Cryptocurrency demystified

Fredrick Awino
15.04.2022
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Cryptocurrency is the talk of town today and probably represents the best power of financial technology (Fintech). Assuming  someone imagined that the Mesopotamian shekel would one day be a virtual currency? That would qualify as a joke of the millennium but see how much humanity continues to surprise itself. The ingenuity of technologists supported by ever changing innovation has brought just so many cryptos to the market today.

WARNING: Investing in crypto, or other markets, can be of a high risk for your savings. Do not invest money you cannot afford to lose, because there is a risk for losing all of your money when investing in crypto, stocks, CFDs or other investments options. For example 77% of retail CFD accounts lose money.

Talk about money? People first engaged in barter trade then to natural objects, to coins, paper and now digital money. Whatever the era, money has retained its unique feature of “making the world go round” as Scarface sings .

In this sequel about crypto, the intention is to do just 3 initial things including ;

  •  Learn what cryptocurrency actually is
  • Where to get cryptocurrency
  • Getting to start trading in cryptocurrency

What is cryptocurrency?

You walk along the down street allays and you will hear elites or generation Z talk about cryptocurrency as if it was some mystical stuff of sorts. Of course they could be right  to give cryptocurrency an larger than life outlook. Pose for a moment and think who would have imagined a world where money is completely held online and still retains it’s value.

Before anyone makes it appear that you are out of touch with progress, lets break down this giant of cryptocurrency and see just how much simplicity is packaged to look so complex.  It’s intriguing just to imagine the thinking that goes into making  digital currency but the elasticity of human ingenuity is yet to take us aback even more.

Imagine your physical $1 dollar bill in your wallet now. Maybe just remove and look at it. You need to produce it whenever you need to buy any good or service worth it. But now, cryptocurrency stores that value for you digitally. In simple terms, you don’t have to hold the $1 bill to feel liquid. What happens is that technology is used to create a digital currency whose value is similar to your $1. So the only thing for you is be able to access your virtual money anytime you need it.

Let’s get a little technical about cryptocurrency now. These are virtual money whose security and unique features are developed  and preserved by technology. Through a blockchain technology, cryptocurrency is developed, serialized and distributed so that they are unique and can only be used once.

A cryptocurrency is accessed through distributed ledger and is not subject to intermediaries such as banks whenever someone wants to make an online payment. But something outstanding about crypt is that unlike other currencies, it is an asset in its own. Today, people do not buy crypto for the sheer fun or wanting to look rich. Instead, people buy crypto to trade in them and make more money. It is not simply a means of exchanging goods and services but an asset to be traded in.

Where to find cryptocurrency

You are used to having your money in the bank account which can be withdrawn to cash whenever needed. But  now this cryptocurrency things is virtual which means you can’t touch and feel your money. So the disturbing question is, where can you find your crypto today?

Want to get your first cryptocurrency? Then you have two options standing. First possible ways is that you can check out cryptocurrency exchanges. The second and extremely engaging option is to engage in cryptocurrency mining. It is no mean task to mine a cryptocurrency just as it is mean feat to get it introduced into the market.

It takes companies or conglomerate of very wealthy people to process a successful cryptocurrency mining. Although not intended to dampen anyone’s spirits in crypto, it’s between to focus on crypto exchanges as an individual investor than punching way above own weight into mining.

Cryptocurrency mining

The terminology of cryptocurrency mining may bring out mixed if not confusing connotations. Mining in this case does not mean burrowing tunnels upon tunnels into the crust to extract crypto. No, it just means the technological processing of a new cryptocurrency.

Like any currency, there must be proper checks and balances before introducing any new crypt  into the market. Take for example, the central bank of any country cannot just wake up overnight and print notes for god knows why. There must be an assessment of the financial flows, international exchanges and many more before a specific amount of money is entered into the market. Similar procedure also happens before a new crypto finds its way into the circulation.

To introduce a new cryptocurrency into the market, highly sophisticated hardware go into the works. It takes complicated algorithms to written and extremely out of this world math performed just to create one crypto. A series of dedicated computers are used in the process and the first to solve the math problem gets the new currency before the process begins again to mine the next.

Cryptocurrency exchanges

Cryptocurrency exchanges are simply brokering and give you access to the digital currency whose value matches what you have to invest in ordinary currency. For instance, if you have $200 bill, you may buy 10 bitcoins  in exchange.

The cryptocurrency exchanges are reputable and certified agencies that act like brokers. They hold access to various cryptocurrencies or better still have a speciality in one or  few currencies. The exchanges operate by taking your ordinary currency be it a dollar, rand, shilling, kroners, franc, pound or whichever it is and then exchanges it for you with a crypto of a similar value. Typically, cryptocurrency exchanges specialise in buying and selling these digital monies,

Leading Cryptocurrency exchanges

Up until this point, you already have an idea about what cryptocurrency is and now know it’s a viable investment option. Again, we have let you know as a starter that  of the two available ways, the only best way to thrust yourself into the boundless of crypto is using cryptocurrency exchanges.

It only gets better to stay informed about which  brokers are likely to offer the best services in your journey of trading cryptocurrency. Traders to look up to invest and trade in different crypto include;

  • Coinbase
  • Crypto.com
  • Gemini
  • BitMart
  • Kraken
  • Cash App
  • Bisq

Cryptocurrencies in Circulation today

It’s advisable not to get frustrated about technical behind the scenes mathematics  that go into crypto. To say the least, so much mind blowing calculations and software manipulations happen before a new crypto is born. It requires lessons, pamphlets and volumes of books to understand the behind the scenes.  So lets make do with the little but necessary bits already highlighted.

The technology involved in mining crypto should be much like what a chicken  feeds on before it finally hits your table as dinner. So, mind so little about it because the jargons can be frustrating. With the knowledge of which cryptocurrencies are in circulation, you can then get further to see which if them is performing well. After all, you are in it for business, an investor.

Today, there are quite a handful of cryptocurrencies in the market. Initially, Bitcoin took the lead and actually seemed to be the pioneer crypto that received criticism, skepticism and apprehension all in equal measure. However, today there are many more currencies that are gaining attraction and attention in the world of fin-tech. Just type common crypt to trade in and you will see how many will pop to your screen.

Cryptocurrency investors today are almost spoilt for choices on which one is best to invest in. No wonder it really makes a lot of sense to immerse oneself into self-teaching and consultation with veterans in the industry. Currently, the most popular cryptocurrencies in the market include Bitcoin, Ethereum and Dogecoin.

 

Author Fredrick Awino