Digital innovations all over the world in different sectors are ushering in new eras very quickly, establishing milestones for humanity’s progress every other day. It feels surreal to think that the same technology that has allowed Breakout escape rooms to develop their virtual experiences also enabled the rise of cryptocurrency.
Cryptocurrency has become one of the trendiest topics in finances. This digital model of payment is now gradually gaining recognition in countries all over the globe. But what is cryptocurrency exactly? What are various kinds of cryptocurrency? And what is its importance?
If you wish to know more about it, stay tuned with us as we show you what it is!
What is cryptocurrency?
In simple words, cryptocurrency refers to an alternative form of payment that can be used with the intervention of any centralized monetary authority, like the government or the bank. It is a completely decentralized mode of payment. Cryptocurrency takes on a different approach instead. There are certain specific cryptographic techniques that are used to create it. One can make use of cryptocurrency to buy, sell or even trade their goods and services for a profit. Often, cryptocurrency finds its usage as an investment vehicle by individuals or companies.
Cryptocurrency is generally managed by using blockchain technology. Now, blockchains are advanced levels of computer networks that are created purely with the help of mathematics and coding. Cryptocurrency comprises two modes: coins and tokens. While coins operate on their blockchains, since they are used as money in various transactions, tokens, on the other hand, operate on existing blockchains.
One usually stores their cryptocurrency securely and safely in a digital wallet, generally in a blockchain wallet. This helps individual users to easily manage it and trade the coins as and when necessary.
How can you Invest in Cryptocurrency?
As against cryptocurrencies like Bitcoins which can be easily bought by using US dollars, others can only be obtained by paying using another cryptocurrency. But before you head towards buying any kind of cryptocurrency, what you need to have is a digital wallet to keep your currencies.
The most common way of doing this is by simply creating an account on an exchange and thereafter using real money to buy your cryptocurrency!
What are the most common kinds of cryptocurrency to choose from?
While there are several different kinds of cryptocurrencies for you to choose from, here are the few most commonly used ones:
Known as the oldest and most commonly used cryptocurrency all across the world, Bitcoin was created back in 2009. It used blockchain technology to become the first-ever cryptocurrency to have been used for transactions.
Ethereum is yet another popular kind of cryptocurrency that, with the help of blockchain technology, has made smart contracts so much easier! It also makes use of decentralized software, much like Bitcoin. The token that one generally uses on this network is termed as ‘ether.’
Ethereum allows individuals to build their smart contracts on its interface. Individuals can smoothly run their contracts here, devoid of the fear of any kind of fraudulence or third-party indulgence.
The development of this cryptocurrency stems from the inspiration drawn from the popular meme featuring a Shiba Inu dog as its icon. Following the powerful backing received from Tesla CEO Elon Musk, the price of this cryptocurrency reached its peak.
Unlike Bitcoin, this cryptocurrency exercises no kind of limit on the number of coins that one can mine.
With the creative and innovative team of cryptographers, engineers and mathematicians were born this form of cryptocurrency. The uniqueness of this cryptocurrency lies in the fact that, unlike most known kinds, it is a much more sustainable and balanced coin to use.
With the help of the same technology as is used by Bitcoin, Litecoin is also one of the earliest forms of cryptocurrencies. Even though it is created using the same technology, Litecoin is found to generate blocks at a considerably faster rate.
Hence, as one can understand, by using this kind of cryptocurrency, you can get a much faster transaction rate.
Why do you think cryptocurrency has become so popular?
There can be several reasons for which people these days tend to invest in cryptocurrencies. However, amongst all, here are a few common factors that make people align themselves towards investing in it:
- People of the modern age tend to view cryptocurrencies as the presumably future of the world. This increasingly makes them so much interested in investing in it these days.
- Many people simply use cryptocurrency as it’s an alternative mode of currency that is unmonitored by centralized monetary agencies like banks. This is mainly because, with time, the value of money is often reduced by banks via inflation.
- Some people use cryptocurrency because they like the technology that works behind it, known as the blockchain. They even believe that as cryptocurrency is operated by a decentralized system, it is often much more secure than traditional modes.
- There even exists a small group of people who use cryptocurrency majorly because they think and believe that its value is going up considerably. These people simply harbor no interest in the long-term acceptance of cryptocurrency.
How can you stay protected while using cryptocurrency?
If this is your first time investing in cryptocurrency, then you need to be far more cautious in using it than anybody else. Here are some aspects of crypto that you need to consider before you invest investing your money in it:
- Look for the owner. If you find that the owner is someone who can be easily identified and is well-known, then that is surely a good sign.
- Can you find other identifiable investors also investing in this cryptocurrency like you? This is also a good sign to look for a suitable cryptocurrency to invest in.
- Does the cryptocurrency company allow you to own a stake of your own? Or can you just use the currency and tokens? Noting this distinction is a crucial step in choosing a suitable cryptocurrency for yourself. If you own a stake, then remember who also gets to earn when your company earns. However, if you are just entitled to using the currency, that means all you can do is use the currency.
If you are planning to invest in cryptocurrency anytime soon, then make sure you check all the aspects of the phenomenon. Invest in this secure form of technology today, which is seemingly the future that we are heading on to!