Cryptocurrency explained: A guide for Beginners
In recent times, cryptocurrency has emerged as a hot topic for all investors. The first cryptocurrency launched was Bitcoin in 2009 and the dynamics of the market haven’t been the same since then. There have been enormous improvements in the world of digital currencies. People are now willing to invest in these digital coins also known as cryptocurrencies.
It’s fascinating that the first crypto, launched 13 years ago. In these 13 years, hundreds of cryptocurrencies have already made their place in the market. As the popularity of these cryptocurrency have increased so does the risk.
Earlier people indeed had very few options to choose from but now people have plenty of options to choose from. But, the excess option is something that is creating problems for the people. Many of them get confused on which cryptocurrency would be best for them.
If you are also one of them, then you need not worry. As In this article we are going to explore the various cryptocurrencies. We will also look at the various pros and cons of investing in cryptocurrencies and how these cryptocurrencies even work.
What is Cryptocurrency?
Before we dive deep into cryptocurrency, we need to understand the basics of cryptocurrency. To understand the meaning of cryptocurrency, we first need to understand the traditional currency.
Traditional currency or fiat currency such as Dollar or Pound or Euro are the currencies. It's controlled by the government or a central authority. When do you know that a particular currency is a fiat currency? Well, it's simple. If you can touch and feel that currency, you know that yes, it's our traditional currency but cryptocurrency is something different.
The first characteristic of a digital currency is that you can neither touch nor feel that currency as it is intangible. The other characteristic is that they are not at all controlled by any central authority.
Cryptocurrency- how it's created?
Now that we have a basic understanding of cryptocurrencies, you might be thinking that if digital currencies are not controlled by any government then how are they created?
Cryptocurrencies get created through a variety of methods. The most usual and popular method through which it’s created is Mining. One such crypto that's created via mining is Bitcoin. Mining is a process in which computers solve a variety of complicated puzzles. Its work is to verify the authenticity of specific transactions on the network. As a reward, the user or the owner of those computers receives cryptocurrency.
Cryptocurrency- How does it work?
Now that we have an idea of how this cryptocurrency gets created. Let's move further and understand the basic principles on which these cryptocurrencies work. Cryptocurrencies work on a technology called blockchain. Now what is blockchain? Blockchain is a technology that records and confirms your cryptocurrency trades.
Whenever you buy, sell or exchange cryptocurrency, this technology collects that data or information.
Blockchain plays an essential role in the trading of cryptocurrency. It not only stores the information but also prevents users from making copies of their crypto holdings and spending it twice.
Various kinds of Cryptocurrencies
The first and the biggest cryptocurrency that is the leader of all cryptocurrencies is Bitcoin. It stands tall with a market share of $410, 202, 265, 385. It’s based on blockchain technology.
Ethereum follows it with a market share of $150, 833, 549, 828, making it the second biggest cryptocurrency after Bitcoin. It focuses on decentralized applications and smart contracts.
The next on the list is Tether (USDT). Launched in the year 2014, It has a market share of $66, 837, 248, 865 as the first Stablecoin. It has various benefits like Low transaction fees, transparency, and stability
Binance (BNB) was first launched in the year 2017. It has a total market share of $39, 135, 965, 106. It’s also a stablecoin which functions on Ethereum blockchain technology. It offers features like faster and cheaper transactions. Last but not least, the cryptocurrency that we have on this list is Dogecoin(DOGE).
With a market share of $9, 088, 298, 080, it's known as the first Joke cryptocurrency. It’s Used on social media platforms like Reddit or Twitter (now X) to tip the creator for its quality content.
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Cryptocurrency investment platform
There are various platforms in the market where you can buy and sell your cryptocurrencies. But before selecting a platform you need to make sure that the platform you are choosing to trade your cryptocurrencies is a legit one and is not a scam. One of the biggest and most trustworthy platforms where you can trade your cryptocurrency is KoinBasket.
Founded in 2022, it is a new platform, but it has already gained a significant amount of followers from countries like India, Singapore, and UAE. KoinBasket also comes with various features such as demo trading, a referral program, crypto fantasy leagues, and one of my favorites, Risk-free cashback.
All these features can help a user to start his/her journey of cryptocurrency smoothly and safely. So, if you wish to invest in your cryptocurrency, KoinBasket is one of the best platforms out there in the market.
Now that we have an idea about the various cryptocurrencies. Let's look at how you can keep those cryptocurrencies that you have purchased.
Like you keep your traditional currencies or fiat currencies in your wallet or purse. So to keep it safe from theft or from getting lost, you need to keep your cryptocurrency in a safe place and that’s where crypto wallets come to your rescue.
These are the wallets that help to store your cryptocurrencies in a safe and secure environment. Thus, keeping your cryptocurrencies safe from unauthorized transactions or frauds. There are two types of crypto wallets- Hot and cold.
The major difference between them is that one of them is hot wallets. These are online wallets. Thus, connected to the internet. The other is Cold wallets. These are wallets that are not connected to the internet and are thus known as offline wallets.
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Advantages and Drawbacks of Cryptocurrency Investment
Now that we have gone through a few of the best cryptocurrencies in the market. Let’s look at a few of the Advantages as well as Drawbacks of investing in cryptocurrency.
24/7 access to money:
When you invest in the share market there’s a certain timeline when you can take your money out. But, with cryptocurrencies, one has 24/7 access to money without a specific timeline.
Unlike traditional transactions, In crypto transactions you can send or receive money anytime, anywhere, and unlimited times as there’s no central authority to regulate the cryptocurrency.
Less transaction cost:
Sending money through the traditional method is both expensive and time-consuming. Whereas in cryptocurrency there’s no to very little transition cost.
Drawbacks of investing in cryptocurrency
Since cryptocurrencies are digital currencies, they're always vulnerable to cyber attacks.
As of now there are no rules which govern the workings of cryptocurrencies. This has caused investors to lose their money to scammers.
Cryptocurrency is a wide digital world. There are a lot of cryptocurrencies out there in the market. Choose the one that you think is most suitable for you. Start your journey of cryptocurrency trading today.