We going to make a quick assumption: you have heard of cryptocurrency and want to know more, but just like most people you’ve become frustrated with how difficult it is to get started. We feel your pain. Cryptocurrency can be an intimidating subject, especially if all you’re coming from is another exchange where everything is measured in fiat currency.
Why are you here? We’re betting that maybe you know just enough to be dangerous, but not nearly enough about cryptocurrency mining (the backbone of any cryptocurrency) and trading (buying and selling your coins), let alone how it all fits together. That’s ok; we’ve got you covered.
We’re going to break it down so that anyone can understand. But first…
What is cryptocurrency?
If you haven’t heard of cryptocurrency yet, let us catch you up very quickly before we get started with the meat and potatoes. Cryptocurrency is a decentralized digital peer-to-peer currency that uses cryptography (encryption) to secure transactions and in most cases to control the creation of new units. Cryptocurrencies aren’t printed like fiat money; they’re produced by people running specialized computer programs, and there is a limited supply of them.
Why does cryptocurrency exist?
Some people think it’s the future of money. Others believe it could be one of the best real-world examples of the sharing economy. The answer is, well… it doesn’t really matter why you care about cryptocurrency right now—what matters is that you understand how it works before getting started.
Even though there are more than 1000 cryptocurrencies in existence, Bitcoin remains the most popular coin to date.
The reason behind this has everything to do with the first cryptocurrency’s greatest innovation: decentralization. Before Bitcoin, cryptocurrencies were difficult to communicate about because they all looked different; you had to buy and trade different currencies through different exchanges.
If you wanted access to all of these tools and networks, you had to pay a fee for each exchange using traditional payment methods such as credit cards or wire transfers.
As we will discuss in a future article, decentralization, and anonymity (the two often go together) are at the heart of most cryptocurrencies: they’re intended to remove middlemen like banks and governments from our transactions, making them safe for anyone to use. You can use platforms like Bitcoin Era to trade crypto coins.
How does cryptocurrency mining work?
Bitcoin is still by far the most popular cryptocurrency on the market, but it’s becoming more difficult to mine for new coins. If you’re just getting started in mining—or if you’ve thought about getting involved with Bitcoin or another of the bigger cryptocurrencies, like Litecoin or Ethereum —you may want to do some research before jumping in headfirst.
Don’t worry; we’ll make it simple. Mining is the process by which cryptocurrency transactions are validated and new units of that currency are added to the ledger.
You need to understand something about cryptocurrencies in general: they aren’t controlled by banks or governments—and this has huge advantages over fiat money. When it comes time to verify a transaction, a network of miners is responsible for checking that all rules have been followed before adding the transaction to the ledger.
The first cryptocurrency, Bitcoin, had this system built-in; its security relies on strong encryption and consensus among users. By using these two things together, Bitcoin was able to build an honest currency that’s free from tampering by banks or governments.
In conclusion, there is so much about cryptocurrencies that you need to learn. As such, you will need to show a whole lot of patience and do your homework properly. As a beginner, there is a high chance that you may make some rookie mistakes but you will get better with time and with our help.
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