Cryptocurrency for beginners, it’s confusing… Why is everyone talking about bits and dogs? What’s with all the memes? Why does your cousin’s sister’s nephew suddenly have a Lamborgini? All these questions and more will answer. Here is everything you need to know about cryptocurrency for beginners to prepare for the future and sound smart at parties.
What is cryptocurrency?
Cryptocurrency is like regular currency, but completely digital.
Cryptocurrency comes in many forms, intentions, and uses. The simplest way to look at cryptocurrency is a form of stored value (money) that is not beholden to governments or central agencies like banks, states, or companies. All records of its creation and when it’s sent or received are stored in a sort of big digital book that anyone can access, keeping it honest. It can’t (easily) be stolen or seized and can be used anywhere in the world.
Cryptocurrencies make it possible to lend, sell, buy, or borrow without an identity, credit score, or even a bank!
Some coins are used to transfer value (measured in a currency like dollars) cheaper and faster than using credit or conventional means. Meaning the cost to send someone crypto, which can be converted into regular currency, is cheaper than something like a check or wire transfer.
Others are the only form of payment, or value, that are accepted on exchanges or in software like video games. This is what made crypto very popular years ago on the dark web to purchase drugs or other illegal things through the internet. Instead of giving a drug dealer $20 USD for some drugs, a person would send that amount of USD value in the chosen crypto (usually bitcoin) directly from your crypto wallet to theirs.
However crypto is NOT just for illegal purposes. In fact, due chiefly to its price fluctuation and other reasons it has fallen out of favor on the black market.
Cryptocurrency for beginners: In-depth explanation
A cryptocurrency, crypto-currency, or crypto is a collection of binary data (1’s and 0’s) which that designed to work as a medium of exchange.
This sounds complicated but even dollar bills all have serial numbers to verify them and keep a record. It’s the same with cryptocurrency. They can also all divided into smaller pieces similar to how USD can be divided into pennies.
Individual coin ownership records are stored in a ledger which is a computerized database using strong cryptography to secure transaction records, to control the creation of coins, and verify the transfer of coins between people.
Cryptocurrency does not exist in physical form (like paper money) and is typically not issued by a central authority. However, it can be and many governments are working to create a crypto coin version of its respective fiat currency.
Cryptocurrencies typically use decentralized control as opposed to a central bank digital currency. When a cryptocurrency will mine or create prior to issuance or issue by a single issuer, it will consider centralized. When created with decentralized control, each cryptocurrency works through what is called distributed ledger technology. Which is typically a blockchain that serves as a public financial transaction database.
Bitcoin, which was first released as open-source software in 2009, is the first decentralized cryptocurrency. However, since the release of bitcoin, many other cryptocurrencies have been created with different uses and intentions.
Some tokens are exchanged directly for troy ounces of gold or make up digital art and certificates like NFT’s, but that’s all too complicated and advanced for a beginner to worry about. Wait to get into that part of crypto until you’re familiar with the overall market and culture.
Cryptocurrency for beginners: What cryptocurrencies should I know about and why is it making people rich?
You’ve no doubt heard of Bitcoin and Dogecoin. This is primarily because the two coins went from being worth pennies to way, way more than that in a short amount of time. These coins are among two of the most popular for internet users because they are well known, and lots of people are invested in them. Which means they get the most memes and articles created about them.
This does not mean they are necessarily the best form of crypto overall or necessarily have the most inherent value. They are just the most popular, which in the crypto world, is sort of what gives them value. There are actually thousands of cryptocurrencies just like there are thousands of currencies used in countries across the world.
Some people have become very wealthy because cryptocurrencies fluctuate in value like a stock. In 2010 Bitcoin was worth pennies on the dollar when it first came out and now averages around $60,000 per coin. Demand for Bitcoin is going up and its supply is going down, basic economics dictates that its value increases as a result.
However, they also fall in value almost as quickly as they go up which is what attracts day traders to crypto. Crypto gains also taxed like capital gains similar to regular stocks. So if you use an exchange you’ll be taxed since they will report that to the IRS. However, there is a loophole when you pay directly with crypto from one wallet to another so… do with that what you will.
Cryptocurrency for beginners: Popular coins explained:
Bitcoin- Introduced in 2009 Created by “Satoshi Nakamoto” (Real name and identity unknown)
The world’s first successful cryptocurrency for beginners and everyone. Bitcoin is a decentralized digital currency that users can buy, sell and exchange directly, without an intermediary like a bank. There is a finite supply, only 21 million bitcoins can produce as designed by the creator.
The Bitcoin blockchain is a full record of the network that history validated by individuals running the Bitcoin software (nodes). This ensures that unlike most digital data, which can be freely copied and modified, bitcoins cannot be. Because bitcoins are scarce, divisible, and transferable; bitcoins use as money.
DOGECOIN– Introduced in 2013 by Jackson Palmer and later Billy Markus
Dogecoin is a digital currency like bitcoin or Ethereum. The coin started as a joke, intended to be a satirical take on bitcoin based on a popular dog meme. Unlike Bitcoin, which that designed to be scarce, Dogecoin created to have many coins. There is about 130 billion DOGE. Miners produce around 10,000 every minute.
That high amount is a key part of the idea. Dogecoin created as a low-stakes Bitcoin alternative. When it launched in late 2013, it began attracting a big online community.
Ethereum-Launched in 2015. Created by Vitalik Buterin
The decentralized Ethereum network makes it possible to create and run applications, smart contracts, and other transactions on the network. Ethereum is different from Bitcoin in that the network can perform computations as part of the mining process. People use Ether as a digital currency in financial transactions, as an investment, or as a store of value. Ethereum is the blockchain network on which Ether that held and exchanged.
Litecoin- Introduced in 2011 Created by Charlie Lee
Litecoin is unique from Bitcoin in that it can produce a greater number of coins and its transaction speed is faster. The creators say it intended to be a lighter version of Bitcoin. Litecoin can accommodate 84 million coins compared to Bitcoin’s 21 million. Litecoin founded with the goal of prioritizing transaction speed and that’s what attracts many people to the coin. As of October 2021, the total value of all bitcoins in circulation is around $1.2 trillion, making its market cap much larger than Litecoin, which has a total value of around $14.5 billion.
Stellar Lumen (XLM)- Introduced in 2015 Created by Jed McCaleb
Stellar is a decentralized computer network that operates using Blockchain technology. On the Stellar network, you can trade its form of currency, which is XLM. The creators say Stellar designed to reduce transaction costs and serve as a bridge between fiat, digital and other currencies. The intended purpose of Stellar is to connect financial institutions via the blockchain and provide cheap transactions in developing markets. According to Stellar’s website, there are 50 billion lumens in circulation. Stellar will not produce any more lumens, so they cannot mine.
There are many, many more cryptocurrencies but the top 25 are the most important to know at the start. Remember, there is more to cryptocurrency than just Bitcoin.
Cryptocurrency for beginners: How do I get into cryptocurrency?
The easiest way to start buying and holding cryptocurrency would be with an exchange. There are several popular ones and you can use them right on your smartphone. This allows holders to buy, sell, and store their crypto on their phone or on a computer.
All you need is to download the app and enter your info and connect to a bank account. After that, you can trade instantly, but be careful, you might will addict and start checking it all the time…
Any amount of money is enough to start because you can buy slivers of a coin, it doesn’t need to be a whole coin. However, experts agree it’s best to invest at least $100 across a few different coins to start.
Before making any investment decisions, please consult with financial planners and experts.
The future of cryptocurrency
Cryptocurrency’s future is still largely uncertain. It still didn’t accepted in most real-life transactions; however, some companies and countries are starting to adopt it. In September, 2021, El Salvador was the first country to list cryptocurrency as an official currency and there is a Burger King in Venezuela accepting crypto.
It remains uncertain if Canada or its resident Burger Kings will be accepting cryptocurrency any time soon.
I don’t know if cryptocurrency will stand the test of time, but maybe there will be a future where my grandkids are buying me Christmas gifts with dog-meme-inspired currency.
The Bitcoin network introduced to the world in 2009 by an unknown individual or group called Satoshi Nakamoto. In 2021, there are more than 10,000 different projects in the field of cryptocurrencies, each of which, having its role in building the future of money.
The market value of cryptocurrencies reached $ 1 trillion for the first time in January 2021 and passed $ 2.5 trillion in less than three months later, which shows that this market is one of the growing markets in the favor of its investors.
Bitcoin Cloud Mining is the process by which you participate in a mining pool to a cloud miner website and purchase a certain amount of hash power. In this pool, the profit will distribute equally among all participants who have participated in the mining pool based on hash power. The cloud miner platform allows you to mine your Bitcoin without installing any hardware and at no extra cost. Minerland, the best crypto cloud mining service, helps you invest in Bitcoin easily and with low risk.