Cryptocurrency prices have been on the rise lately, and everyone wants to get in on the action.
However, even though it’s a complicated and new subject for most people, you don’t need to be an expert in order to understand what is going on at all times.
In this Anony Max , we’re going to cover what you need to know, from the basics of what cryptocurrencies are to the most important factors that affect their value.
What is a cryptocurrency?
Cryptocurrencies are decentralized or “virtual” currencies that aren’t issued by a specific government.
Instead, they’re created and stored electronically through a process called mining. How cryptocurrency mining works is explained in detail below.
For now, it’s enough to say that you can keep your virtual currency secure by keeping it somewhere safe and anonymous – like a wallet on your mobile phone or an encrypted hard drive.
You can use different types of wallets for different purposes which we’ll cover later on as well as getting more details about the best wallets here .
What are some of the differences between cryptocurrencies?
There are three basic cryptocurrencies that everyone needs to be familiar with. These are Bitcoin, Ethereum, and Litecoin.
There are also several other coins that have some characteristics of these currencies which we’ll discuss shortly.
Bitcoin is the first decentralized cryptocurrency that was invented by Satoshi Nakamoto, meaning it’s the easiest to understand.
It was designed to operate autonomously without a centralized authority.
This means no one has control over the value of it – it stays relatively stable over time because there’s no central party or government to control its supply or price.
The supply of it is fixed and finite, and all transactions must be verified through cryptography.
Bitcoin also offers a simple and easy payment process and can transfer money anywhere in the world in 10 minutes.
This makes it the perfect platform for global payments. It isn’t subject to any fluctuation in price , and you can’t get your money stolen from you because the transactions are encrypted.
There’s no other cryptocurrency that offers such a high level of security.
Bitcoin is also one of the most stable ones out there, largely because it was one of the first to market.
Its value doesn’t fluctuate too much, which means you’ll get the most out of what you’re investing in if you decide to buy some now .
They’re added whenever there’s a need for an application to run, like a contract or a financial exchange. To access a smart contract, you’ll need Ether coins .
These coins are needed because they pay for the computing power needed to complete transactions and to keep the network going.
You can think of it as paying tolls in order to drive down a road – unlike Bitcoin, Ethereum requires money in order for things to happen.
Interesting features of crypto currency :
- You don’t need a bank account to open an account.
- You can transfer them to other wallets.
- No middleman . Most of the transactions are done directly between users, avoiding the need for a third party like a bank or government agencies.
- You can use your crypto currency to pay for things online and offline, including online gaming and gambling sites.
- The blockchain technology that they’re based on makes them completely transparent and secure .
- You can check the status of your transactions at any time via an online block explorer.
- The availability of wallets across all platforms allows you to access your money from anywhere in the world whenever you need to.
- Crypto currency payments are irreversible – this means no one can chargeback or reverse a payment, so it’s a great way of avoiding scams and fraudulent sellers online .
- A new cryptocurrency is created whenever anyone successfully verifies a block, catching competitors off-guard and providing plenty of investment opportunities for smart investors .
- A different cryptocurrency market exists for each exchange.
- You can earn interest by investing in “coins” (cryptocurrencies).
- There are plenty of online exchanges where you can trade your coins for other ones, like Bitcoin or Ethereum.
- You can use them to pay for services or products online without having to give out your real name or personal information, making them ideal for anonymous transactions .
- There are no limits on the number of coins you can own – there’s no limit to what money you can make by buying and selling these things .
- The use of encryption makes it easy, safe and quick to transfer them between wallets .