confirmed.
Whilst, making it almost impossible to forge transaction histories. And now, just as we mentioned earlier, Cryptocurrencies are systems that allow for secure payments online. “Crypto” refers to the various encryption algorithms and cryptographic techniques that safeguard these entries. Such as elliptical curve encryption, public-private key pairs, and hashing functions.
