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Understanding Cryptocurrencies

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UNDERSTANDING CRYPTOCURRENCIES

This is the 21st century, and surely the word cryptocurrency isn’t novel again. Even kids and adolescents have heard of the word and make use of it in sentences. News flashes everyday pick out events and activities surrounding the cryptocurrency world; hence, it is no longer a new word. In as much as the word is prevalent, the concept of cryptocurrency isn’t entirely understood or known by many like the back of their palms. To some its just Bitcoin and other coins that are of high value, well you might not be wrong. But for further and clearer understanding, keep on reading.

Cryptocurrency is a digital currency designed to work as a medium of exchange through a network that is not reliant on any central authority such as governments or banks to uphold or maintain it. By this, they are theoretically immune to government interference or manipulation. Cryptocurrency are digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Majority of cryptocurrencies are decentralized networks based on blockchain technology. It’s a peer-to-peer system that can enable anyone anywhere to send and receive payments. Instead of physical money carried around and exchanged in the real world, cryptocurrencies payments exist purely as digital entries to an online database describing specific transactions. Cryptocurrencies are stored in public ledgers. Cryptocurrency uses encryption to verify its transactions. This means advanced coding is involved in storing and transmitting cryptocurrency data between wallets and to public ledgers. Hence, it’s imperative to note that Cryptocurrency is safe and secured.

If you own any cryptocurrency, you don’t own anything tangible. Shocking right? But you do own something valuable. What you own is a key that allows you to move a record or a unit of measure from one person to another without a trusted third party. Units of cryptocurrency are created through a process called mining, which involves using computer power to solve complicated mathematical problems that generate coins. Its also possible to buy currencies from brokers, then store and spend them using cryptographic wallets.

Bitcoin is the most popular and valuable cryptocurrency under present market value. It was invented by an anonymous person called Satoshi Nakamoto widely believed to be pseudonym for an individual or a group of people in 2009. It was the first cryptocurrency and is still commonly traded. Ethereum is another cryptocurrency that operates on its own blockchain platform. It was developed in 2015 and its the most popular after bitcoin. It is called Ether (ETH) or Ethereum. Other cryptocurrencies include Ripple, Litecoin etc.

still commonly traded. Ethereum is another cryptocurrency that operates on its own blockchain platform. It was developed in 2015 and its the most popular after bitcoin. It is called Ether (ETH) or Ethereum. Other cryptocurrencies include Ripple, Litecoin etc. Now you might be wondering where you can buy cryptocurrencies from and you have to do so safely because scammers are on roar. Well, there are three basic steps involved and they include:

The first step is deciding which platform to use. You can use the traditional brokers or the Cryptocurrencies exchanges. The traditional brokers are online brokers who offer ways to buy and sell cryptocurrency, as well as other financial assets like stocks, bonds etc. The cryptocurrency exchanges are the most popular and widely used as they offer many cryptocurrencies, wallet storage, interest-bearing account options, trading options etc. Examples of these are Binance, Blockchain, Metamask etc.

The next step is funding your account. Crypto exchanges allow users to buy crypto by funding their account through Fiat currencies (i.e., government issued currencies like the Dollar, Euro, British Pound etc.), some even allow debit or credit cards, although these varies by platform as crypto purchases with cards are deemed risky and some banks and financial organizations don’t even allow crypto transactions on their cards. Some agencies allow ACH (Automated Clearing House) transfers and wire transfers.

The last step is placing an order via your chosen exchange platform or web. If you are planning to buy cryptocurrencies, you can do so by selecting “buy”, choosing the order type, entering the amount of cryptocurrencies you would like to purchase and confirming the order. The same process applies to the “sell” orders.

In summary, the blockchain's decentralization is a distributed database that keeps a library of resources and trades across a peer-to-peer network. With this understanding of what decentralization is, if you don’t own any cryptocurrency yet, you just might be ready to own your first one

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