What is cryptocurrency?
A cryptocurrency is a digital or virtual currency that is protected by encryption, making fake and double-spending practically impossible. Many cryptocurrencies are built on Blockchain technology, which is a distributed ledger enforced by a distributed network of computers. Cryptocurrencies are distinguished by the fact that they are not issued by any central authority, making them potentially impervious to government intervention or manipulation.
Cryptography technologies have made it possible to make safer online payments without the involvement of third-party payment processors. Various encryption methods and cryptographic approaches, such as elliptical curve encryption, public-private key pairs, and hashing functions, are referred to as “crypto.”
Cryptocurrencies can either be mined or bought on cryptocurrency exchanges. Cryptocurrency purchases are not permitted on all e-Commerce sites. Even prominent cryptocurrencies like Bitcoin are rarely used for retail purchases. Cryptocurrencies, on the other hand, have become popular as trading instruments because of their increasing value. They are also utilized for cross-border transfers to a limited extent.
Blockchain technology is at the heart of Bitcoin’s and other cryptocurrencies’ attractiveness and usefulness. Blockchain is, as its name implies, a collection of interconnected blocks or an online ledger. Each block comprises a collection of transactions that each network member has independently validated.
Experts say that Blockchain technology can serve multiple industries, such as supply chains, and processes such as online voting and crowd-funding. Financial institutions such as JPMorgan Chase & Co. (JPM) are testing the use of Blockchain technology to lower transaction costs by streamlining payment processing.
Types Of Cryptocurrency
the most well-known and valued cryptocurrency is Bitcoin, which was conceived by Satoshi Nakamoto and made public in 2008. However, since then, thousands of cryptocurrencies are currently available on the market.
Every cryptocurrency claims to have a unique purpose and specification. Here are the top 10 Cryptocurrencies.
- Bitcoin (BTC)
Bitcoin, which was made available to the public in 2009, remains the most widely traded and covered cryptocurrency. As of November 2021, there were over 18.8 million Bitcoins in circulation with a total market cap of around $1.2 trillion. Only 21 million Bitcoins will ever exist.
- Ethereum (Ether)
Ethereum, which was founded in 2015 by Vitalik Buterin and is much more than digital money, is the second-best currency for consumers to invest in. Ethereum is a decentralized app and smart contract platform based on blockchain technology. Smart contracts are blockchain-based agreements that execute themselves when certain pre-defined conditions are met.
- Ripple (XRP)
Ripple, which was founded in 2012, focuses solely on solving challenges in one industry: international payment transfers. Its goal is to make international transactions quick and inexpensive. Its digital payment technology is more well-known than its XRP cryptocurrency.
- Litecoin (LTC)
Litecoin was founded in 2011 by Charlie Lee, a former Google employee, to improve on the existing Bitcoin technology by providing faster transaction times, reduced fees, and more concentrated miners. Litecoin, like Bitcoin, is a digital currency that does not include a smart contract framework. Litecoin’s efficiency has weathered the test of time, and it is today one of the most popular types of cryptocurrency.
- Bitcoin Cash (BCH)
The block size of Bitcoin Cash, which was established in 2017, is 8MB, which is a significant variation from the original Bitcoin. Bitcoin Cash has a block size of 1 MB, which means it processes transactions faster.
- Cardano (ADA)
Cardano is an “Ouroboros proof-of-stake” cryptocurrency co-founded by Charles Hoskinson and developed using a research-based approach by engineers, mathematicians, and cryptography professionals. Cardano appears to stand out among its proof-of-stake rivals as well as other significant cryptocurrencies due to its rigorous process of considerable testing, peer-reviewed research, and producing 90 papers on blockchain technology.
- Stellar (XLM)
Stellar is a decentralized blockchain network aimed at facilitating money transfers. Its network is designed to make money transactions across national borders faster and more efficient. Transactions between banks and investment businesses that used to take days or weeks can now be completed virtually immediately, with no middlemen and cheap transaction fees.
NEO, formerly known as Antshares and founded in China, is attempting to establish itself as a major worldwide cryptocurrency player. Its main focus is on smart contracts (digital contracts), which allow users to form and execute contracts without the need for a third party. The commonalities between Ethereum and NEO are the major aspect that investors like.
IOTA, or Internet of Things Application, is a blockchain-free platform that connects smart devices to the Internet of Things (IoT). This facilitates internet-based communication between various sensors-equipped items. IOTA aims to improve the security, usability, and scalability of this technology. Tangle is the name of the protocol.
EOS, founded by Dan Larimer, is creating a platform for developers to construct decentralized apps and smart contracts, but with a significant technological upgrade.
How to Invest in Cryptocurrency?
Investing in cryptocurrency has a high level of risk as well as a high potential profit. As a result, it requires the necessary knowledge and effective planning. Short-term (including daily) and long-term investing strategies can be classified based on their duration.
Buying virtual money and attentively tracking its exchange rates is the basis of short-term investing. According to the theory “cheaper to buy, more costly to sell,” when the price of a purchased coin rises at about the same rate as the rate at which it was obtained, the investor sells it at a greater price. The price difference shows his investment profit.
What is the best way to invest in cryptocurrency stocks? Long-term investments, which can span anywhere from a few months to several years, are an alternative to short-term investments. In their instance, the investor believes in the long-term growth of a particular cryptocurrency. At the same time, they are unconcerned about short-term price increases, which are the predictors of success for short-term traders. Investing in cryptocurrency can be done through brokers or a cryptocurrency exchange.
How To Store Cryptocurrency?
So, now that you’ve purchased your cryptocurrency, where should you keep them?
Knowing how to use a crypto wallet is an important step in becoming knowledgeable about cryptocurrency. Just like with online banking apps, most of these wallets function similarly and have similar features. All crypto and bitcoin wallets come with public and private addresses. Simply put, this public address is used by people trying to send Bitcoin to your wallet. Your private key can be thought of as a password that you use to interface with (access and transfer) your bitcoin. Here are 5 ways to safely store your cryptocurrency.
1. Mobile wallets
Mobile wallets are one of the most popular crypto wallets. Users often download these wallets as apps. Each user’s public and private keys, or addresses, are generated by these apps. Many of them also allow you to create a QR code that looks like the public address, making it simple to send Bitcoin.
2. Hardware wallets
Hardware wallets are another popular option for storing cryptocurrency safely. The same goes for all Bitcoin wallets. Hardware wallets have their own set of keys, although they differ significantly. Hardware wallets are similar to USBs in that they are plugged into your computer, loaded with your assets, and then removed from your computer, taking your digital assets offline. Hardware wallets secure your funds from cyber assaults because they are offline but remain kept on the Blockchain, according to Zipmex.
3. Desktop wallets
A desktop wallet is another popular wallet option. It functions similarly to mobile wallets. It is a program that you install on your computer to interact with the blockchain. The finest desktop wallets have a combination of robust security measures and simple functionality. However, because desktop wallets are connected to your computer and, in many cases, the internet, they are vulnerable to security breaches. Desktop wallets, on the other hand, are ideal for folks who frequently send and receive messages through the computer.
4. Paper wallets
Paper wallets are one of the more unique methods of storing cryptocurrency, as well as one of the most secure if done properly. Until about 2016, the majority of people who made paper wallets did so by printing a QR code of their wallet onto paper and then putting it in a secure and safe location. Most people now write down their 12-word seed phrase, which serves as a mnemonic for their address.
The security problems of printing out a QR code are eliminated by writing down the seed phrase in one’s handwriting. This technique of accessing your digital assets allows you to generate a fresh public address for each transaction, which is not possible with the QR code approach. The most significant consideration with paper wallets is how you will store your paper. Those who are most concerned about security laminate their documents and store them in a fireproof and waterproof safe. As a result, the storage is extremely safe.
Each of these four methods for storing your Bitcoin has its own set of advantages and disadvantages. It is entirely up to you and how you intend to use cryptocurrencies. For people who want something simple to use and will be making a lot of transactions, digital wallets are ideal. Hardware wallets are ideal for keeping huge quantities of cryptocurrency, whereas paper wallets are ideal for safely holding assets offline.