What is Cryptocurrency? An Easy Beginners Guide

Last updated on May 28th, 2023 at 05:23 am

What is Cryptocurrency?: Cryptocurrency or digital currency lets us buy services and goods. We can trade cryptocurrency to earn money. The Bitcoin is most popular currency. In this article, we will be going to discuss what is cryptocurrency? What is cryptocurrency? and How to buy cryptocurrency?

What is cryptocurrency?

Cryptocurrency or digital currency or digital money is a new means of payment for goods and services in electronic form. It doesn’t require any bank or agency to verify transactions. It is a peer-to-peer system. A peer-to-peer networking system that enables peers (nodes) to share the network resources without relying on a central computing system. The first cryptocurrency arrived in January 2009 in the shape of Bitcoin launched by Satoshi Nakamoto.

What is cryptography?

What is Cryptocurrency?: The cryptocurrency is encrypted in digital format is known as cryptography. The science of protecting information in a secure format is called cryptography. Here encryption and decrypting mean the advanced coding involved in storing and transmitting cryptocurrency data between wallets and to public ledgers. It provides security and safety.

Advantages of Cryptocurrency (What is Cryptocurrency)

Quick and easy transaction

Transaction in cryptocurrency is very quick and straightforward. There is no requirement of any broker, agent, dealer, or representative of the government. There is no brokerage or fee involved. There is also no commission or charges involved in it.

Protection from inflation

Inflation is nothing but an increase of rate in prices over a given period of time. The value of currency declines in inflation. But since the release of cryptocurrency, its value remains fixed. There is only twenty-one 21 million bitcoin released in this world. Its valuation increase with demand. Its valuation of which maintained inflation.

Private and secure

Cryptocurrency is very secure and its privacy is very strong. When it is issued or transferred authorized it can’t be reversed. It has a strong encryption technique applied throughout its ledger or blockchain.

Exchanged of currency is easy

Cryptocurrency or digital money can be bought using normal currency like the euro, dollar, or rupee. Cryptocurrency one currency can be converted into another by trading cryptocurrency and with a very minimum transaction fee.

Decentralized

It is decentralized. It helps to keep currency free from monopoly and it is checked for manipulation. It will keep stable and secure and normal or fiat currencies which are controlled by the government and central banks.

International Trade become Easier

The cryptocurrency is free from any charges such as interest rates, transaction charges, or other levies imposed by a country. The legal tender is more or less unorganized at national levels. And cross-border transactions are very much easier without any fluctuations in currency rates.

Immutable not reversible

Likes of normal or fiat currencies transaction the cryptocurrency is immutable. It is not reversible. Crypto transactions did it will be final and it is nearly impossible to reverse.

Confidential Transactions

The transaction from debit or credit may be a reference document for the bank. Whenever you go for a transaction it is documented and help the credit agency to access your credit rate and also it reflects in your account balance. And in cryptocurrency, each transaction is a unique transaction between two parties. This financial transaction protects from identity theft.

International trade become easier

The cryptocurrency is not involved in any exchange rates, interest rates, transaction charges, or other levies. Because it is not legal tender on a national level. It uses blockchain technology with peer to peer mechanism, the cross-border transactions become easier with the fear of currency rate fluctuation.

Secured transaction

The transaction of cryptocurrency can’t be reversed as the transaction is immutable. It has a strong encryption technique applied to its ledger. For that reason, it is safe from fraud and can’t be tempered.

Cryptocurrency examples — Examples of Cryptocurrency

Disadvantages of Cryptocurrency

Any monetization has to face resistance to adapt to the new format. It will definitely take time for people to adopt cryptocurrency. Because it cannot be touched. It can only be used in digital wallets. That’s why most countries consider it appropriate to delay its implementation. However, the trend of cryptocurrency is going to increase in the coming years and some disadvantages associated also

It is very difficult to reverse a cryptocurrency transaction once it is completed.
The developers have not been able to find any option to reverse the digital currency yet.
As you have come to know, it is saved in the digital wallet, and if you forget the digital password or the security associated with it. or gets lost. So it will be difficult to find it.
So, keeping the ID secure is a challenge.
It is currently not possible to recover digital currency in case of a forgotten Wallet ID password.

Despite the risks, cryptocurrencies have the potential to revolutionize the way we think about money. They offer a number of advantages over traditional fiat currencies, including:

Decentralization: Since cryptocurrencies are managed by several parties, governments are unable to manipulate or interfere with them.
Security: Transactions using cryptocurrencies are secured by cryptography, making it harder to falsify or double-spend them.
Speed: Cryptocurrencies allow for quick and simple transfers without the use of middlemen.
Cost-effectiveness: International payments using cryptocurrencies can be made at a minimal cost.

Cryptocurrency examples

Bitcoin (BTC)

It was founded in the year 2009. The currency was developed by Satoshi Nakamoto and it is believed to be the pseudo-name of a group. It was the first cryptocurrency. It is still a heavily transacted cryptocurrency.

Ethereum (ETH)

It was developed in the year 2015. It is the most popular cryptocurrency after Bitcoin. It is based on blockchain technology and it is open source. The Ethereum blockchain focuses on running the programming code of the decentralized application. It allows application developers to pay for transaction fees and services on the Ethereum network.

Litecoin (LTC)

It was built in 2011. It was developed as an alternative to Bitcoin. It is also an open-source and global payment network that is completely decentralized. It is believed to be faster in transactions and it has an 84 million limit as compared to 21 million for Bitcoin. Litcoin is based on “script” algorithms while Bitcoin is on “SHA-256”.

Ripple

It was developed in 2012 by Chris Larsen and Jed McCaleb. It is based on a distributed ledger system. It is used both as a cryptocurrency and a digital payment network for financial transactions. It is a much faster, cheaper, and hassle-free currency for cross-border transactions. The transactions by Ripple consume less energy than Bitcoin and it is confirmed in seconds.

What is the best way to store multiple cryptocurrencies on one device?

To store many cryptocurrencies on one device, use a multi-cryptocurrency wallet.
These wallets support many cryptocurrencies and help you manage them all together.
Some popular wallets are Trust Wallet, SafePal Wallet App, Exodus, XDEFI, Coinomi, Ledger Nano S, Trezor, and CoinPayments.
Each wallet has different features and security. You can choose the wallet according to your need.