What Is Digital Currency?
Cryptocurrency is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency. Cryptocurrencies use decentralized control as opposed to centralized electronic money and central banking systems.
The decentralized control of each cryptocurrency works through distributed ledger technology, typically a blockchain, that serves as a public financial transaction database. Bitcoin was invented by an unknown person or group named Satoshi Nakamoto in 2009 and was released as open-source software in early 2010. Bitcoins are created as a reward for payment processing work in which users offer their computing power to verify and record payments into the public ledger. Called mining, individuals or companies engage in this activity in for the transaction fees and newly created bitcoins issued into existence by the Bitcoin network. Besides mining, bitcoins can be obtained in exchange for fiat money, products, and services. Few organizations have also offered bitcoin-for-banking services.
Since 2015, acceptance of blockchain technology has grown among governments and businesses. The use of cryptocurrencies has been a subject of scrutiny amidst concerns that they can be used for illegal activities. Cryptocurrencies are primarily designed to be anonymous digital currencies. Additionally, they can be decentralized — as opposed to other forms that exist in centralized banking systems — because their underlying framework is built using code that makes it difficult to change once it’s deployed on a peer-to-peer blockchain network. However exists some cryptocurrencies which carry characteristics from centralized and decentralized systems which usually leads to confusion among people who are new in the cryptocurrency market.
The first decentralized cryptocurrency, bitcoin, was created in 2009 and since then has seen its fair share of ups and downs. The currency has often been associated with illegal dealings such as drug trafficking and money laundering via the dark web.
However, it is worth noting that these days bitcoin is gaining traction as a legal method for transacting business globally. It’s also used by many well-known companies such as Dell Computer, Expedia, TigerDirect and PayPal — to name a few.
Bitcoin is now accepted as payment at nearly 500 major retailers including Microsoft, Overstock and Subway; simply scan your smartphone or tell the cashier you’d like to pay with bitcoin.
Famous Crypto Currency
Bitcoin is a cryptocurrency, a digital asset designed to work as a medium of exchange that uses cryptography to control its creation and management, rather than relying on central authorities.
Litecoin (LTC or Ł) is a peer-to-peer cryptocurrency and open source software project released under the MIT/X11 license. Inspired by and technically nearly identical to Bitcoin (BTC), Litecoin creation and transfer is based on an open source protocol, and can be acquired at no cost.
Ethereum is a public blockchain -based distributed computing platform featuring smart contract functionality, which facilitates online contractual agreements. It provides a decentralized Turing – complete virtual machine in which any program can be executed. It was not premined.
Monero (XMR) is a privacy -centric and open source cryptocurrency designed to allow users to send and receive funds in an anonymous way. This means that every transaction, as well as the balance of each wallet address, are public, while the identity of the user behind an address remains unknown.
Ripple (XRP) is a real – time gross settlement system (RTGS), currency exchange and remittance network created by the Ripple company. Based on a shared, public database (ledger), it provides for financial transactions between any two currencies, including cryptocurrencies such as Bitcoin. It cannot be premined.
Zerocoin (ZCASH) is a decentralized open-sourced cryptocurrency that offers privacy and selective transparency of transactions. Zerocoin uses a cryptographic method known as Zero-Knowledge Succinct Non-Interactive Argument of Knowledge (zk-SNARK), which allows one party to prove knowledge of some facts to another party , but without revealing what was proven or why.
Dash (DASH) formerly known as Darkcoin and XCoin, is an open source peer -to-peer cryptocurrency. It focuses on privacy and anonymity for its users through the use of different mechanisms such as Darksend, InstantX ² and PrivateSend. It is not pre-mined, nor has a blockchain with a genesis block.
Stratis is a powerful and flexible Blockchain Development Platform designed for the needs of real world enterprise and financial services. It offers all the features you need to develop Bitcoin and other side chain applications. It was not pre-mined.
Tether (USDT) is an altcoin that is issued on the Bitcoin blockchain via the Omni Layer protocol, but operates like a cryptocurrency separate from Bitcoin. It can be transferred between parties, placed into cold storage, etc., like any other cryptocurrency. It’s claimed assets are backed by actual fiat currency assets in its reserve account as per published audit statements (which may include exotic non-fiat currencies such as gold bars).
Waves is a decentralized blockchain platform focused on ease of use, which allows users to create their own custom tokens , to make secure transactions, smart contracts and decentralized applications . It was not pre-mined.
How To Purchase Cryptocurrncy
That’s the question on everyone’s mind, isn’t it? How can you purchase cryptocurrency? Many people ask this without even considering other forms of buying cryptocurrency. There are many ways to get your hands on some crypto, but remember that cryptocurrencies are not all created equal. They’re not just numbers to play with. They have real value because they give you access into an economy that is based around decentralized control and proof-of-work consensus algorithms. Some coins will gain value over others, due to their actual utility (not speculative) in our everyday lives. Remember: using bitcoin does not make you a part of its economy; only buying bitcoins can make you a part of its economy nothing else!
Buying Crypto with Fiat Currency
If you are looking to directly buy cryptocurrencies, there are a few options for doing so. The most conventional way is to use an online exchange. Many of these exchanges will accept payments via credit or debit cards, as well as bank accounts. For the purposes of this article, let’s say that I live in the United States and want to purchase some Monero (XMR). I have my bank account linked under 2-factor authentication to Kraken. To start buying XMR on Kraken, I would first need to deposit dollars into my account using a wire transfer. Once the money has settled within my trading wallet, I can start trading for XMR by purchasing them at the current market rate! This method may seem a bit slow, but it does offer some stability. Because cryptocurrencies are still in their infancy, if you don’t pay with a credit or debit card at the exchange… many exchanges will only accept wire transfers as payment.
Buying Crypto on an Exchange with Fiat Currency
On top of this method, we can now purchase cryptocurrency directly from another person without having to go through an online exchange! Popular sites such as LocalBitcoins and Cex sell bitcoin directly from other people who want to cash out into fiat currency (USD). The most direct way of doing so is by purchasing bitcoins with cash. This has its risks, however: cash is easily stolen and you must be able to trust the person who is selling you the coins. That being said, LocalBitcoins and Cex are great for making quick trades with other people as you can see the amount of Bitcoins, as well as USD or EUR, that they have available on their site.
Buying Crypto Using Bitcoin
This method is by far one of my favorite ways to get cryptocurrency. It’s decentralized (meaning there’s no “middle man” taking a cut… like an exchange), it’s private (you don’t give up any personal info… unless you want to!), and has the potential to be anonymous (if you take some additional steps). The drawback is that it takes longer than purchasing something directly off an exchange (1-4 days in my experience). There are several ways to do this, but I’ll only cover a few.
- The first way is to use LocalBitcoins. This site has been around for a while and the service it provides is fairly good — similar to Cex and any other large crypto exchange. On this site, you can search for traders who want to sell bitcoins (or whatever coin you’re looking for) directly from their wallet! You can link up your bank account or make a cash deposit at one of the many bank locations listed on the website. There’s not much room for anonymity here: all trades require some sort of identification (for safety reasons), and everything is done over the internet (using escrow). If you don’t like that idea or would rather not include your personal info into a blockchain, I’d suggest to skip this method.
- The second way is through LocalBitcoins’ sister site , Changelly . This service takes the hassle out of buying coins directly from other people by automatically matching you up with a trader on their website who can sell you coins directly using your credit card. There are some limitations with this platform: only certain countries are supported and it is one of the most expensive ways to trade cryptocurrencies (because they charge high fees for their services). One benefit over LocalBitcoins is that anonymity here is possible by simply not entering any personal information or phone number! However, transactions will take at least 24 hours due to the nature of chargeback protection. So just be prepared for that if you go this route. The third way is to buy directly from Coinbase. This is only possible if you live in the USA (where Coinbase has its headquarters) or somewhere where Coinbase operates. The exchange supports many of the most popular coins, and it’s easy to use — especially for beginners. The biggest drawback with this method is that you are charged a fee when buying your currency… so your trade-to-trade profit percentage will be less than what you would have got on an exchange. However, they are very fair about their pricing structure , which makes it easier to swallow fees in some situations.
- Another option is to use Shapeshift . This service allows for instant conversion of cryptocurrencies by offering 2 step signup verification through an email address and username! That being said, they do not offer any wallet service so it is unwise to store your coins on their site. More information about the dangers of storing digital money online can be found here .
- One last option is to use Coinmama — this exchange allows for buying Bitcoins with credit cards, debit cards, and bank transfers. It operates in most countries but may charge higher fees than Coinbase or Changelly if you use your credit card. You don’t need an account with Coinmama — all you need is cash (USD), a credit/debit card, and access to the internet! This will allow you to make trades very quickly without having to wait days for transactions like LocalBitcoins.