Cryptocurrencies : How its Works, How to Buy & Types of Cryptocurrency

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Every country has its own currency, and through that currency the economy of the country runs. But nowadays some such currency has also come in the world, which is in digital form and we do not see it. Today we are going to talk about one such currency whose name is cryptocurrency in this article. In this article, we are going to give you all such information about what cryptocurrencies are, how they work, and which cryptocurrencies are, and their features, etc.

What Is Cryptocurrency?

Cryptocurrency is a digital currency created by a technology similar to cryptography and using a distributed ledger system, which works by blockchain. Through this technology, the developers aimed to create such a currency, which is secure, private, traceable and decentralized for a longer period of time.

When we have to pay to buy something or take a service on a large scale, then we can make payment in digital form through online money exchange. Therefore, the payment done in this is done using the Internet in the form of some wallet. This currency appears new to us, so it is the most advanced version of cashless payment, which is done in digital form.

How does cryptocurrency work?

To know how cryptocurrencies work, you should pay attention to some of the points given below –

  • The main function of cryptocurrency is to transfer money from one computer to another. And this is done, through the blockchain.
  • Blockchain acts like a bank. All the transactions done in this are recorded in this blockchain, which greatly reduces the chances of fraud.
  • This technology is monitored and tested by some people through powerful computers. This process is the mining process of cryptocurrencies.
  • Those by whom this monitoring and checking is done, they work in the same way as a clerk in a bank, and they are called minors.
  • Now it comes to how these miners monitor and check it, so let us tell you that they get a code to do this, and they get this code only when a person presents in front of them. He solves maths problem correctly.
  • Here the mining process of cryptocurrencies is completed and after that comes the exchange process, in which cryptocurrencies are transferred from one account to another.
  • When buying, selling or trading through cryptocurrencies, it comes to where you have it, let me tell you, there are some wallets for this. In which this store resides.
  • In fact, it is a program to store public and private keys in the computer. And it enables users to send, receive and monitor digital currency balance. And that’s how cryptocurrencies work.

How Cryptocurrency Started?

When the Internet facility started in the world, then it was unknown to many people. Talking about the 1990s, in the beginning most of the people were struggling to understand the Internet. Although many people were so smart, that they were fully aware of how the internet is such a powerful tool.

Such people believed that the government and corporation have got too much power over our lives. And they wanted the people of the world to get freedom by using the internet. So these cypherpunks wanted to allow Internet users to have more control over their money and information, using cryptography.

To this end, Cypherpunks created a catalog of digital cash, in which both Digicash and Cybercash were attempts to create a digital money system. But due to some shortcoming, both failed. Then after a long wait, a digital cash system i.e. digital currency was invented in 2009, which was successful. And thus the beginning of cryptocurrencies.

Types of Cryptocurrency

Bitcoin (BTC) :- The first and most famous among cryptocurrencies are bitcoins. Yes bitcoin is the most used cryptocurrency in the world. Which was created by Satoshi Nakamoto in the year 2009.

Dogecoin : – It was started in such a way that when bitcoin was in circulation, during that time dogecoin compared it to a dog. But later it itself became a cryptocurrency. Its founder was Billy Markus. At present, the value of this cryptocurrency is more than $197 million. Along with this, mining also gets done quickly.

Litecoin (LTC): – Litecoin is also like bitcoin, which is also decentralized and also works under peer to peer technology. It was started in the month of October 2011. This cryptocurrency was started by Charles Lee, who was an employee of a Google company during that time. In this, when the mining process is done, then the script algorithm is used in it.

Dash (DASH): – It is made up of two words that are digital and cash. This cryptocurrency is launched with more good features than the most famous cryptocurrency bitcoin. In this, security is given more importance than other cryptocurrencies. Such technology and algorithm is used in this, so that the people joining it can do their own mining.

Also Read : What Is Bitcoin & How Its Work?

PeerCoin (PPC):– A cryptocurrency called PeerCoin is similar to a peer-to-peer cryptocurrency as per its name. The algorithm used in this is SHA-256, and it does not require much power for doing transactions or for mining process.

Faircoin (FAIR): – Blockchain technology is also used in cryptocurrency called FAIR, which is similar to other cryptocurrencies. But its design is socially creative. In this, proof-of-cooperation is used to verify the coin.

Ethereum (ETH): This is another type of cryptocurrency, it is also an open source decentralized computing platform based on blockchain. The founder of this cryptocurrency is Vitalik Buterin. A digital token is used in this, which is called Ether. There are 2 versions of this cryptocurrency, the first is Ethereum (ETH) and the second is Ethereum Classic (ETC). It has also become very famous.

Ripple (XRP): – This cryptocurrency was introduced in the year 2012, which is based on the distributed open source protocol. Its value today is about 10 million dollars.

Monero (XMR) :– Monero was launched in the year 2014. It works on all types of systems. And also like bitcoin. Consumer-level CPUs are used in this cryptocurrency.

What is blockchain and how does it work?

Blockchains use Distributed Ledger Technology (DLT) to remove third parties from the system. This means that the way when we do a transaction with someone, there is some 3rd party in the middle which is helpful in completing this transaction but it does not happen in this.

The technology used in the transactions of cryptocurrencies is a shared database, where the transaction information is recorded. This technology is called Blockchain Technology. Actually Blockchain is a database of every transaction, the information about the transactions that are done in it is in the form of blocks and then these blocks join one by one with the database and form a long chain. This is what blockchain is.

Once information is in the blockchain, it cannot be removed or changed. Nor can everyone see it. The entire database is stored on a network of thousands of computers called nodes. Any new information is added to the blockchain when more than half of the nodes agree that it is completely valid and correct.

Cryptocurrency Related Some Information

  • Digital: – We cannot see cryptocurrency, because it is on the computer and not alive, so it is a digital currency.
  • Decentralized – Cryptocurrencies do not have a central computer or server. They are usually distributed over a network of thousands of computers. Networks without a central server are called decentralized networks.
  • Reliable: – No third party has to be trusted in this, in this, full control of money and information remains in the hands of the users at all times.
  • Encrypted: – Each user has a special code so that their information cannot be accessed by other users. This is called cryptography. And hacking it is also almost impossible. When information is hidden with cryptography, it is encrypted.
  • Pseudonymous :– This means that you are not given or required to provide any personal information to use cryptocurrencies. No rules have been set for its use.
  • Peer-to-peer :- Cryptocurrencies are passed online from one person to another. In this, users do not interact with each other through banks or payment systems or through Facebook. That is, there is no third party in this. Rather, there is direct interaction with each other, and this is called peer-to-peer.
  • Global : – All countries have their own currency which is called fiat currency. It is very difficult to use fiat currency all over the world. Therefore, if you use cryptocurrency instead, then this work will be done very easily.

How to Buy Cryptocurrencies?

There are two ways to buy cryptocurrencies but today the easiest way is to buy them through a crypto exchange. There are hundreds of cryptocurrency exchanges coming in operation around the world.

Talking about India, many exchanges are working here including WazirX, Zebpay, CoinSwitch Kuber, Coin DCX Go. Apart from this, there are also international platforms such as Coinbase and Binance, where one can buy digital currencies from around the world including bitcoin, ethereum, ether and dogecoin.

Also Read : How to earn money from Bitcoin?

Crypto Currency Exchanges Open 24 Hours

Buying and selling bitcoin and other cryptocurrencies in the country has become quite easy. The most interesting thing is that all these crypto exchanges are open round the clock for making purchases.

Because of these it is quite easy to buy and sell cryptocurrencies. For crypto trading and investing in Rupee, you have to register on one of the exchanges. For this, after signing up on the site of the exchange, after completing your KYC process, you have to transfer money to the wallet and then buy these digital currencies.

India preparing to introduce bill on cryptocurrency

India is also witnessing a steady increase in the number of people investing in cryptocurrencies. According to a report. Active registered users in India currently about 15 million (15 million). In some or the other crypto exchange operating in India.

For this reason, keeping in mind the safety of Indian investors in this unregulated market, both the Reserve Bank of India (RBI) and the central government have become strict. A bill will also introduced in the ongoing winter session of Parliament to rein in private cryptocurrencies. Along with this, RBI has also given a proposal to the government regarding its digital currency.

Advantages of Cryptocurrency

When It Comes to Using Cryptocurrency If so, then the question definitely arises in the mind that why? Why use cryptocurrency after all? Why use cryptocurrency? What are its benefits Are? So I would like to tell you that cryptocurrency There are many benefits. As if :-

  • Cryptocurrency is a digital currency. In this The scope for fraud is very less.
  • Buying, Selling and Investing Cryptocurrencies It’s very easy to do. because for many All Digital Wallets are available.
  • Need a bank for cryptocurrency Not there.
  • Cryptocurrency is a very good option for investment. Because its price rises rapidly.
  • Cryptocurrency is not under controlled by any state or government. Cryptocurrency is a Secure Currency.

Disadvantages of Cryptocurrency

  • Everything has two sides. There are some advantages and some disadvantages too. The same thing applies to cryptocurrencies as well. That is, Cryptocurrency also has some disadvantages. Come, Know about the disadvantages of cryptocurrencies: –
  • Now, the biggest disadvantage of cryptocurrency is that it is not controlled by any authority. That is, no one can control its prices. that’s why its Prices fluctuate unexpectedly.
  • The second disadvantage is that it is a digital currency. So, it can be hacked. And this has already happened with Ethereum.
  • The third biggest disadvantage is the use in Illegal Activities. Illegal weapons, drugs and stolen Credit/Debit Cards can be purchase using Cryptocurrencies.
  • Also cryptocurrencies have no physical existence. That is, it does not have notes and coins.

Last me Note : Please read disclaimer before taking any action.

FAQ :-

What is cryptocurrency and how it works?

Cryptocurrency is a digital currency created by a technology similar to cryptography and using a distributed ledger system, which works by blockchain. The main function of cryptocurrency is to transfer money from one computer to another. And this is done, through the blockchain.

How is money made from cryptocurrency?

The most common way of earning money from cryptocurrencies is buying coins such as Bitcoin, Litecoin, Ethereum, Ripple, and more and wait until their value rises. Once their market prices rise, they sell at a profit.

How to Buy Cryptocurrencies?

There are two ways to buy cryptocurrencies but today the easiest way is to buy them through a crypto exchange.

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