Bitcoin: How Cryptocurrencies Work
A cryptocurrency (or “crypto”) is a digital currency that can be used to buy goods and services. Online transactions are fast and secure thanks to an online ledger. The majority of the interest in these unregulated currencies is to trade for profit, with speculators skyrocketing prices with online traction.
Imagine a coin that is currently worth thousands of US dollars but it’s not made of gold, silver, or any precious metal. It’s not even the kind of coin you can put in your piggy bank. It’s a digital currency; which means it only exists electronically. This is what Bitcoin is. Unlike most currencies, Bitcoin is not attached to any particular state or government, so it doesn’t have a central issuing authority or regulatory institution. In other words, no organization or individual decides when to make more bitcoins, keeping track of where they are located, among other features seen in other currencies. How can this have any value at all? Bitcoin wouldn’t work if there wasn’t a network of people or an important factor called cryptography.
Bitcoin is a fully digital currency, you can exchange in a worldwide, peer-to-peer network intended for sharing with participating individuals. This is what most cryptocurrencies are based on. A cryptocurrency (or “crypto”) is a digital currency that can be used to buy goods and services. Online transactions are fast and secure thanks to an online ledger. The majority of the interest in these unregulated currencies is to trade for profit, with speculators skyrocketing prices thanks to online communities.
What is Cryptocurrency?
A cryptocurrency is a digital or virtual currency secured by cryptography, making it difficult to counterfeit or double-spend. What could stop people from making a bunch of counterfeit bitcoins? Like Bitcoin, numerous cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a network of computers. For instance, Bitcoin is not necessarily an entity of data that can be duplicated but rather an entry of a huge network called the blockchain. The blockchain has a record of every transaction ever occurred. Essentially, Bitcoin, like other cryptocurrencies, is a digital asset.
Benefits of Cryptocurrencies
Cryptocurrencies are systems enabling secure transactions online. A revolutionary feature of cryptocurrencies is they are generally not issued by any central authority, allowing them, in theory, to be immune to government interference or manipulation. Blockchains, which is the technology in the crypto networks, ensure the integrity of data transfers. Numerous experts believe blockchain and related technology will continue to disrupt many industries, such as central banking. Due to the decentralized nature of Bitcoin's blockchain, all transactions can be transparently viewed by either having a personal node on the network or by using blockchain explorers that allow anyone to see transactions occurring live. The most popular benefit is that Bitcoin is a deflationary asset in an inflationary world. The argument is that central banks' money printing will continue to decrease the value of money over time. Bitcoin, by contrast, has a fixed limit of 21 million coins that can ever be created. This limited supply allows Bitcoin to resist inflation.
The Most Popular Cryptocurrency
Since the initial launch in 2009 by an individual or group known by the pseudonym "Satoshi Nakamoto”, Bitcoin remains the most popular and most valuable cryptocurrency. Today, there are thousands of alternate cryptocurrencies with various functions and specifications.
Altcoins and Shitcoins
Competing cryptocurrencies led by Bitcoin’s success are known as "altcoins, " including Dogecoin, Cardano, Ethereum, and Polkadot. On the other hand, “Shitcoin" is the term given to cryptocurrency that, depending on who you ask, is useless and has “no value”. Shitcoins are cryptocurrencies with little to no value or digital currency that have no immediate, discernable purpose.
How do I buy Crypto
To buy cryptocurrencies, you simply need a “crypto wallet” or just a wallet. Makes logical sense right? If there’s a currency, there needs to be a form of storing it. A wallet is an online app that can hold your currency. Generally, you create an account on an exchange, and then you can transfer real money to buy cryptocurrencies such as Bitcoin or Ethereum. The most popular platforms to buy cryptos are Coinbase, Robinhood, among others.
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Disclaimer: I am not a financial advisor.