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5 simple ways to fully understand cryptocurrency

“Buy the dip, buy the dip or get that hot cryptocurrency coin”

These are common words we have seen on the internet in the past few months, stretching into over a year.

Cryptocurrency is a term that isn’t alien to us, as we must have one point heard of it, or any other termed closely related to it.

This begs several questions from us…

  1. What exactly is cryptocurrency?
  2. What makes it different?
  3. What is the origin of cryptocurrency?
  4. Is cryptocurrency safe?
  5. How do I use cryptocurrency?

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In this article, you will understand as much as you can about cryptocurrency.

What exactly is cryptocurrency?

According to Forbes, Cryptocurrency is decentralized digital money that’s based on blockchain technology. You may be familiar with the most popular versions, Bitcoin and Ethereum, but there are more than 5,000 different cryptocurrencies in circulation.

Cryptocurrency, as the name implies, is also a currency that exists either digitally or virtually, and can be used in transactions that are secure and authentic. It uses cryptography technology, which makes it difficult, or nearly impossible to counterfeit or replicate. Using cryptocurrency, you can make secure payments online, making use of virtual tokens.

Basically, cryptocurrency is an electronic form of legal tender.

What makes it different?

Unlike a physical form of currency, It is nearly impossible to replicate cryptocurrency. Being in electronic form, it is a digital payment system, which means it doesn’t really on banks for approval of transfer. It also means that, it is not subject to direct influence/control from the government. In simple terms, cryptocurrency is an unregulated digital currency, that is free of direct influence from the government and doesn’t rely on banks.

Being a digital currency, it also means that cryptocurrency has ease of transfer from one party to another.

How cool is that?

It means that you can transfer or receive any amount with more ease than using a bank. It also has minimal transfer processing fees.

What is the origin of cryptocurrency?

In the year 2009, the first cryptocurrency was released. Created by a Satoshi Nakamoto, which is a pseudonym, as the identity still remains a mystery, even until this day, Bitcoin was released as an open-source software. Bitcoin was gotten through a process called mining. Bitcoin first peaked at $266 for 1. 13 years later, there are over 18.6 million bitcoins, worth over $927 billion.

Since then, modifications has been made to Bitcoin to create more cryptocurrencies. Some of these include Ethereum(released initially in 30 July, 2015), Dogecoin(also released initially on December 6, 2013), Litecoin(released October 13, 2011), e.t.c

Starting off on academia, cryptocurrency has fast become a pillar in this modern world.

Is cryptocurrency safe?

Here is the QUESTION. The question always asked by most. How safe is cryptocurrency?

The method of storage and transaction of cryptocurrency is done only through a designated software, mobile, computer application, or through dedicated digital wallets.

Cryptocurrency is secured by public and private keys, and in this lies its safety.

How do we mean?

Remember that cryptocurrency is stored using a digital wallet, also known as crypto-wallet, and this wallet stores the private and public keys used for transactions. These keys also signs and encrypts information. A crypto-wallet can be any of cloud, desktop, hardware or mobile.

The public key is in this crypto-wallet (or account address), while the private let is know only to the owner, and is used to sign off transactions. Cryptocurrency transactions are done using dedicated blockchain based networks, which again emphasizes an un-regulation from direct government influence.

Lastly,

 How do I use cryptocurrency?

With the ongoing rave about cryptocurrency, it is only expected that one gets in on the ‘fun’.

To get in on this, you probably would want to buy cryptocurrency, and do that safely.

The first thing to do is choosing a platform to use. These platforms are generally traditional brokers or cryptocurrency exchanges. After doing that, you will need to fund your account, so you can begin trading. You can also place an order via a mobile platform or broker, or even an exchange web.

Storing your cryptocurrency is in two modes;

  • Cold wallet storage- This is also known as hardware wallets, and it relies heavily on offline electronic devices to firmly secure one’s private keys. There is also a fee charge.
  • Hot wallet storage- This mode of storage issues online software to protect the private keys, and there is no charge on it.

In Conclusion

Cryptocurrency has become a huge part of the digital world, and is set to become an even more integral part of it, as certain countries have approved it as a legal means of purchase. Certain companies, websites also accept cryptocurrency.

Learn more about cryptocurrency on our LevelUpTrybe. We offer insight and help into digital skills that can be acquired, to benefit you.

 

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  1. Pingback: 5 Key Mistakes Investors Can Make in a Volatile Market - LevelUpNG

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