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Cryptocurrency is the digital form of money that is based on blockchain technology. It has a decentralized structure that allows users to work without the control of government and central authorities. It is also known as crypto, which occurs virtually and uses cryptography to ensure secure transactions. In this article, the cryptocurrency guide is discussed in detail.
As it has a decentralized structure, it is easy to record transactions and resolve the issues of the new units. There is no need to verify the transaction from the bank. People from anywhere can send and receive the payment by using the crypto platform. The payment in cryptocurrency is purely digital and is existed in their online database.
While many cryptocurrency guides discuss the methods to use it, they fall short of the point that funds are transferred and recorded in a public ledger. It is permanently stored in digital wallets and receives its name because of the encryption it uses to verify the transaction. Moreover, advanced coding is required to store and transmit the cryptocurrency data between wallet and public ledgers.
It allows users to control their money by themselves. It is a peer-to-peer system so that anyone in the world will be able to send and receive payment. The first cryptocurrency was founded in 2009 and is known as “Bitcoin” which is the most popular cryptocurrency of the 21st century. In this article, we will act as a cryptocurrency guide to understand how it works and what you can get from this unique system.
A Brief History
The idea of cryptocurrency is given in 1980 and at that time this idea was given to send the money untraceable. In this way, there will be no need for centralized entities. In 1995, the cryptographic electronic money name Digi cash is invented by American cryptographer David Chaum. Digi cash is considered the early form of electronic payment which requires anonymous software to withdraw from the bank.
In this case, specific encrypted keys are required to send money to the recipient. Later, in 1998 Bit Gold was designed by Nick Szabo in which users have to participate in the context and solve cryptographic puzzles. After solving the puzzle, they will receive a reward for it. But, in this case, Nick Szabo is not able to solve the puzzle of the double-spending problem without the help of a central authority.
Later on, in 2009, Satoshi Nakamoto published a white paper with the name Bitcoin. Bitcoin is basically a peer-to-peer system that is helpful in describing the functionality of the Bitcoin blockchain network. Satoshi start the mining Bitcoin network on January 3, 2009. After the mining of six months, the value of Bitcoin was less than 14 cents.
In this way with the passage of time, many other cryptocurrencies can into existence. It is estimated that more than 19,000 cryptocurrencies exist in the world right now. Most of the coins came into the market and get crashed and vanished. To explore the cryptocurrency guide, users must be aware of the history of cryptocurrency.
How Does Cryptocurrency Work?
The cryptocurrency market has a number of online brokers like Coin-base that help the users to purchase different types of cryptocurrencies at the same instant of time. As it works on blockchain technology so their record of transactions is maintained and updated by existing currency holders. Multiple blogs and government statement regarding cryptocurrency guide has mentioned that cryptocurrency is risky to use for investors.
It is created through a process known as mining which is the complex process of solving complicated mathematical problems by using computer power. The end result of mining is to generate the coins and users will also be able to buy the currencies from brokers by using this platform. Moreover, cryptographic wallets are used to store and spend these coins.
To transfer the funds from cryptographic wallets a password is required which is known as a private key. This password should not be shared with anyone and cryptocurrency mining is required to verify the transaction. It only shows the transaction total without revealing the parties involved in it. It also supports the transactions of bonds, stocks, and other financial assets as mentioned in another cryptocurrency guide.
Cryptography is an essential part to discuss in this cryptocurrency guide. It is used in cryptocurrency to support secure and trustless transactions. It does not contain any information about the person to whom the transaction is to be made. Users will make the transaction directly with the sender and no middle man role will be played by any bank, government, or other third parties.
Its algorithm is used in block-chains in the form of asymmetric-key algorithms and hash functions. These hash functions are used to provide a single view of the blockchain to each of their customers. Mostly, the SHA-256 hashing algorithm is being used as the hash function in most block-chains. Cryptography is being used by Ethereum and is not supported by Bitcoin.
Rising Trend of Cryptocurrency
This cryptocurrency guide will also cover the rising trend of Cryptocurrency as it has gained a boost over the last five years. According to a report, large-scale funds are associated with crypto almost 2 billion USD at the end of 2019. Moreover, Grayscale Bitcoin shows a massive increase of 900% at the end of 2020.
Most companies like Square and Micro Strategy place a large portion of their cash reserve in the form of Bitcoin. PayPal payment method is also used for the buy and sell of the cryptocurrency. In 2019, a digital currency named Libra is launched by Facebook that allows users to buy things and can send money to others in Libra currency. The value of a digital currency is increase or decreases on daily basis. Companies will also be able to take benefit from its fluctuating price.
Most companies buy digital currencies at low prices and then sell them at high prices. Thus, they strengthen their digital assets. As per another cryptocurrency guide, it is forecasted that the value of cryptocurrency will grow from 910.3 million USD in 2021 to 1902.5 million USD in 2028 at a CAGR percentage of 11.1.
Benefits of Cryptocurrency
In this cryptocurrency guide, the benefits of cryptocurrency should be discussed for beginners. Cryptocurrency will replace the banking system in the future as it contains many flaws. The traditional banking system is associated with the risk of hacking customer accounts. The transfer limit of the customer account can also be exceeded.
The account may face most of the technical issues with the ATM as the link of the bank system will be down most of the time and customers will not be able to withdraw money. Cryptocurrency will cover all of these issues and there is no central point of failure for such systems. The transaction cost of cryptocurrency is also low from a digital wallet to a bank account.
Luna cryptocurrency guide forecasted that investors will use crypto as the medium of exchange because transactions can easily be made with dollars or more. The best part of using cryptocurrency is that payments are settled in seconds and minutes. Moreover, it has the ability to have high return potential as compared to other methods and is independent of the central authority.
In most of the cryptocurrency guides, it is mentioned that privacy is one of the main benefits of cryptocurrency. As it is based on blockchain technology and has the ability to record all the transactions forever. It is equally beneficial to exchange the values between two parties thus making the transaction independent and censorship-resistant.
The risk associated with Crypto- Case Study
Our cryptocurrency guide is helpful to learn about the risk associated with cryptocurrency. The risk of cryptocurrency is very high as the whole system is working online. No one is able to know about the sender and receiver. The utilization of cryptocurrency is increasing with the passage of time and the risks associated with the financial service industry are also increasing.
The trading of cryptocurrency is risky as it is related to volatility. The trading is shown in the form of graphs and charts. The unexpected changes in market price will lead to the up and down the value of the currency. If someone buys the coins and starts trading then it will be so risky to determine whether their price will increase or decrease after a short interval of time.
Cryptocurrency trading is associated with the risk of fraud, lack of transparency, and many more. Most investors also lose a lot of money by investing in cryptocurrency. Investors should be aware of the volatile nature of the cryptocurrency in which they are invested. Many cryptocurrency guides describe different methods to mitigate the risks of cryptocurrency. Potential security, accounting, and tax concerns should also be observed before investing in cryptocurrency.
Case Study of Luna Coin
The coins that are crashed in the market have dangerous side effects. Terra and Luna’s coins are the best example of these as they both crashed last month. The result of their crash is a loss of 500 billion USD in the crypto market. Many of the investors have invested in it and they all lose their money. Numerous investors committed suicide and many of these called for criminal investigation.
Initially, the Luna coin is considered the best crypto asset as it returns 60 percent of the investment profit. According to the report, almost 1 billion Luna coins were in circulation. The main reason for the Luna crash was that large investors of TerraUST and Luna began to sell their stocks which result in a huge drop in Luna’s Price.
The price of any coin depends upon the buying investors of that coin. As the buyer of coins increases the value of that coin will also lead high. In the case of Luna, investors start selling their coins so the value of the Luna coins starts decreasing and the market of Luna gets crashed. Initially, the price of Luna was 80 USD and now the price of Luna is 0.000065 USD after getting crashed.
How to stay updated about crypto
This cryptocurrency guide will include all the ways that help the users to stay updated with the latest news of cryptocurrency. CoinDesk, Bitcoinist, and Cointelegraph are the main big websites that give updates on cryptocurrency on regular basis. Some of the major crypto news websites are Coin Geko, Crypto Twitter, Glass-Node, YouTube, and Blogs.
Coin Geko is another website that helps investors to track the active rates of their favorite coins. The latest cryptocurrency Statics are also shown on this website. Users will also be able to find the trading volumes, market capitalization, and current market prices by using this Coin Geko Website. It is equally beneficial in comparing the number of crypto at the same interval of time.
Crypto Twitter is also useful if investors want not to miss any updates on crypto. Crypto Twitter is the complete source of news, thoughts, and discussions. It contains all the information about the launching of new coins and increased and decrease prices of multiple crypto coins. As discussed in many cryptocurrency guides that it includes all the token listing and information that what is going on in the crypto world.
Glass-node is the best website to stay updated about cryptocurrency. It helps get the analytics and updated data from the blockchain. Users will be able to get the statistics and data and can compare the number of crypto reports by using this website. On-Chain data and metrics across popular block-chains are also available on this website.
YouTube is the advanced source of getting the latest information about cryptocurrency. The crypto news is time-sensitive if, somehow, users cannot get the update on cryptocurrency. YouTube is best to use at that time. Most of the prominent crypto YouTubers also help the investors by providing the latest update on cryptocurrency on a daily basis.
BLOGS are another source of getting the latest information about cryptocurrency. It keeps users updated about the latest trends in cryptocurrencies and the financial market for free. Users will be able to get an update on cryptocurrencies daily. Several blogs are also helpful by providing authentic information about the affairs of cryptocurrencies.
The article discussed above will serve as a cryptocurrency guide. Cryptocurrency is the digital currency that helps users to make payments through an online system. It uses the cryptography method to verify the transactions. It allows the users to maintain the transaction record by a decentralized system. It is also used in trading with high reward and high-risk probability.
It is a precarious platform for investment as there is no money-back guarantee. In cryptocurrency, users can invest in it by buying multiple coins. According to many cryptocurrency guides, the price of cryptocurrency depends upon the coins’ buying and selling rates. The value of coins increases as the buyer of coins increases and the importance of a currency will decrease as the investors start selling their coins.
Many media on the internet help the investor stay updated with cryptocurrencies, such as Blogs, YouTube, and many more. The best example is Luna which has been popular in the past month as it gives a return profit of 60% of the user’s investment. Its price was 80 USD in the past, but as the investors starts selling their coins the market of Luna get crashed and its value goes down to 0.000065USD.