The notion of cryptocurrency has attracted some and turned others off, and the idea has likely puzzled even more people. Some think it is an online fad while others support it as the wave of the future. There is a group who believes the technology behind cryptos can change the world for the better.
But, they are other investors who see it as a dangerous trend that wastes energy. So, many newbies in the crypto arena always have this question of what is cryptocurrency.
Therefore, if you are looking to get into the cryptocurrency game, you need to understand what is a cryptocurrency, and you need to understand what it is all about.
So Let Us Walk Through the Whole Story. What is Cryptocurrency?
Instead of a tangible piece of fiat currency, you can carry with you; a cryptocurrency is a digital asset that you can exchange.
In other words, a cryptocurrency is a virtual or digital currency created to work as a medium of exchange. It uses cryptography to secure and verify transactions and controls the creation of new units of a particular crypto. Therefore, cryptos are simply limited entries in a database that nobody can change unless specific conditions are fulfilled.
Moreso, using crypto for an exchange instead of fiat currency, cryptocurrency owners do not have to rely on banks to facilitate transactions. They can successfully avoid the charges that come with using financial institutions.
However, cryptocurrency transactions are completed and processed through a blockchain network. Blockchains are created to be decentralized, and every computer connected to the system should successfully confirm the transaction before it can be processed.
So, this creates a safer transaction for the people involved. But, it can also lead to you waiting a while; for instance, one big complaint about Bitcoin is the time it takes for a transaction to go through.
Most common Cryptocurrencies
Bitcoin is the first cryptocurrency to emerge. It is a form of electronic cash and decentralized virtual currency which has no central bank. Network nodes verify its transactions via cryptography and record them in a blockchain.
Today, Ethereum is the second to Bitcoin in terms of market cap. What makes Ethereum stand out from Bitcoin is that instead of working as a currency and disruption for banking, Ethereum seeks to disrupt online data storage. The blockchain technology on Ethereum is popular for storing smart contracts.
It is crypto with private transactions abilities and one of the active communities, which is due to its privacy and open-focused ideals.
Litecoin has also frequently displayed its transaction speed in comparison to Bitcoin, and as a result, it is seen by some cryptocurrency fanatics as another potential altcoin that can become a genuine currency.
Unlike many cryptocurrencies, it does not use a Blockchain to reach a network-wide consensus for its transactions. But, Ripple and its XRP currency seek to help financial institutions. The strength of XRP’s as a currency is its ability to function in the middle of a transaction between two fiat currencies, minimizing liquidity.
What Can You Do With cryptocurrency
Accept as payment (for business)
If you wish to own a business and if you are looking for potential new customers, accepting cryptos as a form of payment as it may bring positive results. In this line, the interest in cryptos has never been higher, and it is going to increase. So, with the growing interest, also grows the number of cryptocurrency-ATMs located around the world.
Firstly, you should tell your customers that your business accepts crypto coins. You do this by putting a sign on your cash register. Therefore, the customers can make payments using touch screen apps; simple wallet addresses through QR codes or hardware terminals.
In the past, getting a merchant that accepts cryptos was extremely difficult, if not impossible. Nowadays, however, the situation is entirely different.
There are many merchants both offline and online that accept Bitcoin as the form of payment. They range from huge online retailers to small local shops, restaurants, and bars.
Moreso, Bitcoins can work as a payment method for hotels, flights, apps, computer parts, and even a college degree.
Furthermore, other digital currencies like Ripple, Ethereum, Litecoin, etc. are not accepted as widely just yet. But, things are changing for the better though, as with Apple having authorized ten different cryptos as a possible form of payment on App Store.
Moreover, users of other cryptocurrencies other than Bitcoin can always exchange their coins for BTCs.Moreso, there are Gift Card selling websites which accept around 20 different cryptocurrencies.
Therefore, through gift cards, you can easily buy anything with a cryptocurrency.
Many investors believe that cryptocurrencies are an excellent investment opportunity currently available. Indeed, there are some stories of people becoming millionaires via their Bitcoin investments. In other words, Bitcoin is the primary recognizable digital currency to date.
However, it is worth noting that cryptos are high-risk investments. The market value for bitcoin fluctuates like no other asset’s. Moreso, it is partly unregulated, there is always a significant risk of them getting outlawed in certain dominions, and any cryptocurrency platform can potentially get hacked.
Therefore, if you decide to invest in cryptos, Bitcoin is still the dominant one.
Is Cryptocurrency Safe?
There are many scams which one should take note of all the time. Cryptos are still a new thing that many people misunderstand, and it is easy to rip someone off.
As many wonder what is a cryptocurrency, others also think if it is safe? So, if you are cautious, careful and make the right choices, yes.
However, doing cold storage “keeping your wallet offline via a paper wallet” can keep your cryptocurrency offline.
Also, you need to keep your computer protected and updated. Do as much research as you can before selecting a cryptocurrency and the platform you wish to purchase the digital asset.