Cryptocurrency is a digital currency that is monitored by a peer to peer blockchain. It works on the method of cryptography and the blockchain organizes as well as monitors every transaction very well.
This means that it is necessary to have a medium of exchange because this is very similar to the currency of the real world.
In this article we will know what is cryptocurrency and how it works in real world.ย To understand this you must know about how transactions are done in real world.
So let me tell you that there are transactions like buying, selling, transferring then you may know that this operates independently as this is neither a tie-up from any bank nor any central authority.ย
We also know it sometimes by the name of โCryptoโ. You will be surprised to hear that this currency does not use any decentralized system of any kind to record transactions and issue new units because cryptocurrencies do not have a central issuing or regulating authority.
You should also know that since cryptocurrencies have nothing to do with any bank, it is stored in a digital wallet.
Whenever you transfer your crypto funds, all transactions are recorded in a public ledger and stored in a digital wallet.
Every data reigns in an encrypted form and you must be aware that of encryption to verify its every transaction.
This means that it uses an advanced coding wallet which is encrypted and being encrypted provides great security.
Perhaps you must have heard about the first cryptocurrency that was Bitcoin, established in 2009.
To understand this currency, first of all we have to understand the three words Blockchain, Decentralization and Cryptography.
What is Blockchain and how does it work?
So friends, first of all let us understand this chain, So the blockchain is also a digital ledger that records all kinds of ledgers, transactions related to many types of assets. We have already told you that any cryptocurrency works only on the digital platform.ย
Everyone in the crypto network has the same information received which cannot be changed and so far there is no question of money laundering here.
If it is molded as a democracy, then just imagine who has how much black money, everything will be known and the name of black money will be erased.
- Mining:ย Any cryptocurrency, which is a fully digital currency, is generated through a process called โminingโ. Mining is a complex process. It will take only 5 to 10 minutes for a particular person to mine a bitcoin to a bitcoin, but in reality, it will take an estimated 25 to 30 days to solve mathematical puzzles of a computer systems in this process. it seems
- Buying, Selling & Storing: In todayโs digital age, users can buy or sell cryptocurrencies from central exchanges, brokers and individual currency owners. And once a user has purchased crypto-currency, it can be stored in a digital wallet. There are also two types of digital wallets: โhotโ or โcoldโ.If the wallet is connected to the internet then it is called โhotโ and being connected to the internet makes it even easier to do transactions. On the other hand, cold storage is secure, but it makes it difficult to transact currency as compared to a โhotโ wallet.
- Transacting or investing: Once you buy bitcoin, then you can easily transfer this currency from one wallet to another wallet even from your mobile phone. Not only this, once this bitcoin is in your wallet, then it is your choice how you do it. If you want, you can also buy any goods using bitcoin. You can also use the bitcoin to make transactions in a trade. Whatโs more, the easiest way is that you can also use your debit card to withdraw cash just like an ATM.
- Cryptography: It is a method that secures the data of customers from unauthorized access with the help of encryption techniques.
Cryptocurrency Meaning & How it Works?
Cryptocurrency works on a one-of-a-kind method in which units are created through a process called mining.
In this process computer power is used to solve very complex mathematical problems to generate coins.
If a person wants to buy coins then that person can also buy currencies from any brokers first and then store or spend using their cryptographic wallet.
Suppose you have cryptocurrency and you want to sell it, then you can transfer from one wallet to another wallet (sender to receiver wallet).
Since cryptocurrencies are governed by the security provided by a kind of decentralization which makes this blockchain more difficult because no central authority exists to decide on changes to this blockchain.
Types of Cryptocurrency
There are several cryptocurrencies available in the market with more than 10,000 figures in 2022. We are here to show you the top 5 cryptocurrencies include:
- Bitcoin:ย Who does not know about bitcoin today? The first currency in the world of crypto currency is the bitcoin. Bitcoin was so famous at one time that people used to take the name of crypto currency from Bitcoin itself. This means that at one time the name of bitcoin was known as a synonym for crypto currency. ย
- Ethereum:ย Like bitcoin, Ethereum is also a cryptocurrency that was developed in 2015. It is also known as Ether (ETH). After bitcoin, it is also very popular and has its own Blockchain platform.ย
- Litecoin:ย This is also like a Bitcoin Currency.
- Altcoin: It is one of the most popular fastest growing cryptocurrency in the market that can be used as a substitute for bitcoin or as a digital currency. There are many other altcoins in the market today such as LuckyBlock, Shiba Inu and Terra.
- Crypto Tokens: You have to know that both coins and tokens are different. Because if we look at the first glance, both coins and tokens look the same. You already know that you can mine coins but you cannot mine tokens. Because coins are linked to the block chain but tokens are not linked to the block chain.
How to Buy Bitcoin Cryptocurrency 2023
You must be aware of the popularity of bitcoin. So the demand for such popular crypto-currency will also be very high.
And you can buy the biggest and most popular cryptocurrency from any crypto-currency exchanges.
You can even buy it on some brokerage apps such as Gemini, Coinbase, eToro, Robinhood and Weibull are some of the best trading platforms for trading bitcoin.ย
Before you buy it by visiting these platforms, I would like to tell you that you will have to verify your identity on that platform.
For example, you will have to attach your address, social security number and a copy of your driverโs license or other valid ID.
As soon as you open your ID on that platform, after that you have to make some money in your account so that you can buy it.
So let me now tell you the step by step process of how to buy cryptocurrency, which is as below:
- Step 1: Choosing a platform:ย As I have already told you that first of all you have to choose a platform to buy crypto currency.
- Step 2: Funding your account:ย Once you have selected your platform, then you need to fund some amount in your account so that you can start trading.
- Step 3: Placing an order:ย As soon as you have bought a crypto, you can trade through the web or mobile platform of your broker or exchange. In this trading process you can both buy and sell.
Conclusions
So friends, I told you in this article you are familiar with cryptocurrency meaning, types and how does it work? If you still have any question in your mind, then feel free to ask by commenting in the comment box. I will try to answer all your questions.
