What are Cryptocurrencies?

Cryptocurrencies trading stands out in the global investments and slowly taking every investors’ minds like nothing before.

They are so popular right from top companies to individual local people.  Cryptocurrency is the talk everywhere online and social media.

Thanks to technology, we are living in the crypto world.

Before we can know how cryptocurrencies trading works, let’s first know what a cryptocurrency is!

What is a Cryptocurrency?

A cryptocurrency is a digital currency that works as a medium of exchange. This means you can buy goods or services and pay for them online with cryptocurrencies.

Some call them ‘Cryptos’.

They use cryptography to secure and verify transactions as well as to control the creation of new units of a particular cryptocurrency.

This currency has no physical representation. It’s just a verified ledger of entries in a database.

It registers  accounts, balances and transactions.

You cannot change Cryptocurrency without fulfilling certain conditions.

Bitcoin came first in 2009, and still remains the best among the other cryptocurrencies. As of today, there are more than 1000 cryptocurrencies available online.

To mention but a few, Ethereum, Ripple, Litecoin, Monero, Ethereum classic, Dash, Augur and Nem.

In addition, Cryptocurrencies are decentralized. This simply means that no central governing bodies such as Central banks controls them.

You can only pay or receive cryptocurrencies directly to another user through the use of private and public keys.

There is no central bank intervention. So this makes it a fast means of payment worldwide.

How do Cryptocurrencies trading work

The value of cryptocurrency is determined on exchanges just like the value of other currencies.

The exchanges have a catalog of all currencies and their prevailing market value.

Cryptocurrencies  run on a distributed public ledger, the blockchain. The blockchain contains records of all transactions of all the currency holders.

 In other words, every user within a network has a list of all transactions up to date to ensure that they are valid and that double spending does not occur.

For example, if I send 10 coins to my friend John. 

In his transaction file it will reflect, ” 10 coins from Me to John“ and signed with my private key.  

Later, a transaction is broadcasted in the network, sent to every other peer.

Users can also buy the currencies from brokers, then store and spend them using cryptographic wallets.

You can also own cryptocurrencies through mining.

Cryptocurrency Mining involves using computer power to solve complicated maths problems that generate coins. 

As more people accept and embrace its existence, their value too increases. 

What are the most common Cryptocurrencies

When you start a conversation with certain individuals about cryptocurrencies no one will seem interested at all.

However, how about when you decide to talk about Bitcoin everyone wants to listen.

It’s Bitcoin that people fell in love with and are still taken up

.To some extent some individuals invest their money in bitcoin but they actually don’t know how bitcoin came about or exactly what it is.

All they need is to invest in something that brings a higher yield. So what is this Bitcoin?

In the next lesson we shall mainly focus on what Bitcoin is and how to invest in Bitcoin.

The other cryptocurrencies include;

• Ethereum
• Ripple
• Litecoin
• Monero
• Bitcoin Cash

Conclusion on cryptocurrencies

With the fast growth rate of technology around the globe, cryptocurrencies best suit as potential currencies.

Even though, they are still not yet accepted today as a medium of exchange.

It is still possible, they could become more widely used in the future as a medium of exchange. 

The revolution is already happening.

Institutional investors, Banks and governments start to accept cryptocurrencies step by step. Soon the whole world will accept and embrace the change to the digital currency market.

Last but not least, the crypto market is very fast and the most challenging. You can make a lot of money from it or you can lose it all. Also you are likely to meet a lot of scams.

In this case, you should be aware of the volatility of the market and the risks involved before you invest in cryptocurrencies.

Choose to deal with people or legit brokers.

Make research first and get enough information about the people you deal with.

For speculating traders, use risk management to protect your money from large volatility.