What is cryptocurrency? | InvestoAxis

What is Cryptocurrency in Simple Terms – Crytocurrency for Beginners

What is cryptocurrency?

Most cryptocurrencies are segmented based on blockchain technology. Cryptocurrency is a virtual currency protected by cryptography, which makes it almost impossible to commit fraud or double-spend. Cryptography protects these digital currencies, which is why they are called cryptocurrency. Data is protected from cryptography theft and can be used for user authentication.

Types of Cryptocurrency

Bitcoin Cash (BCH)

Among the cryptocurrencies Bitcoin is leading the world it is a digital currency that operates free of any central control or the oversight of banks or governments. Instead, it relies on peer-to-peer applications(Software) and cryptography. A public ledger records all bitcoin transactions and copies stored on servers around the world.

Ethereum (ETH)

It is also using a blockchain platform with its own cryptocurrency which is called Ether (ETH) or Ethereum, and its own programming language, called Solidity. As a blockchain network, Ethereum is a decentralized public ledger that verifies and records all events. Its cryptocurrency is now second leading after  Bitcoin in market value.

Litecoin (LTC)

Litecoin, like all virtual currencies, it is a form of digital money. Individuals, as well as institutions, can use Litecoin to purchase things and transfer funds from one account to another.

Polkadot (DOT)

Polkadot enables a cross-blockchain network, which transfers any type of data or assets, not just tokens. Connecting to Polkadot that supports the ability to interact with a variety of blockchains. Polkadot, which provides the ability to interoperate with a wide variety of blockchains. Polkadot also provides scalability in transactions by distributing transactions across multiple similar blockchains.

Cardano (ADA)

Cardano is one of the top ten cryptocurrencies in terms of market value. The platform uses a new settlement system called Ouroboros, based on demonstrable security.

Stellar (XLM)

Stellar is the cryptocurrency used by the Stellar distributed ledger, which facilitates cross-asset transfers of value. And  using XLM network, it acts as an intermediary currency in transactions involving different currencies. Stellar’s goal is to enable less-expensive, cross-border transactions between cryptocurrency and ‘fiat’ currencies(Fiat currency is the most accepted and supported form of currency by the many payment networks and currency exchanges around the world).

Binance Coin (BNB)

Binance Coin is a cryptocurrency that is used mainly  to pay transaction and trading fees on the Binance exchange.

Dogecoin (DOGE)

Dogecoin (DOGE) is a peer-to-peer, open-source cryptocurrency. It is considered an altcoin and an almost sarcastic meme coin.

Read Also: Affordable and Low Price Cryptocurrencies to Invest in 2022.

Why do we use cryptocurrency?

Cryptocurrencies have been one of the fastest-growing and next-generation asset classes lately and have provided a lot of opportunity to a cluster of people to make good attractive returns.

There are some Pros and Cons are as follows:

Pros

Ever received a paper token from your next-door grocery shop in lieu of a little change, which he would accept the next time you visit him? Controversy has been going on in India regarding cryptocurrencies. Cryptocurrency is a virtual currency protected by cryptography, which makes it almost impossible to commit fraud or double-spend. The main difference is that here there is no owner-issuer and least in theory but is universally accepted. They have their own prices, and they are designed to be used as an exchange for various transactions.

Cryptocurrencies are decentralized(i.e there is no authority regulating them). They are built on the network which is blockchain technology where you are able to track every transaction and ensure that all transactions are done in a transparent way. Such currencies, theoretically, are untouched by government interference or any kind of manipulation. Because cryptocurrencies do not have a primary economic base, they are inflation-proof. And it is in the states of digital structure that facilitates simplicity across geographical boundaries and divisions.

Cons

However, they are often criticized because their security relies on a combination of cryptographic and decentralized ‘blockchain’ technology which conceal the identity of holders, governments are deeply concerned about their use in illegal activities such as money laundering, terrorist financing, and tax evasion, etc.

How does cryptocurrency work?

Cryptocurrencies work using a technology which is called blockchain. They are tokens that can be used as a form of transaction in exchange for online goods and services. Cryptocurrencies are digital form, where more sophisticated computers solve more complex mathematical problems. They carry a set of prices of their own, just like any other fiat currency like dollar or rupee. Their mining is careful, costly and only periodically rewarding.

Do You want to invest in cryptocurrency?

Technology has made it easier to access digital currencies for all potential investors. Digital currency transactions are done through a wallet, as in a bank account. Before investing in cryptocurrencies, it is important to know what is a cryptocurrency wallet and how to use it. A crypto wallet is a way to keep crypto money securely. These cryptocurrencies may contain Bitcoin, Ether, Dogecoin, and any other tokens.

As a crypto investor, you can directly buy and sell cryptocurrencies on the exchange. When you transfer transactions from one wallet to another, blockchain technology is protected. One can buy these currencies using the local currency, or dollars, in the currency of one’s choice. However, there are some currencies that only accept payments or investments in Bitcoins or other special cryptocurrencies.

Is market cap matter in cryptocurrency?

Normally, the higher the market cap of a cryptocurrency, the more dominant it is considered to be in the market. Market capitalization is often regarded as one of the most powerful indicators of cryptocurrencies.
 
Current ranking  of few cryptocurrencies
Bitcoin
Ethereum
Binance coin

Is it safe to invest in cryptocurrency in India?

Cryptocurrencies are a very risky, uncontrollable investment in the future. Temporarily the demand for it may go higher but be cautious, you may lose all your investments within a moment. If you are a new investor in the market, then cryptocurrencies may not be a good option for you, as it’s a price maker and has a lot of volatility.

What is a cryptography?

Cryptography is the storage and transfer of data in a way that can only those people for whom it is designed can be read. Data is protected from cryptography theft. It can also be used to authenticate a user.

What is a Cryptocurrency Wallet?

A crypto wallet is an app or software on your mobile phone or computer where you store your digital assets. These assets include Bitcoin, Ether, Dogecoin, and any other token. With a wallet, you keep your digital money secure with password protected. Digital currency or assets transactions are done through a wallet, same as in a bank account. When the transactions happen from one wallet to another wallet, it is secured by Blockchain technology.

Read Also: How to Invest in Cryptocurrencies in India.

Disclaimer
All the information are used for education purpose only. Investing in Cryptocurrency poses a risk of financial losses. Investors must therefore exercise due caution. InvestoAxis is not liable or responsible for any losses caused as a result of decisions based on the article.

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