Despite doubt in the crypto space, a growing number of traders are continuing to join the crypto community. There are over 420 million active traders in 2023, and new ones are giving the cryptocurrency market a chance every day. If you’re one of them, welcome! Allow us to help you understand blockchain technology and crypto transactions with our to-the-point Cryptocurrency Explained Guide!

After reading this page, you’ll be able to answer:

• What is crypto?
• How does cryptocurrency work?
• Where can you safely buy crypto?
• What are the different types of crypto you can purchase?

There’s a lot to discuss, so let’s make the most of your time here and get started!

Cryptocurrency Explained: The Birth of Crypto

Crypto’s history began in 2009 when an anonymous person (or group of people) with the pseudonym “Satoshi Nakamoto” released Bitcoin – the first cryptocurrency in the world. The idea was that Bitcoin could be used to liberate society and provide an alternative medium of exchange. 

It would, in theory, put financial control in the hands of the people as opposed to a government or financial institutions. To further explain crypto and how it works, we need to go deeper. There are two essential factors that make digital currency stand out from fiat currency.

Cryptography

Cryptography is at the core of digital currencies. This complex mathematical technique secures cryptocurrency transactions and enables them without the need for a third party. It also makes crypto extremely secure. People can’t counterfeit or steal it with the ease with which they steal money from bank accounts or wallets. Additionally, crypto assets are also pretty immune to inflation, as no specific authority determines their price.

Decentralisation

The second key factor is decentralisation. Unlike traditional currencies, crypto is not issued by a government or bank. It can’t be manipulated, and due to its DeFi nature, it is cheaper to send worldwide. As long as the receiver has a crypto wallet to store cryptocurrency, sending digital assets and making cryptocurrency payments is not only faster but also more cost-effective.

• Check out this video, which cleverly explains why crypto is ultra-valuable for society: What Is Bitcoin and Why It Has Value.

Crypto’s Inner Workings

source

To continue our Cryptocurrency Explained Guide, we need to cover more complex terminology and explain some of its processes. To start, crypto uses blockchain technology, a type of distributed ledger that transparently records any cryptocurrency transaction. Each block in the cryptocurrency blockchain ledger has a record of transactions. These blocks, once created, can’t be altered, sealing shut all data.

Wondering how cryptocurrency mining goes into this? It’s the miner that processes and then has to verify transactions. They do this by using a lot of computing power to solve mathematical puzzles. Once solved, they receive crypto for their effort, which also creates new blocks and improves network security.

Of course, many of you might think they can easily jump on the bandwagon and mine Bitcoin. However, when we say this task takes a ton of power, we are not exaggerating. It equals the total electricity that an average American household uses in 13 years. As a result, today’s investors tend to acquire their own cryptocurrency in a different way.

Where to Get Ahold of Digital Assets

Big corporations or individuals who can afford to pay for the power needed to mine typically focus on this task. Modern traders, on the other hand, purchase crypto. There are hundreds of websites around that allow you to set up a digital wallet and start trading virtual currency. The most popular choices are online exchanges, brokers, and trying to mine crypto in alternative ways.

Cryptocurrency Exchanges

Crypto exchanges are online marketplaces that offer virtual currencies for various prices. People can buy any type of crypto or NFTs if they want to create a portfolio of cryptocurrency investments. Exchanges are full of various trading tools to help investors track price movements and make decisions for their assets. These tools are typically more complex and require some time to become familiar with, which is why we don’t recommend them to beginners.

Of course, if you have confidence, you can give them a try. We recommend a crypto exchange that’s safe and versatile, with plenty of active traders and good trading volume – Kraken. The cryptocurrency exchange also allows you to set up your own wallet instead of relying on a digital storage solution.

Crypto Brokers

A great option for novice investors is choosing a crypto broker to support them throughout their crypto journey. If you are wondering where to find reliable and reactive brokers, try a platform we tested – Quantum AI. There, you can sign up for free and pair with a broker who can help you with your crypto financial transactions and answer all kinds of questions on the crypto industry.

Moreover, they can provide you with useful learning materials that can supercharge your trading experience and put you a few steps ahead of other investors! When it comes to coin variance, you will be able to find Bitcoin and many other major and minor cryptocurrencies in their repertoire. There really is no downside to choosing a broker, even if you have years of practice.

Alternative Forms of Mining

In case you don’t want to make online payments or any payments at all to get your hands on crypto, you can also try to mine it. Now, it’s important to mention this type of mining is nothing like the one necessary to build new Bitcoin blocks. But that’s alright – there are plenty of other coins and tokens we can mine!

For example, you can explore geomining and receive rewards for the distances you travel. Every time you get out for a drive, all you need to do is switch on your location and open an app on your phone. You earn rewards for geomining various blocks displayed on your GPS map. If you’re interested in trying this out, please check the COIN app for more information.

Before You Buy: Types of Crypto Explained

To finish this Cryptocurrency Explained Guide, let’s take a look at some coins and tokens you can buy as a trader.

Bitcoin and Ethereum

Bitcoin, often referred to as “The King Coin,” was the first digital asset released in the cryptocurrency industry. It remains the most popular cryptocurrency to this day. Ethereum uses similar processes to Bitcoin, which is why they share a category. It is the second most well-known currency and follows Bitcoin in terms of market cap.

Altcoins

source

Altcoins are any other cryptocurrencies that are not Bitcoin. They have a wide range of functions. For instance, they can enable transfers, offer speedier services, prove ownership of other assets, and more. Each altcoin is a unique project with a set of individual functions. Here are some popular choices:

• Solana (SOL)
• Tezos (XTZ)
• Binance Coin (BNB)
• Stellar (XLM)
• Chainlink (LINK)
• Polkadot (DOT)

You can check the price of each coin on popular websites such as CoinMarketCap and decide which one will be the most lucrative for you!

Final Thoughts

In this Cryptocurrency Explained article, we managed to cover crypto’s inception and secure places to buy and sell cryptocurrencies. We also explained some of the cryptographic techniques behind blockchain systems. Thus, we hope this article was useful to you and you’re now one step closer to understanding the intricate world of crypto!