This year, I've been swept up in the popularity of cryptocurrencies. I heard them before but I didn't really pay attention because I didn't know what they are about. I thought "crypto" wasn't important so I just shrugged it off. And that's the problem when you do not find a way to educate yourself. You miss out tremendous opportunity.
What is cryptocurrency?
Cryptocurrency (also known as crypto) is a digital or virtual currency, stored in a digital wallet, used to buy goods and services online. It takes the form of tokens or “coins" for quick payments or investment, hoping the value goes up. There are currently more than 1,000 cryptocurrencies; the most common being Bitcoin (BTC), Bitcoin Cash (BCH), Litecoin (LTC), and Ethereum.
You can do a number of things with cryptocurrencies, depending on which one you are working with. Basically, you can transfer cryptocurrency to someone online or connect it to a debit card which make you spend it like cash. However, if you are into investment, you can buy cryptocurrency with a credit card or get it through a process called “mining.”
Cryptocurrency mining (also known as crypto mining) is the process of gaining cryptocurrencies by solving cryptographic equations through the use of computers. There is this technology known as ‘blockchain’ which acts as the digital register that records all transactions relating to a virtual currency. These transactions are then verified by 'mining' and the miners who are like auditors earn small amount of cryptocurrency.
People might crypto mine as another source of income, gain financial freedom or use it for their investments. Still, keep in mind that cryptocurrencies are international currencies used to send money without any identity checks, making them a favored option for cybercriminals involved in malicious or criminal activity.
Cryptocurrency vs Fiat currency
Fiat currencies are legal tender (currency declared legal by a government) backed by central governments like U.S. dollar with an unlimited supply. Due to inflation, the money loses in value when more money enters the economy. Cryptocurrencies, on the other hand, are not controlled by any central authority such as a central bank and they have fixed supply. Due to deflation, the money/asset in circulation gains value over time which is why investors take this as an opportunity to attain more assets.
Centralized vs Decentralized Cryptocurrency Exchange
Cryptocurrency exchange - are platforms that facilitate the trading of cryptocurrencies for other assets, including digital and fiat currencies. In short, they refer to websites where you can buy or sell crypto such as Coinbase, Binance, Kraken, and Gemini. Despite the fact that crypto exchange has its different rules and regulations, they all provide you access to the most prevalent cryptocurrencies.
Centralized Cryptocurrency Exchange (CCE)- is a platform where you can buy or sell digital assets. They function as trusted intermediaries (negotiator) in trades, and often act as custodians (keeper) by storing and protecting your funds. It is owned and operated by a company that maintains total control over all transactions which also means that the users of CCEs do not have access to the private keys of their exchange account’s wallets. However, centralized exchanges offer more reliability to their users with flat pairs at stable prices. In fact, about 99% of all crypto transactions go through centralized exchanges.
List of some famous CCE
Binance
Bittrex
Bitfinex
Coinbase
Kraken
Decentralized Cryptocurrency exchange (DEX) - is a platform similar to CCE except that it allows users to execute peer-to-peer (P2P) transactions. The main benefit of decentralization is the security associated with operating on a trustless system (where participants involved do not need to know or trust each other or a third party for the system to function). Decentralized exchange users keep the private keys to their digital coin wallets so they can ensure that their digital coins are protected. But due to some of the issues associated with centralized exchanges, decentralized exchanges are preferred by some users.
Decentralization is the newest wave in cryptocoin markets. However, it doesn't mean that they surpass centralized exchanges effortlessly. In fact, there are benefits connected with both centralized and decentralized exchange sites.
WavesDex
Bancor Protocol
Kyber Network
EtherDelta
AirSwap
Investing in Cryptocurrency
Cryptocurrency is the latest alternative investment on the scene and investing here is one of the ways to get rich- even become a millionaire. I remember someone I know in a group uses read.cash as a tool to make investments in cryptocurrency, making me curious and interested in learning crypto. But investing in cryptocurrency doesn't mean you will become a millionaire effortlessly and instantly. There are numerous of things to learn in crypto. You have to research and analyze every coin to make decisions on which ones will bring you fortune. One thing for sure, you should only invest on what you are willing to lose so don't get influenced by your emotions. And yes, cryptocurrency can make you rich overnight with right knowledge, mindset and strategies.
