You may have heard of it. Cryptourrency and digital money. For some, this may still be a really complicated subject. For others they may have a slight understanding of the disciplines behind it. Yet one thing is certain: people are intrigued. These currencies are the only currencies in the world that are able to free us from the control of centralised authorities such as the central banks and the governments. They give people the full control over their finances that they never used to have. However, there is a certain lack of understanding as to their technology, value and history. In this simple guide, we will go over some of the most fundamental concepts of cryptocurrencies and how you can get involved in the revolution.
Holding a bitcoin digital currency with laptop in background.
What is a Cryptocurrency?
Quite simply, a cryptocurrency is a digital record of a transaction on a decentralised public ledger. This ledger is called the “blockchain”. So, when you own a cryptocurrency, you own a provable record of a transaction that took place some time in the past. Anyone can verify this transaction by taking a look at the public blockchain. This is also 100% secure and cannot be manipulated. This is because the blockchain is secured through the use of the most advanced cryptography in the world. They are also intangible and all that is required to access these cryptocurrencies is a password that will allow you to access your wallet on your PC. You can also save the seed word to your wallet and start it up on a PC anywhere. This cannot be taken from you under any circumstances by any authority.
How Are Cryptocurrencies Bought?
With Large volume Bitcoin trades, you have to first decide first of all how you would like to purchase them. Would you like to buy them in the physical form (the actual currency itself) or would you like to trade on the underlying price. If you wanted to buy the underlying asset itself then you will have to buy from a registered cryptocurrency exchange. There are quite a few to choose from currently but the best one seems to be Coinbase which is based in the USA and is regulated there. If you wanted to merely take a view on price movements, then there are many cryptocurrency trading options that you can pick from. These are mostly derivative instruments which means that their value is derived from the value of the underlying asset. These instruments will pay you out based on the price of the cryptocurrency in question. There are two typed of instruments that you can use for this. One of these is a future which is basically agreement for delivery of a future price. Futures have just been listed on the CME and the CBOE. The other trading instrument that you can use is a CFD. A CFD is similar to a spread bet in the sense that you are betting on the difference of the price on the open and close of the day. You are marked to market every day on the position. There are also quite a few CFD brokers that you can make use of but it is perhaps best to use one that is regulated. One of the best brokers on the market is IQ option. They are fully regulated in Europe and have over 15 crypto assets that you can trade. There are number of IQ option cryptocurrency review that you can make use of.
How Cryptocurrencies are Sent
Once you have your cryptocurrencies, you may want to send it to a friend or indeed an offline wallet for some secure storage. This is where cryptocurrency transactions take place. When we talk of cryptocurrency transactions, we mean someone will be sending a cryptocurrency to someone else through the use of the blockchain. When they submit their transaction from their wallet, they are broadcasting their transaction to the network. Once it has been broadcast, it will be added to the blockchain. In order to verify that the transaction has indeed been legitimate, the network will turn to something called “miners”. Miners are essentially a group of computers on the network that will crunch the code required in order to verify these transactions. The miners will get paid a fee for verifying and clearing these transctions. That fee is the network fee and the users will pay that. They will also get a “block reward” which is additional new crypto currency that will go to them for solving the block.
How Many Cryptocurrencies are There?
There are many different crypto currencies. They started out as just one being the original Bitcoin. This was the coin that launched the whole revolution and was seen as the original digital cash that was “peer to peer”. However, as more people learned about the technology that underpins cryptocurrencies and the amazing amount of uses that they had, they started to develop alternative crypto coins with different use cases. For example, there was Ethereum which was supposed to be a programmable blockchain where people can create their own decentralised applications. You have a coin like Ripple which is meant to be used by banks to facilitate cross border transactions. You have coins that were designed specifically to be stealth coins such as Monero and ZCash. You then have coins that are even themselves as a result of a Bitcoin fork. These include coins such as Bitcoin Cash and Bitcoin Private. Which is the best coin to invest in? This is something that is up to you to decide and the most important part about investing in any cryptocurrency is the concept of Doing Your Own Research (DYOR).
The Future is Decentralised
The amount of information there is for you to discover in the cryptocurrency space is indeed vast. Once you scratch the surface, you discover how much there is lying underneath waiting to be discovered. Irrespective of what you do discover, one thing is for certain, people are way less trusting of central forces in their lives. They have become much more suspect at online services, government agencies and central bank actions. Cryptocurrencies are what frees these people up and gives them the independence that is not often available to many. Cryptocurrencies are already solving problems in countries such as Venezuela and Zimbabwe. Will you join the revolution?
I’m so happy I hold on to quite a bit from the beginning, very nice guide for beginners, definitely look more into it! It’s been around for a while now