Crypto Currency 101
What is cryptocurrency?
Cryptocurrency is a digital token that uses cryptography for chaining together digital signatures of token transfers, peer-to-peer networking between users directly and decentralization. In some cases the proof-of-work scheme is used to create and manage the currency. These systems work without a central repository or single administrator.
Transactions using cryptocurrencies between users are verified by a network of nodes and recorded in a public distributed ledger called a blockchain by a process known as mining. Cryptocurrencies are created only as a reward for the payment processing work called mining.
These transactions are only reversible through an additional transaction that is also documented.
*Blockchain is a public anonymous ledger that continuously records every cryptocurrency transaction and is verified through anonymous parties.
*Blockchain for Business is a blockchain built with the ability to allow you to exchange anything of value, whether it be a house or car, documents, videos and photos. It is also a private interaction between invited members with the correct permissions who may participate in the exchanges that are run on smart contracts, business logic imbedded in the network to reduce disputes and increase trust between parties involved. Also in blockchain for business you may regulate who verifies the transactions and exchanges.
What is Bitcoin?
Bitcoin is the first open-source decentralized virtual currency. Developed in 2009 with the highest market capital, it uses peer-to-peer technology to operate without a central authority or banking institution. It manages transactions which issue Bitcoin, also known as mining, using the collective network. No one person or organization has total control over the entire network. The price of BTC or Bitcoin is determined by supply and demand. If the demand increases so does the value.
How are transactions processed and verified?
A transaction consists of transferred value between two cryptocurrency wallets through a blockchain. Each wallet has a private key or seed that is used to sign transactions which provides the mathematical proof that it came from the correct owner of the wallet.
When one user initiates a transaction, the user designates each address and the amount of cryptocurrency being transferred. Users may transfer amounts to multiple addresses in one transaction.
Once the transaction is initiated, miners process those transactions. Paying a fee is optional by the user to those miners processing and verifying the transaction, but transactions with a higher fee will be prioritized.
What is mining?
Mining is a service done through the use of computer processing power. Miners are the record-keepers that maintain the blockchain by consistently verifying and collecting newly broadcasted transactions through different hashing algorithms (depending on which cryptocurrency it is mining) into a group called a block. Each block created is attached with the previous block by containing the previous block’s cryptographic hash, thus creating a blockchain.
How or where can I purchase a crypto currency?
Bitcoin, Litecoin, Ethereum and any cryptocurrency can be purchased using your credit/debit card, wire transfer or PayPal/Skrill from any exchange available online. Many exchanges have apps that process those transactions and even downloadable apps that act as your cryptocurrency wallet. Make sure to purchase through a reputable exchange.
You may also purchase cryptocurrencies from another user through a blockchain.
There are over 700 variations of cryptocurrencies but the top 10 in order of Market Cap are:
- Bitcoin Cash
So what can cryptocurrencies do for me?
With cryptocurrencies like Bitcoin you can make transactions of value anonymously (if you choose) without paying a bank transaction or monthly fee essentially lowering that cost for buyers and sellers and without concern for currency conversion. This makes cryptocurrencies efficient and almost instantaneous where transaction confirmations are received anywhere in the world within 10 minutes typically, and transactions can’t be reversed once made.
There are also platforms that you can use to trade, lend and invest Bitcoin and various cryptocurrencies to create daily percentage profits.
Many companies are now accepting cryptocurrencies for services, goods and almost anything of value.