You’ve probably heard that everyone is getting rich from cryptocurrencies. And you’re not. It’s understandable that you want to find out more about this emerging technology.
Are they going to disrupt the financial system? Can you get rich quick by buying up Bitcoin? What do cryptocurrencies mean for the future of money?
People are raising many questions about what cryptocurrencies could mean for them. That’s why we’ve put together this complete cryptocurrency guide to give you the basics. Let’s take a look!
How do They Work?
Let’s start with the question of how they work. Cryptocurrencies have emerged out of the blockchain technology. This is a cryptographic invention, which explains the name.
So what is blockchain technology?
The block is a math problem which can be solved with the use of supercomputers. At the moment when the math problem is solved, the block is complete.
Subsequently, when another block is created, the data from the former block is carried over to the new block. This is why it’s called blockchain.
If the data is altered, the block breaks or becomes invalid. This is why it’s so useful when it comes to the security of the transactions of the cryptocurrencies.
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Who Solves the Math Problems?
The math problems are solved by people called miners. When they put together the different transactions, this results in a math problem that needs to be solved. This all requires supercomputers that cost a lot of money and energy.
The miners are also charged with ensuring that every transaction is legitimate. They can monitor whether the sender has the sufficient number of coins in their online wallet. The miners are rewarded for their hard work with coins or transaction fees.
Are They Safe and Secure?
When it comes to finances and money, security is always at the forefront of any investors thinking. There are many security procedures in place that ensures that each transaction is secure within the network. After all, the blockchain technology makes any tampering impossible.
If you’re more worried about your personal security. It’s important to know that each cryptocurrency owner has a so-called wallet with a private key. Only you have access to this.
What are the Different Cryptocurrencies?
There are hundreds of different cryptocurrencies out there, however, some have emerged as the most popular. Let’s have a look at the top 2 cryptocurrencies on the market.
1. Bitcoin
If you’ve only ever heard of one cryptocurrency, it’s almost certainly going to be Bitcoin (BTC). This is the original and market leader.
Bitcoin has established itself as the most well-known and valuable cryptocurrency. Many people have become very rich as a result of Bitcoin.
As a result, an increasing number retailers, from the online giant Amazon to small pizza places, now accept Bitcoin as payment.
2. Ethereum
After the Bitcoin, the other cryptocurrency that has garnered media attention is Ethereum (ETH).
The aim of Ethereum is not to become a replacement currency, but rather for companies to use contracts and applications on the blockchain technology.
Due to the “swiss army knife” nature of Ethereum, many experts have predicted that Ethereum will eventually take over Bitcoin as the most valuable cryptocurrency of the future.
Your Cryptocurrency Guide
The world of cryptocurrencies is new to everyone. It can be extremely complicated.
But with this introduction to how to get into cryptocurrency, you can get started on your journey to making the money of the future.
If you enjoyed this cryptocurrency guide, get more information on investments and digital business, check out our other blog posts.