bitcoin

Five Things to Know About Cryptocurrency

by Josh Biggs in Blockchain on 14th December 2020

Cryptocurrency is becoming more and more popular over time. Most people are most familiar with bitcoin as a form of cryptocurrency, but aren’t aware of the fact that there are several other types of cryptocurrency. The most important thing to note is that cryptocurrency is a form of digital money that can’t be traced. However, there are many other things to know such as how to buy Bitcoin, how to use cryptocurrency, and where it’s stored.

1. How to Buy Bitcoin

Because bitcoin is the most popular form of cryptocurrency, we’ll start with that. Bitcoin first came to the scene in 2009 and was introduced by someone under the pseudonym Satoshi Nakamoto. Since then, it has gained widespread popularity and is slowly but surely becoming a popular way to pay for things digitally.

Bitcoin can be used to purchase things online and is kept inside of a digital wallet. So, how to buy Bitcoin? To purchase bitcoin, you will first need a digital wallet to keep it in. These usually come in the form of apps that are connected to your bank account. Next up, you will want to join a bitcoin exchange. These are places where people can trace bitcoin for another type of currency. Keep in mind that exchange fees and processing fees can differ depending on the service you choose to use. 

Once you have found a provider, you are ready to check out and collect your Bitcoin by using what is known as a Bitcoin ATM. 

2. Protect Yourself From Scammers

Cryptocurrency is not insured by the government like banks are, so your money is at risk of being stolen. Over time, scammers have found ways to break into your digital wallet and take whatever cryptocurrency you may have. 

There are several ways to keep this from happening to you, and it starts with being aware of the signs that you may be getting scammed. Anyone who guarantees you are going to make money is likely someone looking to scam you. Alternatively, someone who promises to give you free money is also not to be trusted. Many people may also make outrageous claims about their company that can’t be proven, which is also something to look out for. 

You can also tell the difference between a legitimate exchange and one that isn’t by checking to see if they have a regulated Know Your Customer (KYC) process. Although insurance isn’t required, many exchanges will, however, offer it. This is a sign of a trustworthy exchange. 

3. Different Uses for Cryptocurrency 

Many people may be hesitant to switch to cryptocurrency because they believe they won’t be able to use it. But thanks to the increasing popularity of cryptocurrency, more and more businesses are accepting cryptocurrency as a form of payment. This form of payment is becoming more and more popular when it involves international transactions due to the fact that it can be done quickly and is a more cost-effective way to transfer money. 

4. What’s a Miner?

While most people purchase cryptocurrency through an exchange as we mentioned earlier, cryptocurrency can also be attained by being mined. Miners are essentially technologically smart investors who are able to crack codes to solve a blockchain. A blockchain is a list of records, also known as blocks. This allows for transactions to be recorded, but virtually impossible to reverse. 

When the puzzle is solved, the miners are awarded with a specific amount of cryptocurrency. Mining isn’t easy work, and requires a lot of skill, money, electricity, and hardware. It most certainly isn’t for everyone. 

5. How Can You Create New Cryptocurrency?

A new form of cryptocurrency is created by building a new blockchain or creating a variant or “fork” to an already existing one. All of the types of cryptocurrencies we see today are “forks” or variants to Bitcoin. Once again, a miner comes into play when dealing with creating a new form of cryptocurrency. 

When they become the first person to solve a cryptographic puzzle, they then get a new coin as a result. However, there is a limit to the supply of these coins, depending on the type of cryptocurrency being awarded. Bitcoin for example, has a limited amount of coins, while other types of cryptocurrencies do not. 

Conclusion

As you can see, cryptocurrency is a fascinating and ever-changing form of currency. Although not accepted at all businesses just yet, it is starting to get more and more popular, which means it won’t be long before businesses have no choice but to accept cryptocurrency. 

Learning more about cryptocurrency is as easy as searching it up on the internet, or reading about it in a book. Its increased popularity means information about cryptocurrency has become readily available to anyone looking for it. 

Categories: Blockchain