What is crypto for beginners? - A beginner's guide to understanding cryptocurrency
Cryptocurrency can be complex and intimidating, especially if you’re unfamiliar with it. But it doesn’t have to be that way! We’ve created this guide to explain the basics of crypto in simple terms and give you the steps you need to take in order to start investing in cryptocurrency right away! What is cryptocurrency? We’ll start with the basics, since understanding exactly what it is can be the most confusing part of getting into the crypto game.
Cryptocurrency
Cryptocurrencies are decentralised. No single institution or person controls them. They are powered by a blockchain, which is a shared public ledger where all transactions are recorded permanently and anonymously. Bitcoin, the first and most well-known cryptocurrency, was created in 2009.
So, what is blockchain? A blockchain is a digital ledger of all cryptocurrency transactions. It is constantly growing as completed blocks are added to it with a new set of recordings.
Blockchain
In its simplest form, blockchain is a digital ledger of transactions. When someone wants to add a new transaction to the ledger, they must first solve a complex mathematical problem. This process is known as mining. Once the problem is solved, the transaction is verified and added to the blockchain. The ledger is then available for anyone to view. Transactions are anonymous, which makes blockchain a popular choice for those looking to buy or sell illegal goods. However, this anonymity also makes it difficult to track down criminals who use blockchain.
Initial Coin Offering (ICO)
An ICO is a fundraising method where new projects sell their underlying crypto tokens in exchange for bitcoin and ether. It's similar to an Initial Public Offering (IPO) in the sense that investors receive a stake in the company, but with ICOs, they get a digital asset instead of equity. These are called tokens and are similar to shares of a company sold on the stock market. Investors can put any amount from $10 up as long as it converts into one token which is equivalent to 1/100th of an ETH or 1/100th of BTC.
Cryptocurrency wallets
A cryptocurrency wallet is a digital wallet that stores your private keys and public addresses. These keys are what you use to access your coins and make transactions. You can think of it like a bank account number or a PIN number. There are many different types of wallets, but the most important thing is to find one that is secure and easy for you to use.
Wallets 101
Most wallets are free. Some wallets are web-based while others require you to download software or an app onto your computer or phone. The most important thing is that you have control over your private keys.
Storing coins on exchanges vs. storing them in your own wallet
When you first start trading cryptocurrency, you may be tempted to store your coins on an exchange. After all, it's convenient and you don't have to worry about losing your private keys. However, there are a few reasons why you might want to store your coins in your own wallet instead. First of all, exchanges are often hacked, and if your coins are stored on the exchange, you could lose them all in an instant.
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Crypto Currency, its digital money.
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