Cryptocurrency is by no means a new term; however, only recently has it become a popular one. While the majority of the population is somewhat aware of the concept of cryptocurrency, a large part of this majority has not fully grasped the concepts necessary to understand the space.
Cryptocurrencies can be intimidating and extremely confusing at first. Let’s simply break down the words, Crypto meaning hide or hidden, and currency. Currency can be explained in shorter terms as different forms of money. Before you decide to invest in cryptocurrency or try using it as a form of payment, you should have, at the very least, a decent understanding of the key concepts of the crypto space.
The crypto-sphere has long been shrouded in the darkness of people’s confusion and fear of this mysterious world of unregulated currencies that live on this so-called blockchain. These coins and currencies use this decentralized currency plane to conduct transactions and hold unbelievable figures that no government can see or touch. Unlike our fiat or paper currencies, people are not able to print more coins or cryptocurrencies.
Bitcoin, the best-known cryptocurrency, is what birthed the decentralized currency craze that we see today. This cryptocurrency was formed back in 2008; the now well-known alias Satoshi Nakamoto is the man behind the creation of the first coin. No one has confirmed the creator’s identity, but his contribution to the space will be remembered forever.
People today are spending exuberant amounts of money on getting their share of the limited supply of hardware used for mining this digital gold. Bitcoin mining caused a lack of the latest GPUs because of the high demand for mining Bitcoin. This sudden shortage of graphics processors has still not come to an end. Finding market price GPUs is unlikely, especially if you are looking for graphics cards with ray tracing abilities.
Blockchain is a type of database that stores information. It can be considered as a long chain of small pieces of information. For every new block added, there is information about the previous and current blocks. This is basically the paper trail of cryptocurrencies. You can see times, confirmations, wallet addresses, amounts, and more. This is the hub in which all of the transactions taking place with cryptocurrencies are tracked, and the beauty of the blockchain is that it does not lie. People cannot hide anything other than their personal details, but all of their financial moves are open and fair game for anyone to analyze. A lot of information can be gathered from the blockchain as it traces absolutely everything, just not personal data.
The history of every single transaction to do with cryptocurrency can be found on the blockchain, and due to the way it actually works in terms of piecing the information together in a chain-link formation, it makes it so that nothing can be modified or undone ever.
A lot of confusion comes in when the term decentralized gets thrown around. Most of the confusion comes from those who depend on the centralized currency world such as a bank to make money. For centralized currency, you need a third party, such as a bank, to perform and receive transactions. If currencies became decentralized, there would be no need for banks. Furthermore, considering decentralized currency transactions cannot be hacked as easily as many banks have been in the past, there is very little cause for concern. Bitcoin transactions can go on with no worries even if one of the machines involved in the transaction fails, malfunctions or gets hacked.
The main reasons banks and governments help spread fear, uncertainty, and doubt about decentralized currencies are because if decentralized transactions become the new normal, regulation from financial institutions can no longer take place, and the banks will suffer from people no longer needing a bank and becoming independent in their finances ultimately becoming the boss of their money in every sense.
Now that you have a brief understanding of a cryptocurrency and the way the world around it works now you need somewhere to put your cryptocurrency. This is what wallets are for. Think of this wallet as a bank account, one in which you are the boss of the bank. You are in full control of your money with a crypto wallet. You can get a physical crypto wallet if you prefer that. The most common form of a wallet is a software-based wallet in which you install an application onto your computer or phone and can transact and perform functions from there. The physical alternative is the same, but it is stored on a USB device.
Brokerages & exchanges
So, you have come this far and set up your wallet; you see your wallet address, but how does one even get a cryptocurrency into that wallet? The hardest part for all beginners in crypto is finding where you can buy a cryptocurrency. Firstly, you need to find a trusted and approved brokerage and exchange. The biggest problem with the crypto world is human error. You need to be making sure by triple-checking yourself on every step.
Do not try to get currencies from anywhere other than verified marketplaces and exchanges, as this can be risky. When you are sending your currencies, make sure you are sending them to your wallet. Make sure once you have confirmed your wallet address is correct that the token you use to send the currency is compatible with your wallet. Every single brokerage and exchange will give you options of how you receive your funds with a choice of tokens.
These tokens feature different times till the transaction reflects; a shorter time often brings a higher “fuel” price of the transaction. Think of these as transaction fees. Do not forget to make sure your wallet is compatible with that network. For example, Binance has its own network called BSC; it has a lower fuel price but can only send to Binance based wallets.
Hopefully, you are more equipped to take on the crypto world. There are still a lot of things you need to understand before going all the way with investing. Realizing the move to this way of handling our money is the future of finances, and when the world goes virtual, everyone will be hanging up their crypto art in the form of NFTs while paying for their lifestyle in altcoins and other cryptocurrencies.