The core concept of cryptocurrency for beginners
It is possible that you have heard about cryptocurrency and wondered "what does it mean". In this article, we will discuss the core concept you need to know about crypto currencies.
What is cryptocurrency?
cryptocurrency is a digital currency with economical value. The first cryptocurrency -- bitcoin was invented by Satoshi Nakamoto in 2013. It can be used as a medium of exchange.
The serial number on every physical piece of money contains information such as where the money came from, when it was printed, and so on. Whenever you use a credit card to make a purchase, the bank knows the card with that particular number was used to send or receive money that had a specific serial number.
When you create a crypto wallet, your identity is not connected to it since you do not have to share any private information, and you are in control of your wallet and the money in it, but the if the recovery phrase that you were given during wallet creation is lost. You lose all the money in your crypto wallet
Why Cryptocurrency?
Cryptocurrency has more advantage over the current financial system:
Peer to peer electronic cash system
It has no central authority
No exchange rate
Fast transfer
Confidential transaction
Strong Security
Less transaction charges
24/7 accessibility
No transfer limit
Types of cryptocurrency
Coins
Tokens
Coins
Crypto currency coins are built from the ground up. they have their own block chain and other resources built that is maintain by the the crypto coin network. Most crypto coin act as real money.
crypto currency coins are defined by it characteristics:
They have their own blockchain
Can mined
Act has money
Tokens
Tokens do not have their blockchain. Instead, they operate on other crypto coins' blockchains, such as Ethereum. Some of the most commonly seen tokens on Ethereum include BAT, BNT, Tether, and various stablecoins like the USDC.
Tokens are easy to create, networks like Ethereum create template that makes it easy to brand your token and start trading. This makes it so anybody with little or no technical knowledge can create a token
What is Blockchain?
A block chain – also know as a distributed ledger is like a database, but unlike a database it stores data permanently, and it is decentralised. Most crypto currencies are based on the blockchain technology. The bitcoin blockchain for example has a record of every bitcoin transaction
Benefit of blockchain
Immutability
Open traceable transaction
It is neutral
Strong security
Decentralised
Immutability
Data or transaction recorded on the blockchain cannot be changed. This enforce transparency and trust in the system
Open traceable transaction
Anyone with an internet access should be able to verify transaction on the blockchain
It is neutral
The blockchain does not care about the amount of money that is being transferred
Strong security
Due to the cryptographic nature of blockchain, it is very difficult to attack or tamper with any data already stored.
Decentralised
A blockchain is not controlled by person or an organisation, rather every body on the network has direct control on the system
how the blockchain works
how does the blockchain works exactly in this mysterious world of ours. Incase you have not figured it out yet the blockchain is a technoloyg far superior than any teschno
What is crypto mining
Crypto mining is the process of dedicating computer resource to min a crypto coin out of a system, by solving complex mathematical problem. people who participate in Crypto coin mining are called crypt miners The person who solve the mathematical problem is rewarded with a small amount of bitcoin. bitcoin miners also validate transaction in the system by solving the proof of work algorithm
How do people make money from crypto currency
Investing
Trading
Mining
Staking and lending
Airdrops and forks