Basics of Cryptocurrency [Solved!]

Basics of Cryptocurrency

You’ve probably heard of cryptocurrency. Maybe you’ve even decided you want to try buying some: Good movie, but how grounded are you with the fundamental basics of cryptocurrency?

If you are like most people, who barely understand the technology behind bitcoin and other cryptocurrencies, then this article will help you a lot.

In this article, we walk you through the very basics of cryptocurrencythe technology behind bitcoin, types of cryptocurrency, and how to get started with crypto.

Basics of Cryptocurrency

Basics of Cryptocurrency image

Cryptocurrencies are a subset of blockchain technology, and it is a medium of exchange that uses cryptography – also known as encryption in order to secure transactions.

Cryptocurrency differs from fiat money in that it is not issued by central banks or governments and it is not dependent on a guaranteed supply of value, such as gold or silver.

The idea of cryptocurrency is to develop a system of decentralized payment networks with no middlemen. Some key features of cryptocurrencies are faster and borderless transactions in secure storage that is not dependent on any central authority.

What is a cryptocurrency?

Cryptocurrency is digital money that can be sent securely and anonymously over the internet — with no bank to take a cut of every transaction or freeze your funds. Cryptocurrencies are not backed or regulated by any government (or indeed, any real physical thing), but by technology and cryptography, this is the foundation, the very basics of cryptocurrency.

Over the years, cryptocurrencies like bitcoin, Ethereum, and Solana has redefined finance, and who really controls it.

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Today, we see cryptocurrencies bringing utilities and solutions to the many challenges with fiat currencies.

What are the types of cryptocurrency?

What are the types of cryptocurrency?

Cryptocurrencies are not just limited to being a secure mode of payment and wealth management, but also an investment asset in itself and a real-life utility system.

There are different types of cryptocurrencies available which can be classified into different categories, like Defi, NFT, utility tokens, meme tokens, and store of value coins like bitcoin and Litecoin. This categorization is based on their utility.

How do I get started in cryptocurrencies?

There are hundreds of cryptocurrency exchanges you can use to buy crypto online, but a few of the more popular ones are Coinbase, Binance, and Kraken.

These exchanges are online platforms where you can buy and sell cryptocurrencies. If you have never used an exchange before, then I would recommend you start with Binance or Coinbase.

In other to start buying and selling cryptocurrencies you will need a trading account with any of the exchanges. To get started with the Binance exchange, sign up here. Also, see our article on how to buy altcoins Safely.

How do I use cryptocurrencies?

How do I use cryptocurrencies?

While you might not have heard of the term crypto card or crypto card service before, it’s a great way to spend your bitcoin currency.

You can use this method to take a debit card to pay for goods and services or to withdraw cash from an ATM.
Again, if you’d rather not spend your bitcoin directly, as you might feel that spending them directly is too much like spending real money, you can also choose to buy a gift card with your BTC.

What are the risks of using cryptocurrencies?

The appeal of blockchain and cryptocurrency is undeniable. But before you invest or jump head-first into the crypto-world, it’s important to understand some associated risks.
Here are a few of the many risks associated with cryptocurrencies.

  • Fake investment scams (i.e. initial coin offerings).
  • Crypto used to purchase on the black market.
    Smurfing.
  • Money-laundering through crypto exchanges/ATMs.
  • Romance scams.
  • Crypto pump and dump.
  • Fake crypto exchanges.
  • Blackmailing scams.
  • Exchange hack etc.
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While this may be the obvious reality, with proper education and conscious awareness, such risks can be easily avoided.

Security of cryptocurrencies

Cryptocurrency Security, often abbreviated as CCSS, refers to the standard for cryptocurrency systems. Many exchanges follow this standard to manage their system securely and effectively.
Below are the security standards most cryptocurrency exchanges use.
• Key/seed generation
• Wallet Creation
• Key Storage
• Key Usage
• Key Compromise policy
• Keyholder Grant/ Revoke Policy and Procedures
• Third-party audits
• Data Sanitization Policy
• Proof of Reserve etc.

How can I protect my assets from hackers?

Every cryptocurrency transaction is recorded on a public ledger called the blockchain, which makes it impossible to change or delete. The blockchain also allows you to transfer assets without the need for a middleman such as a bank or credit card company.

While this gives you more control over your money and allows you to be more anonymous when making transactions, it also leaves you vulnerable to hackers who may try to steal your digital assets.

When investing in cryptocurrencies, it is crucial to protect your digital assets, and for that, you must imply cryptocurrency security as it gives the fundamental security aspects. As cryptocurrency services do not offer a security level like banks, certain risks and precautions must be looked over and implemented while investing in cryptocurrency.

Here are a few steps to adopt:
• Try to avoid storing cryptocurrency on digital storage.
• Invest in buying a cryptocurrency hardware wallet.
• Do not use public Wi-Fi while making transactions.
• Use a private and secured internet connection.
• Also, make sure to keep the security level high and not install any unsecured apps.
• Use 2-stage authentication and verification for better secure transactions.
• Make sure to stay away from the bitcoin gambling sites.
• Put a unique and robust password – centralized exchanges [CEX]
• Do not share your passwords or passphrase.

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How can a beginner invest in cryptocurrency?

Ultimately, the best way to invest in cryptocurrency is to understand the ins and outs of each one, and then make the decision that fits you best.  See our beginner guide

If you’re just starting out, we recommend beginning with Coin base’s exchange or Binance —they are simple to use, safe, and offer a wide variety of options. Also remember: whichever method you choose to use, always do your research before investing in cryptocurrency, because there are always risks involved. Additionally, mastering so of these crypto terms will help you as a beginner.

Bottom line

Cryptocurrency is fast becoming the preferred way to pay for goods and services online. It’s relatively easy to use, and it offers a great level of anonymity.

People like the idea of not having to get involved in the financial system in order to use a currency. And the cryptocurrency market has only started to see explosive growth in the last few years.

Hopefully, this article provides enough information for you to give cryptocurrency a try and see for yourself how it can enrich your life!

Useful Resource:

Wikipedia: Meaning of Cryptocurrency

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