The popularity of cryptocurrency is rising in the modern digitally aggressive world while a little is clear about its basics to the common people. Cryptocurrency can be easily understood as the virtual currency or digital currency using the different cryptographic techniques for transactions.
Read on to find this detailed guide on the basics of cryptocurrency.
What is cryptocurrency?
It operates independently of any financial institution or government body. These are the decentralized networks based on the blockchain technology. Blockchain is the distributed ledger recording all the transactions spread over the different computer networks.
Prominent cryptocurrencies
Some of the commonly yet significantly found cryptocurrencies are:
- Bitcoin
The first and widely prominent cryptocurrency is Bitcoin. It launched the concept of blockchain and is the digital gold standard in cryptocurrencies. Bitcoin was launched by Satoshi Nakamoto in 2009.
- Ripple
It is a cryptocurrency and digital payment protocol enabling quick and inexpensive international money transfers. Ripple promotes cross-border payments and offers liquidity.
- Litecoin
It is the peer-to-peer cryptocurrency created to produce quick blocks. It is referred to as the silver to Bitcoin’s gold and is limited to supply of 84 million coins. Litecoin was created by Charlie Lee in 2011.
- Ethereum
It extends the concept of blockchain with the help of smart and self-executing contracts with the terms of agreement directly written into the code. These smart contracts help the decentralized apps to be created on the Ethereum blockchain. Ethereum was created by Vitalik Buterin in 2015.
Methods to buy and store cryptocurrencies
Here are the top methods to buy and store them for common individuals:
- Buy and sell on exchanges
Cryptocurrencies are bought and sold on different exchanges like Kraken, Binance, and Coinbase. It is easy to trade different cryptocurrencies or traditional currencies for desired crypto assets on these exchanges.
- Wallets to store
The different wallets used to store cryptocurrencies are hot wallets and cold wallets.
The hot wallets are the online wallets connected to the internet. These mobile or web-based wallets offer convenience but are prone to security risks.
The cold wallets are offline online wallets like the paper wallets or hardware wallets. These are less convenient for frequent transactions but offer high levels of security.
- Security measures for protection
The use of strong and unique passwords along with two-factor authentication protects cryptocurrencies. The private key is similar to a password in cryptocurrencies which offers access to control the associated funds.
Future scope of cryptocurrencies
Towards the end, the future of cryptocurrencies will exist and be dynamic for many individuals. The advancements in blockchain technology, non-fungible tokens (NFTs), and decentralized finance (DeFi) are the catalysts for changing the cryptocurrency landscape.
The leading financial institutions and governmental bodies are further exploring the different methods to integrate blockchain and cryptocurrency into their operations. These factors are set to influence the regulatory environment and adoption of cryptocurrencies.
Parting Words
Cryptocurrency has bought a dynamic shift into the method of perceiving and using money for modern individuals. It is easy to understand the common cryptocurrencies, methods to buy and store, and its future scope.
A careful understanding of cryptocurrency helps make informed decisions in the world of digital currencies.
