Wednesday, June 29, 2022

What Is Cryptocurrency For Dummies

How To Send Bitcoin/money

Cryptocurrency Mining For Dummies – FULL Explanation

Assuming that you have implemented P2P communication, mechanisms for creating digital identities , and provided ways for users to sign documents using their private keys, you are ready to start sending information to your peers.

Since we do not have a central authority that will validate how much money you have, the system will have to ask you about it every time, and then check if you lied or not. So, your transaction record might contain the following information:

  • I have 100 Topcoins
  • I want to send 10 coins to my pharmacist for the medication
  • I want to give one coin as transaction fee to the system
  • I want to keep the remaining 89 coins
  • The only thing left to do is digitally sign the transaction record with your private key and transmit the transaction record to your peers in the network. At that point, everyone will receive the information that someone is sending money to someone else .

    Your job is done. However, your medication will not be paid for until the whole network agrees that you really did have 100 coins, and therefore could execute this transaction. Only after your transaction is validated will your pharmacist get the funds and send you the medication.

    Various Types Of Cryptocurrencies

    More than a thousand cryptocurrencies have been birthed, thanks to the blockchain. Of these currencies, Bitcoin was the first blockchain. After the introduction of bitcoin, many new blockchains followed.

    These currencies are known as altcoins. Altcoins are the alternative cryptocurrencies that were created after the success of bitcoin.

    The blockchain is open-source, meaning anyone can take the source code and use it to develop something new. Lots of developers have created hundreds of alternatives to bitcoin as well as different applications of blockchain technology to complement those currencies.

    Will Crypto & Blockchain Take Over Banking

    Lots of questions have been asked about what could happen to cryptocurrency and blockchain in the future. This is by no means an easy question to answer. Since their introduction, cryptocurrencies have been exciting, scary, and mysterious at the same time. Nevertheless, it is still hoped that they will soon become part of the mainstream financial system.

    Cryptocurrencies have the potential to revolutionize the global financial system and usher in a new financial regime. Should things go according to plan, it is expected that digital currencies will:

    • Be issued by central banks, considering governments in some countries are already making plans to issue coins of their own.
    • Established businesses might issue virtual currencies of their own in an attempt to build trust and gain wide acceptance among the general public.
    • Cryptocurrencies like bitcoin and Ethereum will become widely accepted. It is expected that as the tech literacy of the general public increases, acceptance of cryptocurrency as a legitimate store of value will increase.

    No one knows what the future holds for cryptocurrencies. For now, though, it looks like there are two ways things could pan out: cryptocurrencies will either correct the deficiencies of traditional financial systems or continue to play second fiddle. For the blockchain, however, crypto enthusiasts can look to the future with excitement.

    Recommended Reading: How To Trade Crypto Pairs

    How Do I Get Cryptocurrency

    You can buy cryptocurrency on cryptocurrency exchanges.

    But if you are just starting out, I recommend Coinmama because it supports most countries and you can use a credit or debit card.

    You can go to Coinmama.com or you can click this affiliate link for direct access

    They also sell the post popular cryptocurrencies such as Ethereum, Bitcoin, Ripple, Litecoin .

    But Bitcoin is expensive

    Bitcoins price has increased quite a bit since 2008.

    And it is true that not everyone can afford to buy Bitcoin at $10000.

    However, the good news is that Bitcoin can be bits.

    The Bitcoin decimals are called satoshis. So you can buy any amount of bitcoin based on your budget.

    There are also other newer altcoins which are cheaper.

    Who decides on the price of cryptocurrency?

    Prices are determined on market supply and demand.

    Prices are not determined by any government or central bank.

    This is why so people love them they are completely decentralized on top of the cheap transaction fees.

    What is makes cryptocurrencies such as bitcoin interesting, is that unlike fiat currencies ,they gain value rather than lose value because of their limited supply.

    What Is Cryptocurrency For Dummies

    Cryptocurrency Investing For Dummies

    A cryptocurrency is a digital/paperless currency that is intended to serve as a medium of exchange. In other words, cryptocurrencies are a digital form of money that can be used in making transactions online.

    Cryptocurrencies are designed such that they make use of cryptography to secure and validate transactions. It is also through the use of cryptography that new virtual currencies are generated.

    Technically, cryptocurrencies refer to limited entries in a database that cannot be changed unless certain conditions are fulfilled. While this may sound like a funny description, it is precisely what cryptocurrencies, or even fiat currencies such as the U.S Dollar, for that matter, are.

    The prefix crypto- stands for cryptography. Cryptography is a technology that prevents attackers from accessing information. Cryptography was used during the Second World War were the Allied Forces used it to send and receive secret messages.

    Today, developers have incorporated cryptography into cryptocurrency to help safeguard information. The advent of digital currencies means that people no longer need to trust banks to handle their money and private information.

    This means that you dont need banks to process your transactions anymore. Instead, cryptocurrency transactions get processed on the blockchain, which is a shared database.

    This means that you can use a coin like bitcoin to purchase jewelry, book flights, buy computer parts, applications, or even pay for your certificate.

    Also Check: How To Take Profit In Crypto

    Should You Invest In Cryptocurrency

    Experts hold mixed opinions about investing in cryptocurrency. Because crypto is a highly speculative investment, with the potential for intense price swings, some financial advisors dont recommend people invest at all.

    For example, while Bitcoin has nearly doubled in value over the last year, reaching a price of over $18,000 in November 2020, its also drastically lost value in the same year, like when it bottomed out at under $5,000 per Bitcoin. Even Bitcoins recent highs, however, are still lower than its 2017 peak of about $20,000 per Bitcoin. All of this is to say, cryptocurrencies, unlike most established currencies, can be very volatile and change value frequently.

    Thats why Peter Palion, a certified financial planner in East Norwich, N.Y., thinks its safer to stick to currency thats backed by a government, like the U.S. dollar.

    If you have the U.S. dollar in your cash reserves, you know you can pay your mortgage, you can pay your electricity bill, Palion says. When you look at the last 12 months, Bitcoin looks basically like my last EKG, and the U.S. dollar index is more or less a flat line. Something that drops by 50% is not suitable for anything but speculation.

    That said, for clients who are specifically interested in cryptocurrency, CFP Ian Harvey helps them put some money into it. The weight in a clients portfolio should be large enough to feel meaningful while not derailing their long-term plan should the investment go to zero, says Harvey.

    Blockchain And Cryptocurrency For Dummies

    Blockchains and Cryptocurrencies for Dummies

    The two biggest questions regarding blockchain are what are they, and how can one benefit a business or individuals? A blockchain is a distributed ledger that records transactions. Its also a network for enterprises to run on like a telecommunications network is for telephones and the internet. Blockchains are digital meaning they only exist as software and not in a physical sense. They are usually public and transparent which means anyone can access the information stored on there without permission. Like a bus timetable at a bus stop. Anyone can see the times the buses will be coming and where the buses go but you dont see what the drivers name is or details about each bus.

    A transaction is not considered to be just a financial transaction like all Bitcoin transactions, but an action such as a directive, an order, a sale, the transfer of medical records, a vote in an election, anything really. Any type of information can be sent to a blockchain after being verified, its recorded and stored in a block which will then be considered a transaction. That block then attaches itself to the last block forming a chain of information blocks building upward, hence the term blockchain. The position of blocks is recorded as a block height number.

    Read Also: How To Calculate Crypto Losses

    Global Impact Of Cryptocurrency

    Cryptocurrency has removed the national barriers as people can now easily trade their coins across borders. This helps reduce the economy disparity between countries and gives a fair chance of economic gain to every person.

    It has become a norm for crypto-investors to spend ample time researching and then investing in a coin.

    Want to see what youd pay for life insurance?

    Compare the best prices from the names you know and trust, all in one place with no commitments.

    • Crypto markets are extremely volatile, and the prices may skyrocket or nosedive in a single day.

    • Difficulty in Adoption

      After using a tangible form of currency for thousands of years, adapting to this new technology may take some time.

    • Lack of Regulatory Organization

      Its decentralization can be viewed as a drawback. Even though new legislation has been introduced in the U.S., state and federal agencies have cautioned policymakers from overregulating blockchain technology to avoid pushing the investments overseas.

    What Security Threats Do Cryptocurrencies Face

    Cryptocurrency For Dummies Series – Ep.1: The Basics

    Although their decentralized nature gives users control over their money, that also gives them responsibility for maintaining their security. Security keys can be lost, or worse, hacked. Hacking and phishing have been issues for as long as crypto has been in existence.

    Attacks on the blockchain can occur, such as a 51% attack, where hackers control 51% of a networks mining power. When this happens, hackers can reverse transactions or even double-spend cryptocurrencies. Thankfully, the sheer hashing power needed to conduct such an attack means such incidents are improbable, especially on the Bitcoin network.

    Lets look at some of the most significant security incidents that the world of crypto has faced:

    Read Also: How To Track Crypto Portfolio

    Where Does Crypto Stand In Terms Of Legality

    Regulation has come into play worldwide with the growth of the industry. Over the years, the United States has increasingly stepped up its overwatch of the space. The Securities and Exchange Commission cracked down on initial coin offerings, or ICOs, after the mania of 2017 and 2018. The Commodity Futures Trading Commission and other U.S. agencies have also engaged in various capacities.

    Additionally, crypto regulation outside the U.S. has changed over time, based on evolving regulatory guidelines. The 5th Anti-Money Laundering Directive from the European Union, for example, entails that crypto buying and selling, and other operations must comply with certain guidelines in certain regions.

    Since crypto is a relatively new industry compared with others, legal clarity does not yet exist in terms of requirements for all areas of the space. Part of such clarity includes asset classification. Bitcoin and Ether are viewed as commodities, although categorization for numerous other assets remains unclear.

    How To Buy Cryptocurrency

    Given the pace of crypto adoption, there are a number of ways to buy cryptocurrency. Crypto-native exchanges offer a plethora of different digital assets for buying and selling. In the mainstream world, PayPal serves as one example platform on which participants can buy and sell certain digital assets. Crypto ATMs also exist in various parts of the world.

    As far as payment for assets goes, platforms offer crypto purchases via bank transfers, crypto transfers or credit cards, depending on the platform. Buying crypto with cash in a person-to-person fashion is also possible. Availability for buying and selling crypto on any given platform, however, can vary from region to region.

    You May Like: Where Can I Buy Shiba Inu Crypto

    How Do I Buy Cryptocurrency

    While some cryptocurrencies, including Bitcoin, are available for purchase with U.S. dollars, others require that you pay with bitcoins or another cryptocurrency.

    To buy cryptocurrencies, youll need a wallet, an online app that can hold your currency. Generally, you create an account on an exchange, and then you can transfer real money to buy cryptocurrencies such as Bitcoin or Ethereum. Here’s more on how to invest in Bitcoin.

    Coinbase is one popular cryptocurrency trading exchange where you can create both a wallet and buy and sell Bitcoin and other cryptocurrencies. Also, a growing number of online brokers offer cryptocurrencies, such as eToro, Tradestation and Sofi Active Investing. Robinhood offers free cryptocurrency trades .

    Three Key Characteristics Of Cryptocurrency

    Cryptocurrency Investing For Dummies Audiobook, written by ...
  • Cryptocurrencies arent based on trust. There are no intermediates. All transactions are always checked by every member of this network and occur without control of regulatory authority or bank.
  • Every cryptocurrency transaction is unchangeable. You cannot undo, delay, duplicate, hide or change it. Anyone can steal your regular money using the classic methods while cryptocurrency is protected from peoples factor. Thats why the cryptocurrency is significantly more clear and transparent than any other money, even the most reliable.
  • Cryptocurrency is decentralized. New coins are regularly created by this system. For example, the infrastructure of Bitcoin guarantees that 21 million of this cryptocurrency will ever be emitted. It protects this currency from inflation, which cannot be said about the fiat money that can be printed in any quantity. The government can make people poor just printing the money in any second.
  • Also Check: Can You Trade Crypto On Fidelity

    What Does It Teach

    Through 24 chapters, packed in 6 parts, Kiana Danial will help you understand the value of investing in cryptocurrency, and what you should look out for before investing your money.

    Here are some of the things that you will learn in this book:

    What cryptocurrency is all about. How to get started with cryptocurrency investing. The four different types of cryptocurrency investors. How to read a price chart for cryptocurrencies. What are the top 200 digital currencies? Why you should invest in cryptocurrency now. And much, much more!

    It helps you understand that, just like with fiat currency, there are different types of cryptocurrencies and you should look at them all before making your choice.

    Itll also help you learn to effectively manage your digital wallet and be aware of the potential threats and risks involved in trading and investing in cryptocurrencies.

    The book is straightforward and simple enough for a beginner to easily understand. However, there is enough detail provided in it so that even an intermediate cryptocurrency investor can still learn a thing or two from it.

    Cryptocurrency Investing For Dummies

    The cryptocurrency market is growing at an enormous rate. In 2017 alone, its value grew by 1,000%. This means that if you bought $1 million dollars worth of bitcoin back in January 2017, today you would be looking at a total investment of more than $10 million.

    This has led many people to wonder what exactly is cryptocurrency and how they can get into this new industry?

    Kiana Danials Cryptocurrency Investing for Dummies tries to provide trusted guidance on how to invest in the top 200 cryptocurrencies. But can it really help you figure out the crypto world? Read this review to find out!

    Also Check: Does Crypto Trade 24 7

    How Can You Buy Cryptocurrency

    Basically, all you need is an internet-connected electronic device. Then, download and set up a softwarecryptocurrency wallet and begin depositing funds.

    However, not all software wallets support the use of the US dollar and other fiat currencies. For this reason, youll have to buy cryptocurrencies somewhere else first.

    If you choose to use a crypto exchange, go with any of the leading platforms to protect your money and privacy. Coinbase, Binance, and Kraken are some of the trusted ones.

    Should I Invest In Cryptocurrency

    Cryptocurrency for beginners / dummies

    The same question appeared back in 2015 and 2016. I bet another person will ask the same next year.

    Is it too late to invest in cryptocurrency in 2017?

    No, if you are investing in the right cryptocurrencies such as Ethereum, Bitcoin, OmiseGo, NEO, and Litecoin.

    Can I still make money with cryptocurrency?

    Definitely.

    Why is it not too late to invest in cryptocurrency?

    Go around and ask the people you normally interact with and see how much they know about Bitcoin or Ethereum or any other altcoin. I am willing to bet none of them know anything other than maybe a few close friends you normally talk to about cryptos.

    Cryptocurrency is still relatively new to the world. Only a few countries accepted cryptocurrencies and there is many more coming.

    The Philippines and Japan legalized Bitcoin and its businesses in their respective regions. Japan passed to accept Bitcoin as a legal payment method and two major Japanese retailers partnered with Japanese Bitcoin exchanges to start accepting the digital currency for payments.

    Some of Japans largest retail giants including Bic Camera, which hold a massive influence over the Japanese technology and consumer markets, began to accept Bitcoin payments at their locations. Full article here.

    Don’t Miss: How Do I Buy Crypto On Binance

    Example Of A Cryptocurrency Transaction

    To further understand cryptocurrency basics, hereâs how a hypothetical cryptocurrency transaction takes place.

    Letâs assume Alex wants to send Steven $5 worth of BTC.

  • Steven sends his Bitcoin address to Alex. This Bitcoin address is linked to whatever exchange or cryptocurrency wallet Steven set up. It looks something like this: 3D94LKmtQuVG8JFB3F7cB7gwj614yG4CPg.
  • Alex enters the address in his cryptocurrency exchange or wallet along with the Bitcoin amount â about 0.0005 BTC, which is equivalent to just under $25, and presses send.
  • Steven receives the BTC minus a small fee. According to bitcoinfees.info, these fees can range anywhere between $0.05 to be delivered within the next hour or $0.58 within ten minutes. It doesnât matter if Alex sent $25 or $25,000,000 â the fees would still be the same.
  • How is all of this possible?

    Letâs jump behind the scenes:

    From the moment Alex submits his transaction to the blockchain, every node in the Bitcoin network receives the transaction request. Every node makes sure that:

  • Alex is actually who he is claiming to be. The nodes verify Alexâs identity through his private key â a private key identifies your source of funds. Anyone who has access to this private key has access to your money. This is why itâs paramount to make sure to keep your private key secure.
  • Popular news
    Related news