Everything You Need to Know About Cryptocurrencies as a Beginner
At the moment, cryptocurrency is like the new kid on the block who seems to intrigue everyone. It’s skating away at a fast pace and changing the world of finance with absolute nonchalance. It’s got everything most millennials need right now. From high-end security to excellent return on investment, cryptocurrency has everything.
Cryptocurrency can be intimidating to think about, especially when you don’t have a working knowledge of business and finance. But, once you wrap your head around it, not only does it prove to be interesting but also fairly easy to understand. Today, we are going to talk about everything you need to know about cryptocurrency as a beginner.
What is Cryptocurrency?
Cryptocurrency, also known as digital currency, acts as a medium of exchange. The record of these exchanges among the public is stored on a ledger online called a blockchain. This means that all your transactions based on digital currency are stored in a secured database that is run by the public, instead of the government.
The name ‘Cryptocurrency’ came into being because of the strong encryption it uses to protect user databases online. The most interesting part about cryptocurrency is that even though the data is stored on a public network, nobody but the person who creates the encryption key has access to it.
Think of it as you would of a normal banking system with personal banking, finances, loans, transactions, but digitally. For example, let’s say you want to send someone money but are worried about the security of the transaction. Not only do centralized cryptocurrencies take care of the security angle, but there’s also literally nothing to steal unless you know high-end decryption.
Unlike paper money, cryptocurrency is not issued by centralized authorities like the government. They use decentralized control and are very much different from central banking systems. An example of cryptocurrency is Bitcoin, which is also one of the first cryptocurrencies to ever exist.
How Secure is Cryptocurrency?
Over the years, people have come to judge the integrity of digital currency because of its sheer nature. The fact that it’s a digital asset and not a cow to trade from the Middle Ages seems to have baffled people. As we mentioned earlier, cryptocurrency transactions are stored on a digital ledger called the blockchain.
Think of Blockchain as your regular cash register, but intangible. Now think about how insecure it really is. Anybody could walk into your shop any minute, threaten you with a weapon, and take all of your money. Now picture your digital ledger, safe and secure because of high-end security. This means that it exists in the form of one’s and zero’s that are protected by a two-factor authentication process.
Building blockchain technology is highly complex and it’s not something you can learn in a day or two. As per blockchain, your transactions of cryptocurrency with other people are stored in the form of a “block” in an online ledger. Cryptocurrency is a highly secure world to invest in because it’s built around a technology that is almost impossible for hackers to get into.
This is why when it comes to cryptocurrency, you can rest assured about the safety of your investment. Some of the most widely used and traded cryptocurrencies with sky-high market capitalization are – Bitcoin, Ethereum, Binance Coin, XRP, Tether, Cardano, Polkadot, Uniswap, Litecoin, and Stellar.
Types of Cryptocurrencies
People usually prefer Bitcoin because it has the most value and it was the first cryptocurrency ever to come into existence, but there are various other types of cryptocurrencies. They are as followed :
Bitcoin was the first cryptocurrency to be introduced to the world back in 2011. It was considered the digital gold of the world. Its current capitalization value is $172.76 billion, which is the largest value out of all the cryptocurrencies available. One thing to know about bitcoin is that each unit can be divided into Satoshis, which is equal to one hundred millionth of a single bitcoin (0.00000001 BTC)
Another important thing to note about Bitcoin is that it’s created in such a way that only 21 million units of Bitcoins can be available to move around at a certain point in time. This is one of the key components of Bitcoin that decides its market price. At present, the market supply of Bitcoin is 18.39$ million.
Altcoins, as the name suggests, are alternate versions of Bitcoins. However, it’s notable that some altcoins are extremely different from Bitcoins. Plus, they use a variety of different algorithms. For example, Ethereum is an altcoin. But, it’s not a currency. Instead, it’s a platform where people can make their blockchain-based applications.
There are more than a thousand altcoins at present. A few of the most famous and well-known are Ethereum, Factum, Litecoin, NEO, etc.
Tokens are essentially the by-products of altcoins like NEO and Factum. They don’t have blockchain networks and are used on decentralized apps created via altcoins. Tokens don’t nearly hold as much value as Bitcoins and Altcoins, but they can easily be used on decentralized applications.
Prices of Cryptocurrencies
The market value of cryptocurrencies, needless to say, does not remain the same throughout a period of time. It can change both for the better or the worse. No matter what, you have to be prepared. As of January 2021, here are some of the market values of well-known cryptocurrencies.
|Name||Market Cap (in $)||Per Token Value (in $)|
|Bitcoin cash||8.9 billion||513.45|
|Bitcoin SV||3.5 billion||187.22|
|Binance Coin||6.8 billion||44.26|
Uses of Cryptocurrency
Some critics argue that the “future” of bitcoin is nothing more than non-existent. Their short-sighted opinion comes from the fact that cryptocurrency is not tangible, and hence, cannot be used for long-term investments. However, that could be farther from the truth. Regardless, there’s no way to know other than moving forward free of reservations or biases.
Until then, let’s look at some of the few uses of cryptocurrency we have established until now.
Mode of Payment
While this is still a dream for most economies of the world, companies like Apple accept payments in the form of 10 types of cryptocurrencies on the app store. Also, several merchants have now warmed up to the idea of accepting Bitcoin as payment instead of cash. You can exchange bitcoin for services like dining out, flying, buying jewelry, etc.
Just like the beginning of every revolutionary discovery in various fields, this one is also progressing slowly. Cryptocurrencies like Bitcoin and Ethereum should soon be acceptable modes of payments for trivial uses as well. For example, we should soon be expecting them in departmental stores, shopping malls, etc. However, be warned that this change might take years to come.
Considering its market value at the time, Bitcoin is one of the most fruitful investment options. However, investors should keep in mind that the highly dynamic nature of its value can be a con for some. For example, in 2017, the market value of Bitcoin went from $19000 per BTC to $7000 per BTC.
Please note that this is only natural since the basis of cryptocurrency does not lie in something physical or tangible like gold. Therefore, it’s more prone to change than any of the currencies in the world. It’s important to be mindful of this while making any investments.
Benefits of Cryptocurrency
Cryptocurrency is a digital asset that has been around for quite some time now, which naturally means that it has garnered a lot of uses and popularity. More and more people are looking to use cryptocurrencies because of how secure they are. Let’s look at a few uses of cryptocurrency and why it has been in demand.
Low-cost Money Transfers
One of the top uses of cryptocurrencies has been the hassle-free money transfers they allow. For example, in 2018, a $99 Million Litecoin transfer took no more than two and a half minutes. This only cost the user $0.40 in money. If the same trading amount had gone through a financial intermediary like a bank, it would have taken the bank to transfer the money more than a few days. Plus, the transaction fees would have been higher.
With low-cost money transfers using cryptocurrencies like Litecoin, stellar, or bitcoin cash, they can become one of the most cheaper ways to transfer money overseas.
With just the right amount of education on how cryptocurrencies work, you can start trading and earning interest on crypto like Bitcoin. While this takes a lot of time and a huge amount of general interest in banking and finance, you can spend some time learning how to do it. If you invest enough time, you might just be able to earn enough to, let’s say, pay for college or pay off medical bills.
This is generally looked at as a quick and easy way to make money but it’s anything but. It takes time, skill, and expertise to trade with digital currencies. They have their own pros and cons, though. While the pro is the high amount of interest in cryptocurrencies like Tether, the con is that you would be taking a risk.
While registering with your bank, you probably don’t go in thinking your assets might soon be frozen. But, what people don’t realize is that everything you have that has monetary value – your house, jewelry, diamonds, etc, is susceptible to being confiscated. All it takes is one count of financial misconduct and you can say goodbye to savings of a lifetime.
In such a case, your crypto wallet would act as an alternate resource of money to tap into. You can never be too secure with your monetary assets. They are important for you, your family, and almost everyone that depends on you. This is one of the reasons more and more people are investing in cryptocurrencies.
As we move forward, privacy is of the utmost importance, especially when it comes to our finances. Private cryptocurrency assets in our possession can help us sustain for the future. Cryptocurrencies and their transactions are protected by a distributed ledger called a blockchain. Only you and your peers have access to this ledger, which directly means that you have something saved up in case something goes wrong.
Post Paid Content
Steemit, one of the world’s first decentralized social media platforms, offers to pay its users for adding content to the platform. It gives publishers financial rewards in the form of digital currency like bitcoin, Ethereum, etc, to their users. Furthermore, it pays its users rewards to upvote good top-quality content.
This is well-opposed to a centralized social media platform like Facebook that sells user data to create revenue off them. Steemit is emerging as a popular marketplace that is bringing in a lot of new users. It’s a great application for beginners who are just starting out their Cryptocurrency journey.
When you’re making online transactions with privacy-oriented digital currencies like Monero, ZCash, PIVX, etc, you don’t have to worry about customs. With banks, you have to answer several questions regarding your transactions, and that can be annoying. Plus, it can be time-consuming, especially if it’s a large amount of money.
Owing to the exponential growth of the cryptocurrency ecosystem in the last nine years, some airlines now accept digital currencies. Airlines like CheapAir, Destinia, accept bitcoins as payment methods for booking flights, car rentals, hotel rooms, etc. Furthermore, you can use cryptocurrencies to pay for apartment accommodation during your travel as well.
As you probably know by now, many companies are trying to make space travel a possibility. Richard Branson’s company Virgin Galactic, let the world know in 2013 that it will be accepting bitcoin payments for space travel bookings.
If you need more reasons to invest in cryptocurrency, one is that Elon Musk has announced that they will be accepting cryptocurrency for Tesla. Also, bitcoin luxury marketplaces like De Louvois allow you to buy a Lamborghini or any other luxurious items you might be holding out for.
Investing in Early Stage Startups
The current digital token-based ecosystem allows people to invest in early-stage tech startups. This can be a great way for you to put your money into something with an ROI while supporting a startup with the seed money they need.
Another amazing thing happening in the world of cryptocurrency is ICOs (Initial Coin Offerings). These are a type of fundraising event that provides any such startups to raise money for their company by selling digital tokens to whoever buys them in exchange for cryptocurrencies like bitcoin and Ethereum.
Investing and Storing Cryptocurrency
As far as Bitcoin goes, there are various ways of purchasing it. It’s convenient now more than ever to buy bitcoin because of the different types of investment options available in the market. You can buy it through cryptocurrency exchanges, using gift cards, or investment trusts, etc.
Storing bitcoins can be done offline as well as online. All wallets consist of a public key. This public key holds a private key to the investor and the address of the wallet. The private key is essential because you cannot sign off payments without one. Regardless, it’s noteworthy that one does not hold the units of cryptocurrency itself, but just a key to them. This is what makes them more eccentric than the rest of the currencies in the world. There is very little doubt that it won’t make it to the top of the market, maybe even surpassing the dollar. There’s only one way to find out, and it’s by moving forward.
Speaking of moving forward, cryptocurrencies can be stored in a wide variety of online wallets. These wallets are usually designed to cater to different purposes. Most of them are made to make regular transactions possible. Several companies like Apple, Facebook, Visa, and J.P. Morgan Chase have opened up online cryptocurrency wallets.
Another great feature of cryptocurrency is that the offline wallets are stored in a hard drive. Depending on who the hard drive belongs to and who has the private key, individuals can access the cryptocurrencies. Furthermore, this feature of cold or offline wallets being stored on a hard drive only improves the amount of security that comes with owning cryptocurrency.
Believe it or not, invisible cash, i.e., cryptocurrency may become the largest currency in the world. If we take a look at the market value and supply of these cryptocurrencies, there is a huge possibility that they will soon dominate the world. As we said, there’s only one way to find out. So sit back and watch as the world of cryptocurrencies unfolds. You can also participate by investing, as there are numerous future benefits that you can count on.