Cryptocurrencies are also often referred to as digital assets, crypto trading assets, and virtual payment systems. The first ever – Bitcoin – was launched by mysterious creator figure Satoshi Nakamoto in January 2009. It set the grounds and the standard for the blockchain technology but also made millions of people wonder how cryptocurrency works.
Cryptocurrency Trading Basics
Thanks to the existence and well-developed state of the Internet, digital assets can be traded just like any other. Cryptocurrencies do not have a physical form, even though most of them end with the suffix -coin. But the Bitcoin value and a single Ether’s price can be measured in fiat currencies.
They can be exchanged for one another on one of the many reliable cryptocurrency exchange websites. Users can engage in Bitcoin trading just like in regular currency trading. The blockchain network that almost all of the different Altcoins utilize is open-source and based on the peer-2-peer principle.
It was nothing else than the requirement of developing economies several centuries ago to track where the monetary earnings were going that brought forth the issuing of our everyday paper and coin fiat currencies. The launch of the world wide web more than 25 years ago allowed users from all over the world to trade freely online. This logically brought forth the establishment and release of the Bitcoin.
Lots of people nowadays are riding the so-called ‘crypto craze’ but some of the ones who conduct cryptocurrency investments still ask themselves what is cryptocurrency. The shortest answer would be that this is a medium of exchange which heavily relies on cryptography in order to ensure the security of personal data and information about any kind of financial transactions on the Internet. It is one of the most lucrative assets that one can trade with nowadays.
Cryptocurrency Explained – Short, Simple, & Straight-Forward
One of the most peculiar things about cryptocurrencies is the fact that the cryptocurrency mining process basically creates the given Altcoin and grants a given amount of it to the end user at the same time. The Blockchain is basically a virtual list of records of all the operations that have occurred within a block.
Scrypt mining and crypto mining processes involve the solving of complex mathematical puzzles (equations) creates new blocks (units of the particular Altcoin). All transactions and procedures that have happened within it are documented in a digital catalog.
They verify that a given crypto miner has completed a given portion of work. Other users verify that this has happened and approve of the subsequent payment (sending of several Altcoins or a fraction of just one when it comes to the Bitcoin price). Approval and confirmation time frames vary from one cryptocurrency to the other.
The Bitcoin approval time, for example, can take as long as ten minutes. Other digital assets, such as Ethereum, Ripple, and LiteCoin, can handle transactions in as little as a couple of seconds. The two most popular work verification methods are the proof-of-work and the proof-of-stake.
Did You Know?
The proof-of-work payment verification concept involves the provision of evidence that one crypto miner or a group of such have covered all of the data contained in a single block. The proof-of-stake method allows one to approve transactions based on how many Altcoins one possesses or the average rate of currency mining power one has.
Which Are the Best Cryptocurrencies? – Bitcoin Trading Alternatives
Most people nowadays, even if they have never traded anything in their life, have at least heard of Bitcoin and cryptocurrencies in general. The most attractive thing about the digital assets is the fact that they do not require the user to understand how Altcoins are mined for in order to invest in them to favorable results.
Just like anything else on the digital market, the best cryptocurrency to mine or trade with depends on the individual needs of the user. All of the Altcoins have their specific characteristics and online investors have to examine each and every one for themselves in order to find out which suits them the most.
Below follows a short list of the primary positive features of the main cryptocurrencies on the virtual market:
- » Bitcoin Cryptocurrency: Certainly, the most financially remunerative cryptocurrency is Bitcoin. The units from the virtual payment system have a limited number and most of them have already been mined for. The supply-and-demand ratio suggests that the average Bitcoin price will remain relatively high, no matter how many cryptopocalypses occur. Owning a unit of the first digital currency might someday even have a historical value, making it some kind of antiquity.
- » Ethereum Cryptocurrency: The silver-medal holder has a lot to offer online users. The average Ethereum price is right after the Bitcoin value, making it the second highest in the present market conditions. Its average mining time is only a couple of seconds. Security and safety levels of personal and transaction data are also often viewed as way more enhanced than those of the first digital asset. The latter also has a hard market cap of 21 million, while the former is practically limitless. As long as there are people who mine, new units will continue being issued.
- » Ripple Cryptocurrency: The technology behind is already being applied by various banking institutions around the world. It is a stellar virtual payment system that is here to stay, even if the value of the Altcoin itself begins to drop. Ripple cryptocurrency takes the bronze position for the highest value among other digital assets.
- » LiteCoin Cryptocurrency: This virtual exchange shares many similarities with its bigger brother – Bitcoin. But LiteCoin does have a hard coin cap that is three times that of the first cryptocurrency ever. It also uses scrypt mining and not crypto mining. This is a small difference in the foundational protocols which can turn out to be extremely remunerative for the user.
- » Bitcoin Cash Cryptocurrency: This virtual asset was released as a hard fork of Bitcoin Classic which in itself is a hard fork of Bitcoin. The size of every block contained in the blockchain is bigger, meaning that it takes more users to solve the mathematical puzzle but also that more transactions can be processed within a set time period. It is a consensus-driven cryptocurrency.
Where to Store Cryptocurrencies?
Altcoins are usually kept in secure e-Wallets, also referred to as crypto wallets. There are many different types and some cryptocurrencies even advise users to open one or two particular kinds. It is good to examine their properties before proceeding to get started with one. Crypto wallets can also be described as software programs that store all public and private keys, as well as transaction data. Users can send and receive digital monetary amounts. They can also monitor all of their virtual financial operations.
Ownership of a particular Altcoin is transferred from the blockchain that powers or a user to the receiver. This is done via the appliance of unique signatures and passwords. There are many different types of e-Wallets – hardware, software, mobile, and desktop. Experts advise that it best to open several crypto wallets and disperse the acquired digital funds accordingly. Regular backup, adding extra security layers, and updates are also necessary in order for one to ensure maximum safety and security levels.
How to Invest in Cryptocurrency?
One particular strategy is extensively applied in all types of digital transactions. It is the method of ‘higher risk/bigger investment = better results’. There are some possible scenarios in which it might not turn out to work properly but users should remember that it is a foundational principle for the acquiring of good digital funds.
There are also many different ways in which traders can invest in cryptocurrency. People, who already have some experience in the digital markets, will not have any problems applying different strategies. Those, who do not have any prior education or understanding, can simply rely on the services of a legit crypto robot.
Another good way to buy and sell cryptocurrencies is by visiting a cryptocurrency exchange website. If the offered conditions meet the user’s requirements, then they can open a trading account with the platform. They allow one to transfer digital coins into fiat currency and vice versa.
The shortest way to invest in cryptocurrencies is the following:
- Open Crypto Investment Account
- Make Deposit & Trade
- Accumulate Good Results & Withdraw
Safety, Security, & Anonymity of the Crypto Transactions
Trading cryptocurrencies are generally regarded as one of the top ways to keep your funds and personal data secure on the Internet. Users do not need to give in their credit or debit card number in order to mine for a particular Altcoin or invest in it.
Some digital currencies, like Monero and Dash, use double encryption protocols so that they can ensure the anonymity of their miners. The said help keep the identity of the sender undisclosed. Cryptocurrency exchanges take extra precautions to make their users have complete safety and security.
Bottom Line – Everything is Going All Crypto!
Altcoins have only been around for a little less than a decade but they have managed to captivate the attention of both professional investors and complete newcomers. It appears as if everybody wants to jump aboard the crypto trading bandwagon. There is a good reason for this.
Investing in cryptocurrencies means that one can generate favorable financial results even when the price of a given coin takes a turn for the worst. The best way to do this is to stay thoroughly informed on the recent trends and occurrences.
Of course, crypto traders can simply get started with a legit and trustworthy cryptocurrency exchange platform. A certain level of research is also required here but there are some pieces of software that have cleverly-written algorithms and offer just the right investment conditions.
So remember to stay smart and trade crypto!