What is Crypto?
The online world of Digital Currency can be daunting
Don’t worry! We’ll teach you all the basics behind tokenomics, chart reading, staking, wallets and more!
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What is Cryptocurrency?
Cryptocurrency in the simplest term is a digital currency or digital asset that is secured by cryptography technology. One of the main purposes to a cryptocurrency is that they are not usually issued by a governing body or authority which means these are in theory immune to manipulation but we will go into that later!
The one you’ve probably heard of is “Bitcoin” and that may be followed by “Dogecoin” and “Ethereum”, each of these are different virtual currencies which are based on their own ledger whilst being decentralized and then secured by Cryptography. The easiest way to understand this is to breakdown the fundamentals of these areas.
🤖 Virtual Currency
Much like the money we hold now, whether it’s the Dollar or Euro, etc, virtual currency comes in a limited supply and is distributed to those who purchase it. This virtual currency is then stored inside your wallet. There’s nothing fancy about that, it’s literally just like your current wallet except not physical.
In the past, currencies were tied to varying metals which had different values, these cryptocurrencies are no different. As currencies like Bitcoin have become more popular it’s becoming more common to pay for goods with your Cryptocurrency.
📒 Ledgers
These keep track of who pays who what virtual currency. Every single transaction since the birth of bitcoin is kept on this ledger, whether it’s a transfer or purchase, who’s wallet it was sent to.
In some ways, this can be seen like a financial transaction book or database. Additionally, this ledger is public, you can view this on blockchain.com
💣 Decentralization
Decentralization has varying strong points, one of the major points is that as no one controls the ledger you don’t need to trust any specific individual to manage the transaction data.
If at any point your ledger does not match the other users due to modification or corruption you will no longer be able to send or recieve transactions. This not only means that data isn’t incorrect or lost but from a security standpoint the blockchain is incredibly secure.
🔐 Cryptography
To avoid overcomplicating this, cryptography is a combination of mathematics and computer science which in short encrypts the transactional data so that no third party can manipulate or change transaction data during an exchange.
Cryptography is a lot more in-depth though, it uses technology calling hashing (Bitcoin uses SHA-256) which encrypts any data send through the blockchain. For example if you put “I love Crypto” into a SHA-256 encryption method you would get the following result:
“a28f055bd622d88f9abf2f7637b66”
How Do You Get Cryptocurrency?
There are varying methods to get hold of cryptocurrency, the most common options are purchasing them on an exchange, mining or staking. However, plenty of smaller cryptocurrencies known as “Alt Coins” also offer additional options like “Airdrops”.
Whether you’re a beginner or regular investor, purchasing Cryptocurrency is extremely easy to do on a multitude of exchanges. Not every coin / token is on every exchange, you can use tools like CoinMarketCap to view what popular exchanges the token in question uses and can be purchased in.
For example:
💳 Purchasing Cryptocurrency
It may seem daunting, but purchasing Crypto can be extremely easy. Most big trusted exchanges that you can purchase Cryptocurrency on require you to validate via KYC (Know your Customer), this means you will need to send personal identification documentation to validate your account.
Many exchanges like Coinbase which we consider the easiest to use for beginners, only offer major coins and not many altcoins in comparison to smaller exchanges like GateIO and KuCoin. Typically we recommend trying to keep to only KYC exchanges to avoid any issues.
Once you’ve signed up and added a payment method of your choice to your account, purchasing crypto is usually as easy as clicking on the crypto name, hitting “Buy” and inputting the full amount you wish to spend.
⛏️ Mining Cryptocurrency
Mining allows new coins from the currency in question to enter circulation. For example, Bitcoin is mined via solving an algorithm with computer hardware.
In simpler terms, your computer solves a puzzle and is rewarded crypto for working something out correctly.
Unfortunately, Mining Cryptocurrency is incredibly expensive as you require either a Mining Rig, a computer which has a good CPU (Processor) or GPU (Graphics Card) alongside paying for electricity consumption which will increase dramatically during the time you spend mining
📈 Staking
Staking also know as “Proof of Stake” can be quite complex, in short it allows you to use your current cryptocurrency to earn a percentage based reward over a period of time. This reward usually comes from a “Staking Pool” which is a collection of token holders who essential merge their coins to increase the probability that they will validate a block on the blockchain.
Whilst it sounds great it some come with risks, for example, plenty of staking is locked which means you cannot take your crypto out instantly and the price of said coin/token can go up or down.
Not all cryptocurrencies can be staked and some instead use a method called “Proof of Work” (Mining for example) which uses incredibly high processing power to validate transactions on the blockchain.
🪂 Airdrops
Crypto Airdrops are a fantastic marketing tool which allows users to obtain free cryptocurrency and provide advertising to a project.
Essentially, Crypto Startups (And sometimes bigger coins) will airdrop free cryptocurrencies to varying users wallets if they holder a particular quantity of another token.
There are varying Crypto tools which provide airdrop information such as airdrops.io or CoinMarketCap’s Crypto Airdrop service which allow you to see current Airdrops and enter them directly.
Airdrops don’t always gaurantee profit though, some require other coins or tasks beforehand which can cost time and money, so you should definitely do some research before joining one.