Cryptocurrency is a digital form of money or an asset that can be traded online over the internet from one party to another. It exists only on Blockchain technology. It circulates and traded between people, businesses and organizations without the intermediation of any regulatory body like the Government or banks.
You can buy goods and services with cryptocurrencies like Bitcoin, Ethereum Cardano and many more. Cryptos can even be stored and traded over the crypto exchanges for future gains and speculation.
How do cryptocurrencies work?
Cryptocurrencies are created using the cryptographic techniques with the mining process. Cryptographic techniques convert the original data of crypto into some encrypted message (a combination of letter and alphabets) that can not be understood by the unauthorized person. Hence, cryptos with such encrypted messages can be stored and transferred from one point to another point securely over a medium known as Blockchain. Unauthorized people can not access or use such cryptos with encrypted data and information. Hence these would remain safe with the owner.
How do you get cryptocurrency?
You can get the cryptocurrency with three main ways. First, you can create them with a mining process that’s a complex energy intensive process in which computers solve the tedious puzzles and get newly created cryptocurrencies as a reward.
Or you can simply buy them!
It’s the easiest way. You can either buy from a cryptocurrency exchange or trade them from another user.
How to buy cryptocurrency securely?
You can buy your cryptocurrency easily by following four steps.
- Where to buy cryptocurrency?
As a new buyer, you can buy cryptocurrency from a centralised exchange. It’s relatively easy to use and charges are less for buying cryptocurrency here.
Another method to buy cryptos is from decentralised platforms which are a little difficult to operate and you need technical know-how to operate these exchanges. But the fees are lower than the centralised exchanges.
And you can also try to exchange and buy these cryptocurrency from a peer-to-peer method.
- Decide how you will pay?
If you are a new investor, you are most likely to buy your cryptocurrency from fiat money like Dollar or Euro. But for the experienced buyer, it might be more convenient to buy one cryptocurrency in exchange of his own cryptocurrency. Like, he can exchange his Bitcoins from Ethereum.
- Make value addition to your account
You will first fund your account opened on your crypto exchange. You can fund either with debit card, credit card, or bank transfer. You can also use a digital wallet to transfer your cryptocurrency in exchange for another cryptocurrency.
Crypto exchanges will charge a fee in lieu of these services. You must consider in advance the amount of fee as some exchanges charge more and some less.
- Finally select your cryptocurrency
You can finally choose your cryptocurrency according to your goal and priorities. Set your goals with this purchase. Decide what you want to achieve. If you are interested in value increment. Or you want to explore the underlying technology. Or if you just want to execute some transactions in cryptocurrency.
Select the best cryptocurrency after you ask these questions from yourself. There are literally innumerable cryptos available in the cryptocurrency market and many more are awaiting to enter.
Can cryptocurrency be converted to cash?
Yes, you can convert your digital coins like Bitcoin and Ethereum to cash through a third party cryptocurrency exchange or a broker. These third party exchanges include cryptocurrency ATMs and debit cards that will convert your cryptocurrency into cash. This is an easy way to cash out your crypto coins.
Another method is peer-to-peer transactions to sell your cryptocurrency. This is the fastest way to sell your cryptocurrency and is anonymous as you sell your cryptocurrency directly to another person.
Is Cryptocurrency Safe?
Cryptocurrency are safe to buy, sell and invest if you take precautions while executing the transactions. It has safe store value like gold. Cryptocurrency is inherently secure due to its technology of cryptography. You can always take note of using trusted and secure exchanges with a good track record and using secure digital wallets.
Cryptocurrency is a safe asset. It has store value as well as status of liquid money. You can gain huge profit like in bitcoin that increased from a few cents to more than $60k within a decade. So, it’s time to study, evaluate, and understand so many cryptocurrency options available in the cryptocurrency market.
7 thoughts on “What Is Cryptocurrency In Simple Words?”
A good read. Explained everything in a laymen language. Awesome!
Finally, everything well explained. Easy to read and understand such a technical content.
Sub topics are relevant and make the overall topic more interesting and useful. Thanks a lot!