Alexa Cryptocurrency: Everything you should know about it
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Cryptocurrency: Everything you should know about it


Cryptocurrency

Cryptocurrency: Everything you should know about it

You might be wondering about the crypto fever going all around and want to jump on the bandwagon. Here, you will learn all about cryptocurrency, its benefits, working methodology, and much more.

First of all, what is cryptocurrency?

Cryptocurrency is currency but digital. It is a peer-to-peer electronic form of payment that is used to buy goods and services online. Cryptocurrencies are secured by the technology of blockchain. A blockchain is a public record or ledger that stores cryptocurrency transactions. The ledger is stored on computers that are connected to a distributed network. The cryptocurrency transactions are then combined in the form of blocks which are further connected to form a chain.  Hence, it historically records everything that happens on the blockchain.

The most distinguishing feature of cryptocurrencies is that it is ‘decentralized.’ It does not require intermediaries and removes the need for a middleman. Moreover, since it is not issued by any central authority, governmental organizations have no authority over it. Cryptocurrency is free from interference and manipulation. The most famous cryptocurrencies out there are Bitcoin, BNB, Ethereum, Dogecoin and Ripple. You can buy BNB and other cryptocurrencies easily through cryptocurrency exchanges and trade them later.

Let’s have a look at the working of cryptocurrencies.

Cryptocurrencies work just like a credit card, simple. You exchange these digital assets for goods and services instead of fiat currencies such as US Dollars. To buy or trade cryptocurrency, you should have a digital cryptocurrency wallet. It is software that allows you to store and transfer money. Just like a bank account, a password known as a ‘private key’ is required to access the wallet. You can have multiple keys and funds in them. The technology of blockchain allows you to store funds without revealing your identity.

How many cryptocurrencies are there?

Currently, more than 13,000 different cryptocurrencies are available online, which are traded publicly.  According to CoinMarketCap, the total value of the cryptocurrency market is around $2.6 trillion nowadays. Bitcoin is the most popular currency and has a total market cap of $1.2 trillion.

How to Use Cryptocurrencies?

Cryptocurrencies are just like fiat currencies. You can use it as a payment system as well as a tool for investment.

Payment System: You can use cryptocurrency to buy services and goods online. Since the pandemic, the world has gone digital, and the demand for cryptocurrencies such as Tether, Bitcoin and Ethereum has increased. Cryptocurrency can be bought with fiat currencies such as the US Dollar and then exchanged for other digital currencies.

Investment Tool: Investing in cryptocurrency is highly recommended by the experts of the market. You can buy cryptocurrencies such as Bitcoin and then hold it for a certain amount of time. However, when the Bitcoin price increases to a certain point, you can sell it and gain maximum profit.

Please note, the cryptocurrency market is highly volatile, so the prices rise and drop pretty quickly.

Now, what are the features of cryptocurrency that make it better than fiat currencies?

Cryptocurrencies came into being to make the world digitally and financially stable. The main ideology behind it was to create an electronic currency system that is not controlled by any third parties, and, hence, is fast, cheap, and immune to censorship.

  1. Cryptocurrencies work in a decentralized way, i.e., no one has authority over your money.
  2. A Peer-to-Peer system makes sure that the transactions are working in a secure way and without the interruption of a third party.
  3. Encryption and Cryptography ensure that the transactions are secured in the form of codes, which are only accessed by private keys.
  4. The transactions on the blockchain are permanent hence cannot be modified or retrieved.
  5. The transactions are kept anonymous until the address of the cryptocurrency transaction is shared.

Are there any risks associated with the cryptocurrency market?

Since cryptocurrencies are still in the development phase, the market is quite volatile. Because cryptocurrencies are not regulated by banks or any other third parties, they are often uninsured and difficult to convert into a form of fiat cash. Moreover, since they are intangible assets online, there is a risk of hacking and theft. You can accidentally lose your digital cryptocurrency wallet, which can result in losing all your money.

Here are a few tips for investing safely without worrying about the risks.

  • Buying cryptocurrency is risky. Invest your funds in more than one coin. If something goes wrong, you will still have more options.
  • Never invest in cryptocurrencies that are reliant on the advertising of social media.
  • You must be aware of your strengths and weaknesses, and you must only invest money that you can afford to lose.

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