Cryptocurrency is a digital currency and it is created to be used over the internet. Cryptocurrency is decentralized digital money that is not exist in physical form like paper money.
Cryptocurrency has become the most trending topic in the last few years, especially after the meteoric rise in bitcoin (bitcoin is the first cryptocurrency) in April 2021. Cryptocurrency is a type of currency or an asset that is available over the internet and designed to work as a medium of exchange. Cryptocurrency does not exist in physical forms like paper money or fiat money. Cryptocurrencies are only considered as digital or virtual currency that use cryptography to secure financial transactions and verify cryptocurrency transfer. Cryptography is an important field that plays a crucial role in cryptocurrency transactions to keep information and financial transaction secure and private. Anyone can buy cryptocurrency from crypto-exchange and store them in digital wallets that contain their cryptocurrency.
When a crypto owner made a transaction, the details of the transactions are recorded in a distributed public ledger called a blockchain. Which are typically managed by peer-to-peer networks, the term peer-to-peer usually refers to the exchange of cryptocurrencies or digital assets via distributed networks. Most importantly cryptocurrencies are decentralized, which means crypto is not controlled or regulated by any government or banks.
Cryptocurrency can be created by mining. Mining is a process of creating new cryptocurrency by solving extremely complicated math problems. It is the miner’s responsibility to monitor that the sender is transacting actual money for mining the cryptocurrency. Once the transfer of money is approved, the miners validate it in the ledger.
One of the most well-known cryptocurrency is bitcoin, which was created in 2009 by a mysterious developer or group of developers known as Satoshi Nakamoto. Before going into the details information of cryptocurrency it would be very beneficial for you to get a glimpse of how cryptocurrency become what they are now.
History of cryptocurrency
The era of cryptocurrency began in the 1990s when American cryptographer, David Chaum created DigiCash. He created DigiCash as an extension of an encryption algorithm that was considered popular during those times. The technology he created, together with its DigiCash product was able to generate a huge amount of attention from all over the world. At that time DigiCash become so popular that Microsoft corporation offer it to by DigiCash for $188 million but DigiCash reject the offer of Microsoft and in 1998 DigiCash went Bankrupt.
After some time the second generation of cryptocurrency was borne from the learning experience of digicash. One of the systems that tried to walk on the same path as digicash was e-gold. E-gold was created by an oncologist named dough Jackson. E-gold’s currency was gold. It received physical gold as deposits from its users and in return, it issued e-gold or gold credit. E-gold was able to manage cross-border transactions using gold. But because of the prevalence of fraudulent investment scams like Ponzi schemes, e-gold was closed.
After all that the real or considered as the first cryptocurrency was created in 2009 by unknown developers or a group of developers using the name Satoshi Nakamoto.
When Satoshi Nakamoto developed the bitcoin system, he was inspired by companies like digicash or e-gold. On October 2008 Satoshi Nakamoto published a white paper that expounded the idea of an electronic cash system that allows online payments to be sent directly from one party to another party without going through a financial institution. Today there are more than 21 million units of bitcoin that are circulating in the digital financial system and these have a total capitalization of around 316 billion.
Since 2009, the growth in the popularity of the blockchain and bitcoin has surged. This surge in popularity gave birth to other cryptocurrencies, which are referred to as altcoins or alternative coins of bitcoin. Today , more than 9314 cryptocurrencies are transferred internationally in the digital financial system. Which include Ethereum(Ether), Ripple, litcoin, and Dogecoin, etc.
How cryptocurrency work
Cryptocurrency work on a distributed public ledger called blockchain. A blockchain is a chain of the block, each block contains information about transaction details, hash value (this is typically the id of the block), previous Hash (this keeps track of the previous block id), timestamp (when a block is created), and proof of work. Blockchain uses a peer-to-peer network that allows anyone to join. When someone joins this network, he gets a full copy of the blockchain.
When a transaction of cryptocurrency is made by someone it creates a new block. This new block validates by nodes on all copies of the blockchain. A node is simply a computer or device that is connected to the blockchain network. Each cryptocurrency has its network with a set of nodes communicating with each other to verify blocks. Each node has the authority to verify and validate all cryptocurrency transfers before they are appended to the chain.
Cryptocurrency can be created by mining. Mining is a process of creating new cryptocurrency by solving extremely complicated math problems. all cryptocurrency miners are doing is comprehensive bookkeeping. A huge public ledger contains all the records of the transactions carried out in the world of cryptocurrency until the present. Any transaction of cryptocurrency between two parties has to be recorded and accredited by the miners in the virtual ledger.
It is the miner’s responsibility to monitor that the sender is transacting actual money for mining the cryptocurrency. Once the transfer of money is approved, the miners validate it in the ledger. Moreover, to make sure that potential attackers do not hack the ledger, the ledger is encrypted with very complex computations that are almost impossible to hack. This service of mining offers them cryptocurrency.
A cryptocurrency wallet is program, software, and physical medium that enable the storage of public key and private key. Cryptocurrency wallets don’t really store cryptocurrency instead they work as a sort of getaway that provides the tools you need to communicate or access to your crypto holding on the blockchain. Public key or private key allow users to send, receive and also monitor their assets through a cryptocurrency wallet.
A public key is used to receive cryptocurrency, anyone who knows your public key can send cryptocurrency to your wallet and with the help of a private key, you can send cryptocurrency to others.
There are generally three types of wallets 1) Hot wallets 2) Cold wallets 3) Paper wallet
Hot Wallet:- Hot wallet is very easy to use as compared to other wallets. This type of wallet is always connected to the internet and is easy to access but this type of wallet is not secure as cold wallets.
- Desktop wallet:- This type of wallet is generally your computer that store your public key or private key. Desktop wallet are online all the time which make them vulnerable.
- Web wallet:- Crypto exchange provide you this type of wallet that store your keys on its server. The cryptocurrency exchange know your private key and public key and this makes it very risky.
- Mobile wallet:- This type of wallets are available on your mobile as a application. Mobile wallet provide you to store your crypto and make transaction.
Cold wallet:- Cold wallet are offline and not connected to the internet. Example of cold storage wallet is hardware wallet. Hardware wallet are USB-type where you can store your cryptocurrency. Sole purpose of hardware wallet is to hold your crypto. To use them you need to plug them into your internet-based computer and follow the transfer instruction. Some example of cold wallets are trezor, keepkey and ledger nano s.
Paper wallet:- Paper wallet are one of the most secure ways to store crypto. A paper wallets is a piece of paper containing keys and QR code to facilitate your cryptocurrency transaction.
How Does Cryptocurrency Gain Value?
Cryptocurrencies are digital assets that can be tradable over the internet or can be used as a medium of exchange. Crypto are decentralized, which means crypto is not backed by any central authority, government, or banks. The value of cryptocurrency is not controlled by any person, bank, company, or government. the price of cryptocurrency is determined by its supply and demand in the market. Demand and supply is one of the common ways to know or determine the value of cryptocurrency. When the demand of cryptocurrency is higher than the supply, the price of a cryptocurrency goes up and when the supply of cryptocurrency is more than the demand, the price of a cryptocurrency goes down.
There are also more factors that can affect price of crypto include production cost, news about cryptocurrency, technology development, as well as the condition of market and its trends.
How to buy cryptocurrency
If you want to buy or invest in cryptocurrency then first, you need to pick a cryptocurrency exchange or a broker. a crypto exchange is a platform on which you can buy and sell Cryptocurrencies.
A crypto broker serves as a middleman between the person buying and the person selling the cryptocurrency. The broker might also buy up a lot of cryptocurrency to sell on its own platform. So here is how you can buy crypto through a crypto exchange and a broker.
- Create your account with crypto exchange or a broker . Provide all your personal information so you can complete your registration and open your account.
- Deposit money in your account. After you create a account you need to deposit money in your account so you can buy crypto.
- Decide which crypto you want to buy.
- Place your order to buy cryptocurrency.
- After complete your purchase you can store your crypto in your wallets.
List of most popular cryptocurrency
Bitcoin is one of the most reliable Cryptocurrencies. It was invented by an unknown (mysterious) person or group of people using the name Satoshi Nakamoto in 2008. Bitcoin went live for trading on 3rd January 2009 starting at $0 and now the current price of one Bitcoin is $16,958 dollar. You can calculate, The growth of Bitcoin from 2009 to 2022. It’s just amazing. The current market cap Of Bitcoin is $316B. Many top investors invested in Bitcoin. So, you can add this crypto to your watchlist for 2023.
2) Ethereum (ETH)
Ethereum is a technology for building apps and organizations, holding assets, transacting, and communicating without being controlled by a central authority. Ethereum has its own cryptocurrency, Ether, which is used to pay for certain activities on the Ethereum network. Ethereum was invented in 2013 by programmer Vitalik Buterin. It went live on 30 July 2015. Currently, the price of 1 Ethereum is around $1276 dollar. The current market cap of Ethereum is $157B dollar. It’s also one of the best crypto to watch for 2023.
3) Tether (USDT)
Tether is a blockchain-enabled platform designed to facilitate the use of fiat currencies in a digital manner. It was launched by the company Tether Limited Inc. in 2014. It is also called a stablecoin because It was originally designed to be valued at USD $1.00. The current price of 1 Tether coin is USD $1. The current market cap of the tether is USD $66 billion. It will look great on your 2023 watchlist.
4) Binance (BNB)
Binance is a crytocurrency exchange that is the largest exchange in the world in terms of the daily trading volume of cryptocurrencies. It was founded by a developer Changpeng Zhao in 2017. Binance launched its first cryptocurrency in July 2017 named Binance coin (BNB). Now, it is trading at around $296. Its current market cap is USD 47 billion.
5) USD coin (USDC)
USD coin (USDC) is a stablecoin-like tether that is fixed to the U.S. dollar on a 1:1 basis. Every unit of this cryptocurrency in circulation is backed up by $1 that is held in reserve, in a mix of cash and short-term U.S. Treasury bonds. The center consortium, which is behind this asset, says USDC is regulated by financial institutions. USD coin’s price is $1. The current market cap. USD coin is USD 43 billion. It’s also a trader’s top choice. You can add this.