Know what is cryptocurrency or how it works in just 5 minutes.:- Cryptocurrency, sometimes called crypto-currency or crypto, is any form of currency that exists digitally or virtually and is used to secure transactions. Uses cryptography for. Cryptocurrencies do not have a central issuing or regulating authority, instead using a decentralized system to record transactions and issue new units.
What is cryptocurrency? ¿Qué es la criptomoneda?
Cryptocurrency is a digital payment system that does not rely on banks to verify transactions. It is a peer-to-peer system that enables anyone, anywhere to send and receive payments. Rather than moving and exchanging physical money around in the real world, cryptocurrency payments exist purely as digital entries in online databases describing specific transactions. When you transfer cryptocurrency funds, the transaction is recorded on a public ledger. Crypto currency is stored in a digital wallet.
Cryptocurrency got its name because it uses encryption to verify transactions. This means that advanced coding is involved in storing and transmitting cryptocurrency data between wallets and public ledgers. The purpose of encryption is to provide security and protection.
The first cryptocurrency was bitcoin, which was established in 2009 and is still the most famous today. Most of the interest in cryptocurrency is trading for profit, with speculators sometimes causing prices to skyrocket.
How does cryptocurrency work? ¿Cómo funciona la criptomoneda?
Cryptocurrency runs on a distributed public ledger called a blockchain, a record of all transactions updated and kept by currency holders.
Units of cryptocurrency are created through a process called mining, which involves using computer power to solve complex mathematical problems that generate coins. Users can also buy currencies from brokers, then store and spend them using cryptographic wallets.
If you own cryptocurrency, you don’t own anything real. You have a key that allows you to transfer a record or unit of measurement from one person to another without a trusted third party.
Although bitcoin has been around since 2009, the applications of cryptocurrency and blockchain technology are still emerging in the financial context, and more uses are expected in the future. Transactions including bonds, stocks and other financial assets can eventually be traded using the technology.
Examples of cryptocurrency | ejemplos de criptomoneda
There are thousands of cryptocurrencies. Some of the most famous include:
Founded in 2009, bitcoin was the first cryptocurrency and is still the most traded. The currency was developed by Satoshi Nakamoto – widely believed to be a pseudonym for a person or group of people whose exact identity remains unknown.
Developed in 2015, Ethereum is a blockchain platform with its own cryptocurrency, called Ether (ETH) or Ethereum. It is the most popular cryptocurrency after bitcoin.
The currency is similar to bitcoin but has moved more quickly to develop new innovations, including a process to allow faster payments and more transactions.
Ripple is a distributed ledger system that was established in 2012. Ripple can be used to track a variety of transactions, not just cryptocurrency. Behind this the company has worked with various banks and financial institutions. Non-Bitcoin cryptocurrencies are collectively known as “altcoins” to distinguish them from the original.
How to buy cryptocurrency | Cómo comprar criptomonedas
You may be wondering how to buy cryptocurrency safely. It usually involves three phases. These are:
Step 1: Choosing a Platform Choosing a Platform
The first step is to decide which platform to use. Generally, you can choose between a traditional broker or a dedicated cryptocurrency exchange:
- Traditional broker: These are online brokers that offer ways to buy and sell cryptocurrency, as well as other financial assets such as stocks, bonds, and ETFs. These platforms offer low trading costs but fewer crypto features.
- Cryptocurrency Exchange: There are many cryptocurrency exchanges to choose from, each offering different cryptocurrencies, wallet storage, interest-bearing account options, and more. Many exchanges charge asset-based fees.
When comparing different platforms, consider which cryptocurrencies are on offer, what fees they charge, their security features, storage and withdrawal options, and any educational resources.
Step 2: Fund your account. Fund your account
Once you have chosen your platform, the next step is to fund your account so that you can start trading. Most crypto exchanges allow users to buy crypto using fiat (i.e., government-issued) currencies such as the US dollar, British pound, or euro using their debit or credit card – although this varies by platform.
Buying crypto with credit cards is considered risky, and some exchanges do not support them. Some credit card companies do not even allow crypto transactions. This is because cryptocurrencies are highly volatile, and the risk of going into debt – or potentially paying high credit card transaction fees – for certain assets is not worth it.
Some platforms will also accept ACH transfers and wire transfers. The payment methods accepted and the time taken for deposits or withdrawals vary per platform. Similarly, the time taken for clearing of deposits varies according to the mode of payment.
One important factor to consider is the fees. These include possible deposit and withdrawal transaction fees and trading fees. Fees will vary by payment method and platform, which is something to research initially.
Step 3: Placing the Order | ordering
You can place orders through the web or mobile platform of your broker or exchange. If you plan to buy cryptocurrency, you can do so by selecting “Buy”, choosing the order type, entering the amount of cryptocurrency you want to buy, and confirming the order. The same process applies to “sell” orders.
There are other ways to invest in crypto as well. These include payment services such as PayPal, Cash App, and Venmo, which allow users to buy, sell, or hold cryptocurrencies. In addition, there are the following investment vehicles:
- Bitcoin Trust: You can buy shares of the Bitcoin Trust with a regular brokerage account. These vehicles give retail investors exposure to crypto through the stock market.
- Bitcoin Mutual Funds: There are bitcoin ETFs and bitcoin mutual funds to choose from.
- Blockchain Stocks or ETFs: You can invest in crypto indirectly through blockchain companies that specialize in the technology behind crypto and crypto transactions. Alternatively, you can buy stocks or ETFs of companies that use blockchain technology.