Cryptocurrencies run on something called a blockchain, which is a distributed public ledger that keeps a record of all transactions. Those who own cryptocurrency don’t own anything tangible – what they own is a key allowing them to move a unit of measure or record from one individual to another without the need to go through a trusted third party.
Units of cryptocurrency are created via mining, a process that involves using computer power to generate coins by solving complicated mathematical problems. Take a look at the embedded PDF for more information on how cryptocurrency is mined.
How Many Cryptocurrencies are There?
As of 2021 there were around 5,000 to 7,000 cryptocurrencies in existence. Bitcoin is the largest cryptocurrency, followed by Ethereum. There are many start-ups offering ways to trade cryptocurrencies, but many investors choose to use established platforms over those that are brand new. Non-Bitcoin cryptocurrencies are collectively referred to as “altcoins” to distinguish them from the former, which was the very first cryptocurrency, founded in 2009.
What Are the Benefits of Cryptocurrency?
One of the key advantages that cryptocurrency has over traditional currency is its strong element of privacy. When making a purchase using cryptocurrency no personal information needs to be given, which provides protection against identity theft and other types of fraud. As cryptocurrency experts like Volker Hartzsch (co-founder and director of the company Block Prime) know, an investment in cryptocurrency is secure, no matter what happens to the government.
Many investors choose cryptocurrency due to its global nature: there are no foreign exchange fees to pay, as well as no bank account restrictions or ATM withdrawal limits to take into consideration.
How to Get Started Using or Investing in Cryptocurrency?
To start using cryptocurrency, an individual needs to first choose a cryptocurrency exchange or broker. The former is an online platform where cryptocurrency can be traded, and the latter uses interfaces that interact with these platforms. The next step is to open an account with the broker or exchange, verify this account and then fund it. Once this is done, cryptocurrency purchases can be made.
Usually, cryptocurrency is stored in a wallet. Hot wallets provide online storage that can be accessed from a phone, computer or tablet; due to the fact they are stored online, hot wallets are at comparatively higher risk of cyber-attack. Cold wallets aren’t connected to the internet; instead, cryptocurrency is stored on an external drive, such as a USB device, and a keycode is used to access it.