This is a simple understanding of cryptocurrency basics for beginners, so make sure you share! I’m sure it will help somebody.
Here is what we will cover in this post:
- What is cryptocurrency?
- What is blockchain technology?
- What are cryptos used for?
- What gives cryptos value?
- What are altcoins?
- Digital wallet: Public Key, Private Key & address.
- Cryptocurrency Exchanges.
- What is Cryptocurrency?
Cryptocurrency is internet money, a decentralized digital asset or digital coin. As any unit of account, it was designed to be a medium of exchange (buy, sell or trade), and as it might be obvious it holds value according to its kind. In 2008 Satoshi Nakamoto presented the first digital coin, BITCOIN, a peer-to-peer cash system.
Decentralized? As in opposed to centralized. Not meant to be kept in a centralized bank or to be controlled by one single authority or third-party per se. Its main characteristic is to generate freedom for the coin holder, who will be able to transact that digital asset as he or she pleases, anytime and anywhere in the world. On a peer-to-peer connection that again eliminates third-parties. And what makes this possible is the platform it functions upon: Blockchain ecosystem, I’ll explain as you read along. To learn more about check out our post Centralized x Decentralized.
2. What is Blockchain Technology?
Blockchain is a list of recorded transactions. It is an immutable growing list kept in chained blocks, which records every coin and transaction upon it. It is what validates crypto coin transactions.
Think with me, If I have a physical coin and I transfer it to you, I put it in your hands, it is yours, everyone can see it, you have it. The existence of that one coin is not questionable, it simply exists and it belongs to you, and we all know this because it’s physical and we can see it. Yes?
Now, how could we validate the same transaction if it was a digital coin? With a digital coin anyone could make as many copies of it as desired, so how can I guarantee that only one digital coin of its kind gets to be sent out without being multiplied and given to different people? Well, that’s where blockchain comes in! As coins and transactions enter the blockchain platform they get a code called hash, a hash that cannot be changed ever, and once recorded on blockchain, it will be there forever in the open for everyone who is a part of that platform to see. As the coins move along, with every transaction they gain a new code, but always connected to the old, they will carry every single hash from the moment they were first created. Digital currency would be nothing without blockchain technology, it could not carry any value. To learn more, check out our blog: “BLOCKCHAIN TECHNOLOGY AND ITS USES”
3. What are cryptos used for?
It is used as medium of exchange, buy, sell or trade.
Some coins and tokens can be used to access a platform or a service. it’s like going to a carnival, you may have physical money but to play within the rides you need tokens! Some platforms and services in this community may only work if you have the tokens or coins necessary. Cryptocurrency is still in its early stage, but already used in many sectors from real-estate to charities. They can be used anywhere where they are accepted. To learn more about check out our blog post “Coin x Tokens”.
4. What gives cryptos value?
Just like any other unit of account, cryptos have value because people believe they do. When we create a demand or a use for a currency, we give it value, even fiduciary money, physical money.
To Learn more, check out our blog post “COIN APPRECIATION”.
5. What are altcoins?
Bitcoin is the mother-coin and any other coin or token created after that is called ALTCOIN as in Alternative Coin. Ethereum is an example of an Altcoin, it ranks second place after Bitcoin with a market cap of almost 60B dollars. Bitcoin has been created to be a powerful COIN only. Ethereum on the other hand aside from being a token, it has been created with many functions! It is also a platform for anyone who’d like to create their own token!
To learn more about Ethereum check out our post.
6. Digital Wallet: Address, Public Key & Private Key
Digital wallet is as obvious as it sounds, its where you can hold your cryptos, your address. You can search google and find several different ones according to the kind of coins or tokens you hold.
Address: is a code to send, receive and store cryptocurrency. It is given to you to locate coins, just like a home address.
Public Key: allows you to receive cryptos.
Private Key: allows you to spend your cryptos. Should never be shared.
7. Cryptocurrency Exchanges
Exchanges are platforms where you get to trade one crypto for another, or even fiat currency (paper money).
We have a Cryptocurrency Vocabulary that you might want to check out to help you flow within this community.
You can also check out WorldCoinIndex to see all sorts of coins, tokens and exchanges.
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First Published on Winco.io