Cryptocurrency: The Ultimate Beginners Guide
Cryptocurrencies have become extremely popular in recent years and will continue to grow even more so. This guide is a must-read if you want to understand the world of cryptocurrencies and how they can make you rich.
- Cryptocurrencies are digital (or virtual) currencies that can be stored, sent, or received as tokens through blockchain networks.
- The first ever cryptocurrency was Bitcoin, which was founded in 2009.
- Since then, over 1400 different types of crypto coins have been created as of January 2018.
- There are also many subtypes of virtual currencies such as unique flavors of tokens called ‘altcoins’ or alternative coins.
- Another type is ‘centralized’ vs ‘decentralized’ distinctions which we will cover in this article.
What is the difference between cryptocurrency and decentralization?
A centralized currency is controlled by one entity, such as a government, bank, or broker. In short, the rules and regulations of the currency are controlled by a single entity and all transactions occur on a central database.
A decentralized currency has no single controlling authority. In short, the rules and regulations of the currency are distributed across a network of computers and all transactions occur on a decentralized database.
If you want to buy a product or service with a centralized currency, you need to first exchange it for the currency of the country in which the vendor accepts payment.
However, if you want to buy a product or service with a decentralized currency, you need to first exchange it for a centralized currency like the U.S. dollar and then use the centralized currency to make the purchase.
How do cryptocurrencies work?
Let’s say you want to buy a specific cryptocurrency. There are two ways to do so: - ‘Buying on an exchange’ or ‘Buying with cash’. The first option is to buy crypto coins on an exchange.
You can deposit fiat currency like USD, EU, R, or your own country’s currency along with an agreed amount of a digital token such as Bitcoin or Ether. The other way to buy is to use cash to buy any crypto coins such as Bitcoin or Ether in your own country from a person selling it.
After you buy the digital tokens, you store them in a digital wallet. The wallet is just a digital account or app where you store your digital tokens. You can store your digital tokens in a wallet that you create on your computer, laptop, or smartphone. The wallet is secured with a long alphanumeric password that only you know to unlock.
You can also store your digital tokens in a ‘digital wallet’ provided by an exchange where you bought the coins. The wallet is also secured with a long alphanumeric password that only you know to unlock.
Who invented Bitcoin?
The idea of a decentralized, virtual currency that no government or financial institution could control came from an anonymous individual named Satoshi Nakamoto. No one knows who he is but many believe he is from Japan.
Satoshi created the first ever cryptocurrency, Bitcoin. At that time, the value of one Bitcoin was $1. However, the price of Bitcoin grew steadily over the years. Within a few years, the value of one Bitcoin was more than $1000.
How to buy and store cryptocurrencies?
The first step is to find a cryptocurrency exchange where you can buy and sell different types of cryptocurrencies. You can also buy them from friends or family who are also holding cryptocurrencies. There are many different cryptocurrency exchanges and websites where you can buy and sell cryptocurrencies.
You can choose whichever crypto exchange you want based on its popularity, user reviews, and its fees. You can also choose an online crypto broker. Once you buy cryptocurrencies, you need to store them in a digital wallet. There are many different types of wallets and you have to choose the one that you find secure and trustworthy.
Why should you invest in cryptocurrencies?
You should invest in cryptocurrencies because they are global, decentralized, and available 24/7. They are not controlled by a single government or financial institution, making them borderless and open to everyone.
There is a very limited supply of cryptocurrencies in the market, making them a great investment opportunity for the future.
These digital tokens will continue to grow because more people will adopt them as a use case for transferring money across countries.
Conclusion
Cryptocurrencies are digital or virtual currencies that can be stored, sent, or received as tokens through blockchain networks. The first ever cryptocurrency was Bitcoin, which was founded in 2009. Since then, over 1400 different types of crypto coins have been created as of January 2018.
- There are also many subtypes of virtual currencies such as unique flavors of tokens called ‘altcoins’ or alternative coins.
- Another type is ‘centralized’ vs ‘decentralized’ distinctions which we will cover in this article.
- There is a very limited supply of cryptocurrencies in the market, making them a great investment opportunity for the future.
- These digital tokens will continue to grow because more people will adopt them as a use case for transferring money across countries.