7 INQUIRIES ABOUT CRYPTOCURRENCY ANSWERED
A cryptocurrency is a digital asset that can circulate without the need for a
central authority. They were created using cryptographic techniques. The term “crypto” refers to transactions secured by cryptography — a form of coding -which is so difficult to break or hack.
You can call individual units of cryptocurrencies coins or tokens, depending on their use.
People are more curious about crypto than ever before. As some countries made crypto their national currency, people have become billionaires and few have launched their coins. More a form of digital cash, cryptocurrency has the huge potential to transform many industries.
As you have lots of questions, let me answer 7 of them today.
1. How will cryptocurrency change the world?
Impacts like,
A. Reduction of the risk of fraud.
B. Boost in crowdfunding.
C. Revolutionization of the money transfer process.
D. Encouragement of scientific advancements.
E. Stable alternatives to unstable currencies.
gives you more control over money.
2. How does the cryptocurrency market work?
Cryptocurrency is not controlled by governments or central regulations.
There are three kinds of processes.
One is mining, it’s a complex process. Here, miners need to solve critical mathematical puzzles on computers to get rewarded with bitcoins.
The second one is, buying, selling, and storing. You can buy them from central exchanges, brokers, and individuals and sell them again. You can store them in wallets too. There are two types of wallets.
One is hot, which gets connected to the internet and is risky. And another is cold, which is safer but hard to transact as it is without the internet.
The third process is transactions or investments. You can either use cryptocurrencies to buy goods or services, trade, or exchange them for cash.
3. How does cryptocurrency work?
Cryptocurrencies run on a distributed public ledger called a blockchain. It keeps a record of all transactions updated and held by currency holders. You can’t fake these transactions or overwrite them.
When you own this currency, you own a private key. It’s a piece of code that authorizes your transactions on the blockchain network to spend funds.
4. How can you make money through cryptocurrency?
As an investor, if you want to make money, then trade cryptocurrencies on a crypto exchange. Hold crypto for a while and wait for someone else to come along and pay more for it. For example, if you might have bought bitcoin in April 2011 for $1, now its price is $ 47,000. The highest record for one bitcoin was $ 69,044 which occurred in 2021.
5. How does cryptocurrency work for beginners?
The first cryptocurrency, Bitcoin, was developed in 2009 by a programmer named Satoshi Nakamoto.
To understand simply, think of cryptocurrency as any other well-known currency like dollars or euros.
You can buy things through crypto around the world using your currency without an exchange fee. Despite using credit cards or holding physical notes, your cryptocurrency gets held in your digital wallet. No bank will interfere with your currency and you maintain your record.
Digital 1s and 0s represent the amount of cryptocurrency held in a specific wallet.
6. How do your money-making possibilities depend on crypto?
Though cryptocurrencies give you huge returns, they are a kind of new technology.
The crypto market is so dependent on sentiment. This means if a country bans crypto trading like bitcoin, Solana, Binance Coin, Tether, or Ethereum trading, it decreases the confidence of investors and traders. It’s the time when cryptocurrency’s value falls. Except for stocks and shares, there are no income reports, profits, or revenues for you too.
7. How risky is cryptocurrency?
Cryptocurrency is secure in most cases. According to the Times, in 2021, more than 30 hacks occurred in total.
Though double-spending is a big issue it is rare. It happens when a blockchain network gets disrupted. Cryptocurrency can also get stolen or transaction data gets deleted.
Conclusion:
Cryptocurrency’s newness may make it hard to understand, but it will be easier for you with time. Many investors like institutions, banks, and company CEOs recommended studying, investing, and learning along the way. Hope this article helps you to understand the nature of crypto better. Stay tuned for more.
