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Welcome to the cryptoworld: what are cryptocurrencies?
Back then, as a crypto-beginner, I first heard the word "Bitcoin" and referred to it as the entirety of 'cryptocurrency' since that's the only digital currency I know, and maybe if you're just a newbie in the crypto world, Bitcoin may be the first coin that was introduced to you...
But I was wrong, very wrong.
So for today, as your beginner's crypto guide, I'll be discussing out "what are cryptocurrencies?" and will try to answer different questions I wish I knew before leaping into the world of digital currency.
Cryptocurrencies are digital assets designed as a medium of exchange. Derived from the word 'secret' and 'hidden' — cryptocurrencies uses a secured type of advance cryptography to secure transaction records, to control the creation of additional coins, and to verify the transfer of coin ownership.
Simply speaking, cryptocurrencies are an innovative way of transaction. The use of these generated virtual tokens are handy, ergonomic, and secured. By which such transactions made via cryptocurrencies are private, away of prying eyes.
There are several types of cryptocurrencies and uses for each type. We have Bitcoins, alt-coins, and stable coins. So far, the most popular cryptocurrency is the Bitcoin. It was created by someone aliased as Satoshi Nakamoto. Since its creation on 2009, the value of these coins had grew relatively. But well, with the rise of Bitcoins, competitors was created which are called as alternative coins better known as 'alt-coins.'These virtual generated tokens are similar to Bitcoins specifically its buy, sell and trade functionality but with several rules altered to appeal different users. The distinctions of these virtual tokens made way to the creation of different blockchains that offers lesser fees and other ergonomic functionality. With which further innovated duly by the utilization of Dapps which I will talk more about soon.
With the steady uprise of cryptocurrency fame comes other coin options. Well, we all know for a fact that cryptocurrencies are infamous of its volatility and so to prevent losing such extreme amount and to have a stabilize amount close to a fiat currency, stablecoins was born. A stablecoin has a value relatively close to a U.S dollar. Sometimes, stablecoins values were tied to other assets like gold or any other precious element. In other words, you can think of stablecoins as the digital crypto dollar.
Please take note also that stablecoins may or may not be backed-up by a certain fiat. Nonetheless, stablecoins can be your entry point to decentralized finance exchanges.
Unlike fiat currencies, cryptocurrencies are not issued by any central authority that makes them resistant to manipulation or interference of government. Instead of having a tangible quantity of the amount you hold, cryptocurrencies are 'virtual tokens' which is stored in a digital wallet. The price of cryptocurrencies is much more volatile, unlike the traditional fiat that has a stable value. So there is a big risk that you can lose your money or can earn a lot on it.
Like any other forms of currencies, the value are affected by several factors. For example, fiat currencies such as USD, PHP, JPY and etc had its initial value mainly from their respective country's economy and their government's stability due to the fact that it was backed up by these centralized authorities. If we are to look for cryptocurrencies, the value associated to the coin are correspondent to how much we value it. Thus, the value are from its own users. If there are a good number of people that will use it, certainly, the value will be appreciated and will increase throughout.
Just like any other value of trade or exchange, cryptocurrencies made its exponential growth because of the demand. Initially, to make the coin maintain its worth, there is a limit specified in stipulation of how much coins will be circulated. Either it can be mined or was already pre-mined though it varies to the type of the cryptocurrency coin.
Cryptocurrencies are a good investment to start with. Indeed, a revolution for mankind. In my perspective, cryptocurrencies gives us the freedom of infinite value of money. During this time of uncertainty with health measures as our priority in life, the utilization of cryptocurrencies as a medium of exchange is a better option.
If you are someone who's interested to 'go in digital' might as well try to leap into the future with this blockchain technology. Instead of paying cash let's go cashless using cryptocurrencies!
However, always remember that think, trade, and invest wisely. Try to know how the market works. Know where to put your money on hand and let your money work for you.
This is the cryptocurrency wiz by @francescawrites , I hope that you'll learn more about cryptocurrencies. Let's all hodl and hustle!