What is Cryptocurrency?
Angelica A.
July 19, 2021
  |  

What is Cryptocurrency?

Angelica A.
July 19, 2021
  |  

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Here’s what cryptocurrency is and how it works. We’re covering the most popular cryptocurrencies, types of them, how to get a hold of some and invest in them, all the way to what any business needs to know about it. Our “What’s cryptocurrency'' summary will get any individual kickstarted on this coin’s basics. Yet, entrepreneurs especially so.

And yes, we call it a coin because that’s ultimately what “crypto” (its most common name) is. You'll see us calling it that a lot further below. Let’s jump right into the theory. 

What is cryptocurrency? And how does it work?

Think of crypto as a way to make payments. It’s just a mathematical figure that stands for money (coin) that works online. The “crypt” portion of its name comes from the type of security that characterizes it. That's because cryptography sits at its foundation. And that tech makes this virtual currency extremely difficult to counterfeit.

Just like any sort of coin, currency, or “purchase power mechanism,” cryptocurrency is a type of “money” or funds that lets people buy goods and services. Trading is possible with it, too, which can happen at a profit, as well. 

Aside from coin, you can hear the term token being thrown around. And anyone can come up with their type of crypto. But, of course, this is only possible if the made-up currency meets strict cybersecurity and other criteria.

In the sense of tech and technicalities, crypto works on what's called blockchains. This is a very secure tech that spreads out across multiple devices and computers to control transactions better. 

What are the most popular cryptocurrencies?

Imagine the number of cryptos that have been created! There’s a count of at least 10K different ones at this point. One particular way this sort of money is different is precisely how it’s not centralized by any authority. That means anyone can duly come up with a new kind. This is contrary to how common money is created and regulated. 

Bitcoin (BTC), one of the most famous ones you’ve probably heard, has created billionaires. It's done so to the point of leaving the world baffled at what started as a free option and turned into an invaluable mine for some. Just March of this year, YahooFinance reported “the price of a [single] BTC” at $62,000. As Yahoo also confirms, “over 100,000 people have at least $1 million or more stashed in BTC” right now. 

Coinbase’s Armstrong is amongst the youngest of those. Yet, even more surprising than that is how many of these millionaires get to stay secret, And they're able to keep absolute confidentiality. 

Types of cryptocurrency

It’s as if Bitcoin stood all on its own and by itself. And then there are the tons of clones and re-make attempts that follow it. 

However, to get a real sense of the types of cryptocurrency that exist, imagine just how many other individuals, companies, projects, and initiatives have used this tech before. All to come up with their specific cryptocurrency! 

We’ve seen more and more categories come up as time passes. It happens as people get better acquainted with the technology, its total reach, and daily use. 

How to buy cryptocurrency

The most straightforward transaction for crypto is to purchase some with regular monetary funds. There are various websites and platforms from which to choose to buy crypto. 

Typically, you’ll be able to buy these alternate forms of financial understanding with traditional means. Of course, we’re speaking of items such as credit card purchases and bank or wire transfers. However, some people are willing to show up and trade crypto in person right away, as well. Just be careful, please. The idea is you can always put crypto up for sale. Or buy some online as need be. 

How to invest in cryptocurrency

Investing in crypto is a natural problem for people interested in diverse investing. And there are, indeed, crypto-focused investors. However, as a highly valuable digital coin, the existence of crypto sets specific considerations. 

Landing a proper currency can mean a more than 1000% turnover. This is precisely what BitCoin did for so many happy people. 

To invest in it, start by considering this investment class a particular and specific kind. Of course, some might fight back, saying this is not measurable enough to consider it a high-class investment. But, you should start somewhere (as usual) if this kind of investment interests you. Just beware of the implications before you get started.

For that, read up on exchanges. Look up reviews on whatever calls your attention. And always rest assured there are experts in the currency you’re choosing. So, consider reaching out for guidance, especially so to potential stakeholders or business partners.

What any business should know about cryptocurrency

On that note, make sure you store copies of your private keys never to lose out on funds of this nature by something as simple as a hard drive fatality. There are potential risks associated with crypto and our tech habits. It’d be good to check those out before working on formally making, trading, or selling crypto. 

Also, crypto works at a different pace than “real-life funds” to call traditional money somehow. So, bear in mind the times at which we can buy, trade, or use crypto might be slightly more paced than how we’re accustomed to spending “regular” money. 

Working with cryptocurrency is also quite an anarchistic decision if you wish to see it that way. Part of the political value or implication in using crypto is how it falls out of any legal regime, making it impossible for governments and their agencies to regulate its creation and use. 

Unfortunately, the above also puts crypto at risk for illicit activities, such as money laundering and tax evasion. However, authorities have been known to manage arrests. Those refer to people conducting illegal activities on BitCoin through diverse analyses of the specific blockchain. 

The only other security factor to consider is how encrypted funds like these are much safer than most other online processes. 

Yet, remember wallets in which we host our crypto? Those are still susceptible to attacks. So, while the coin itself can be protected in different ways, a given platform on which we allocate our crypto can be at risk for cyberattacks and/or other injuries. 

Also, this might be nothing more than a curiosity for reference, but did you know that the first currency of this kind was created anonymously by someone passing under the pseudonym of Satoshi Nakamoto? So if you ever hear the name, it can now somehow ring more of an informed bell. 

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