Cryptocurrency has garnered a lot of attention since its conception. It has its shares of ups and downs but is still going strong. New cryptocurrencies emerge every day and are catching people’s attention. For the beginners to the crypto-trading world, going in with information is imperative.
What is Cryptocurrency?
Cryptocurrency is defined as an internet-based medium of exchange using crypto-graphical functions for financial transactions. This is an alternate to the tangible currency that is not being carried around. It is a digital asset that can be easily transferred. It is exchanged between two parties using private and public keys that allow access to the cryptocurrency. Cryptocurrency does not rely on banks for exchange of the digital asset – the processing is instead completed over blockchain networks. They are designed to be decentralised so the transactions are only processed once confirmed.
There were several attempts to make a digital currency but they did not reach completion or did not gain popularity. The first cryptocurrency to reach a significant height of success was Bitcoin. It was launched in 2009 by an unknown entity only known as Satoshi Nakamoto. In the same year, the software was made public through a white paper letting people mine bitcoin themselves. It was seen as a novelty when it was released but managed to be established as an actual currency by 2010. Since then numerous currencies have been made. The value of these currencies including bitcoin varies. Bitcoin at its most successful was priced at $20,000 and currently averages at $7,000.
How to acquire it?
Cryptocurrency can be acquired through several methods such as mining it or outright buying it. Different places can allow an interested party to find cryptocurrencies. These places include cryptocurrency software, cryptocurrency exchanges, cryptocurrency ATMs, and cryptocurrency P2P. The place that is right for you depends on several factors. For example, if the currency you are interested to acquire can be done so using fiat currency or can only be acquired through exchange of another crypto; what is the amount you are willing to pay for it and how much time you have are another two factors that impact the process of finding cryptocurrencies.
Before deciding to enter into the crypto-trading world you need to decide whether you’ll acquire the cryptocurrency through mining – a time, resource and energy-intensive method or through buying it.
How to Mine Cryptocurrency
Mining the cryptocurrency is arguably the most difficult way of getting them. It is stated for the crypto-enthusiasts. This is because the mining process is time-consuming, requires resources and a large amount of energy. If you are looking to go the route of mining the cryptocurrency, maintain realistic expectations. Also, it is likely that even with so many efforts it may not result in much. Moreover, the costs of mining software and hardware along with the consistent adapting and updating will add up quickly. The energy needed will also do some substantial damage to your electricity bill.
Miners generally join in a pool with other miners so the cryptocurrency can be mined in less time. One computer cannot mine much at a single time. The cryptocurrency is mined through solving mathematical equations and is awarded at successful completion. With more people mining together there are better chances of mining significantly more. The mined cryptocurrency is then shared among the people involved.
How to Buy Cryptocurrency?
Mining is a strenuous process and not everyone is capable of spending the time and money required for it. They also may not have the capability of solving the complex mathematical equations needed to mine the cryptocurrency. Cryptocurrency in its early period could only be mined. Now it can be purchased in various ways.
The most common way to buy cryptocurrency is through a cryptocurrency exchange. The exchange platforms allow trading and purchasing cryptocurrency. Some cryptocurrencies can be bought for fiat currency, however, others can only be obtained if another currency like bitcoin is exchanged for them.
Bitcoin and other popular Cryptocurrencies
Bitcoin was one of the first successful cryptocurrencies and still the most notable. Many people who do not have information on cryptocurrency associate it with bitcoin. Other coins are referred to as altcoins with the most famous ones being Ethereum, Ripple, Litecoin and so forth. Ethereum comes after bitcoin in popularity. It differs from bitcoin because it attempts at disrupting data storage instead of being a currency and disrupting banks like bitcoin. Ripple helps financial institutions because of its ability to be used in the middle of a transaction of fiat currencies which will minimise the liquidity. Litecoin’s speed in transactions is similar to bitcoins.
E-Wallets or cryptocurrency wallets are the public or private key needed to buy the cryptocurrency and store it. The digital key will confirm the exchange and transaction and link the trader to the block chain network.
Just as there are several cryptocurrencies there are also several choices in digital wallets. The main factor behind deciding on the wallet is the consideration whether your choice of cryptocurrency is compatible with it. They include paper wallets and hardware wallets. The latter can be connected with the computer for purchases and then stored offline. Paper wallets will have public and private keys on paper and will not connect online.
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