What Is Cryptocurrency? Everything You Need To Know About In Details
Does the current tumultuous Bitcoin prices grab your attention? Do you want to know what cryptocurrency is?
Then you are in the right place. We will break everything for you in simple terms. You will have a clearer vision of Cryptocurrencies.
There was a time when people used to buy something in exchange for goods. Then came up the coins and which was the first introduction of humans to a currency. Now, different countries use different countries, but in the past, different dynasties used different currencies. However, now let’s come to cryptocurrencies,
What is cryptocurrency?
While explaining the cryptocurrency, some terms may come out new or quite challenging to understand, but keep patience; we will break everything up in simple terms.
To put it simply, cryptocurrency is a digital currency that you can use to pay for something (where cryptocurrencies are accepted as a payment method) but cannot physically have. Now, the first and obvious logic comes to mind, we make payments via our CREDIT or DEBIT cards, net banking, or other digital mediums, then what makes it different. Well, if we try to go deeper into the banking system, that would make this article monotonous. So, let’s understand it that way. If we take any currency, let’s take the Dollar, the most powerful currency in the world. The United States of America creates it. And not only creation, but the US government also regulates and controls the currency.
Cryptocurrency is beyond anyone’s control, be it any government, any country, or any individual. Nothing can be created on its own, especially currencies.
Cryptocurrencies are created through computer algorithms. One of the big differences between cryptocurrencies and regular currencies is cryptocurrencies are fixed. That means once the cryptocurrency is made, the amount is fixed. Let’s assume 1 million cryptocurrencies have been made; then, no one can create more cryptocurrencies. It can be handed over to people, but the amount remains the same.
On the other hand, traditional currencies are not fixed. You may have heard that economy of countries grows or shrinks for various reasons. But, the value of cryptocurrencies could get down the amount remains the same.
There are certain terms often used in cryptocurrencies. These must be understood to get a more clear concept.
- Peer to Peer.
Let’s understand those terms one by one.
Peer to Peer:
Peer to peer means person to person. Various persons or computers manage the whole cryptocurrency system. What do they manage? They manage the calculations of the transactions. It is as same as offline transactions.
A ledger or public ledger is considered a book where all the transactions are recorded. Suppose you have three cryptocurrencies, and you just gave one to someone, so it will be considered a transaction and registered to the ledger.
Now, one can simply ask that, as many computers or persons are involved in the system, they can all find out how many bitcoins you gave, and now the person has how many cryptocurrencies left?. It does not really sound good. No one would like to disclose their bank balance at all. Here Comes the Cryptography. Yes, everything from transactions to the number of cryptocurrencies you have is indeed calculated and knows everyone, but they know in an encrypted format. All information to the network is encrypted, and the process is called cryptography. If you are about the SSL, the green lock sign at the first of the website URL does quite a similar job. They encrypt all the information so that no one can read any data. That’s how it stays protected.
Before understanding the miners, let’s first figure out what mining is in cryptocurrencies. In simple words, mining is keeping and verifying any crypto transaction and maintaining the public ledger book. A super complicated mathematical calculation does each and every transaction on cryptocurrencies. For example, if someone gives their crypto to someone else, the miners check whether the first person has the crypto or not. It is very important because that’s how the whole system stays legitimate.
Miners do the job in the exchange of cryptocurrencies. For each successful verify, miners get cryptocurrencies as a reward.
How to earn money from cryptocurrencies?
To earn from Cryptocurrencies, there are two widely used methods available. One is suitable for all and the another requires lots of resources. Let’s the ways,
When you hear the terms mining and Cryptocurrency are linked to it, you might think of gold mining because cryptos are not less than gold anyway. But if you look at its pricing, Cryptocurrencies are far ahead of gold. However, cryptocurrency mining is not like that. You cannot create more cryptocurrency for a specific currency either. No one single-handed control, monitor, keep the ledger of all the cryptocurrency buy and selling information.
There are lots of miners who work with their system to verify each transaction happening all the time. That is the main earning way from cryptocurrencies. Miners get some pieces of cryptocurrencies to verify the transactions.
But that method is not suitable for all.
What do you need to become a cryptocurrency miner?
A high powerful computer system that can calculate the critical calculations of transactions. All the transactions are in coding format and as the number of transactions is rising, the calculations are becoming more complex. To perform those calculations you are going to need high power or some specific type of computer.
All the calculations are done through various state-of-the-art software. Again it’s no need to mention that they are too heavy for a normal computer to run. You will find plenty of free crypto mining software but they are for some basic level. For higher productivity, you have to go with the paid or premium software and their charge is not so less. While choosing the software, you need to check on which OS it runs.
Many miners work alone, but the work is extensive and a team will help you to your goal even more. Most of the rich miners who earn plenty of cryptocurrencies work as a team. So, for the team, you are going to need more powerful machines and more accessible software.
Uninterrupted power supply:
Now let’s come to the energy sector, but one thing is not hard to understand that more powerful machines will consume more power. There are many firms who actually work as crypto mining have a huge setup and believe it, their energy consumption is immense. As you are already interested in cryptocurrencies, you have probably heard of Elon Musk, who later dumped the idea of accepting Bitcoin due to its high energy consumption. If you are going to establish a crypto mining hub, you have to ensure an uninterrupted energy supply.
Invest in cryptocurrencies:
Investing in cryptocurrencies is one of the easiest methods you can adopt to earn from it. Investing in cryptocurrencies is nothing different from investing in the share market or gold. You don’t have to be an expert to buy cryptos. Similar to the share market, many crypto brokers will let you do that. With their website or even with the mobile application you buy or sell your preferred cryptocurrency. In a typical share market, you choose which company or firm share you are going to buy but in crypto, you come after selecting which crypto you want to buy. But one thing is we would mention that just like oil, gold, and share price, the crypto price also fluctuates a lot and it depends on many things too. But, if you look at the price of all the cryptocurrencies the prices of them all grow up. So, it is definitely could be a great investment.
Now let’s come to a buzzword word; Bitcoin.
What is Bitcoin?
Until now, we have talked about cryptocurrencies. If Cryptocurrencies could be considered as whole currencies, Bitcoin can be assumed as Dollar, Pound, Rupee, or any other specific country.
Bitcoin is the most popular cryptocurrency in the world till now. Moreover, it is the most valuable cryptocurrency too. Most of the platforms that accept crypto payments, accept Bitcoin. In fact, it shares the most amount of cryptos. However, there are many other Cryptocurrencies too that are becoming popular too.
- Binance Coin.
They are also rising new marks of value. All these coins also share billions of dollars of the market cap too. In case you find bitcoin too much expensive, you can try these cryptocurrencies too.
Thanks for reading. Explore more articles to make money online,