Primer on Cryptocurrencies: Helpful Pointers For Amateurs and Newbies

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Cryptocurrencies have gone viral and becoming more popular in different parts of the world. So, why did people suddenly take an interest in this intangible asset? For a start, digital money facilitates direct, faultless, and speedy transactions between concerned parties. The user maintains complete control over payments, spending, and balances.

Cryptocurrency Benefits

With total control over your virtual cash, you don’t require a central authority for the validation of transactions. The digital network performs this process of confirmation compared to traditional tender. Third parties like banks and credit card firms serve as intermediaries for regular exchange. Cryptocurrencies, on the other hand, oversee transactions through a distributed ledger. While hackers can pilfer banks’ databases, it will take cyber thieves forever to steal virtual assets. Besides, settlements take only a few seconds or minutes and not hours.

Unique Storage System

You can keep the electronic coins in so-called digital wallets which also manage users’ payments. A private key like a convoluted password which only the owner knows secures this wallet. Send or spend money by consummating a payment from your wallet to that of another person. Just like cash, the cryptocurrency owner uses the electronic tender for any purpose. You may even pay to utilize a wallet application on your mobile phone.

How do the Currencies Work?

Brilliant developers created the app on top of a technology called Blockchain. The platform backs several techniques like the cryptocurrency. The “Block” refers to a complicated geometric or arithmetic problem which depends on a cryptographic system known as “Hash.” The Blockchain becomes complete after you resolve the issue. However, anyone who tries to tweak the information such as transaction details inside this Block destroys the platform and nullifies the data. To make corrections, replace the erroneous data with the original one.

The creation of new blocks requires obtaining data from the previous chunk. Older information becomes safer due to the storage of more blocks. Experts measure the Blockchains employing “height” representing all the blocks in one tower. In the cryptocurrency world, the Blockchain stores an accurate or absolute transaction ledger for the particular currency.

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History of the Currency

Bitcoin (BTC), the original virtual currency traced its early development as a “Peer to Peer (P2P) electronic cash system in 2008. A still unidentified person with the alias of “Satoshi Nakamoto” supposedly invented this coin. It first came out in a cryptographic or secret mailing list. Some researchers said Nakamoto, a computer science whiz, claimed that he lived in Japan with the alleged birth date of April 5, 1975. The anonymous inventor reportedly owns a million coins with the market value of US$15.5 billion as of today.

Since then, a hundred other similar currencies surfaced. The most popular next to Bitcoin include Ethereum, Litecoin, Ripple, Dash, and Monero. Cryptocurrency originated from the use of undisclosed codes to safeguard all financial dealings as well as regulate the making of additional coins. According to the latest industry research, “Miners” or individuals who use special software to solve the mathematical problems will mine Bitcoins until 2140. They look at a ceiling of 21 million units.

Earning Digital Currencies

Industry advocates point to mining as the most common method of earning the virtual currency. BTC mining refers to the process of verifying transactions, adding the coins to the public ledger, and releasing these BTCs to users. Anybody who owns a computer with Internet access and appropriate hardware can perform mining. The procedure entails gathering transactions and solving the convoluted puzzle. Successful miners get rewards from transaction fees.

Some users prefer the cryptocurrency exchange that functions the mainstream like foreign exchanges. You can trade regular tender for virtual currencies. Favorite exchanges include Coinbase, Kraken, CEX.IO, Bitfinex, Bitstamp, and Coin One. The industry classifies these facilities into trading platforms, brokers, and direct trading.

Platforms or websites connect sellers and buyers getting their fees from transactions. Direct trading provides person to person trades without fixed market prices. Each vendor sets a specific rate of exchange. Broker websites sell virtual currencies at a price set by middlemen just like FOREX dealers.

Top Cryptocurrencies

Bitcoin tops the market because of global prominence, absolute security, and massive client base. As of today, one BTC boasts of an unbelievable rate at over AUD$22k. The other leading virtual assets consist of Ethereum (ETH), Ripple (XRP), and Litecoin (LTC).

If you enjoy the content on GeekLingo, feel free to donate some digital coins:

Bitcoin (BTC): 1HQyptUXQS8Cp29Ta34JyaTwxiAt99mn13

Litecoin (LTC): LfxWyShJENcfrLVG8aZrgL6NETEQjndaiE

Ripple (XRP): rJYLPYbiZF9hMKvf95MHnEmbp4dMYpoodD

Post Author: Noeneel Sharma

Australian born tech expert, Noeneel, is the founder of the GeekLingo. He has over 20 years of experience in the Information Technology (IT) world. As an Information Technologist, he has a Bachelor in Information Technology, MBA and a Master of Business Process Management. He has professional working experience working across reputable industries including telecommunication, legal, accounting, banking, and most recently electricity. He spends most of his time with his gadgets as he enjoys photography, researching and runs the popular aquatic forum SKF Aquatics. Connect with Noeneel on Google+, Twitter, and Facebook.

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