Let quickly explain what cryptocurrency is and how does cryptocurrency works for dummies –what you must know to stay abreast on cryptocurrencies like bitcoin, ethereum, bitcoin cash, binance, and the rest of them. Cryptocurrencies are decentralized exchange markets, which shows they are not controlled by a central bank such as a government authority.
How does cryptocurrency work for dummies – What is a cryptocurrency (crypto?)
Cryptocurrency in short form crypto is a digital currency stored in an online wallet, that can be exchanged and used for payment of goods and services. Thousands of company have issued their own coin (currencies) that is referred to as tokens. These can be traded specifically for goods and services provided by the company by using cryptocurrency to access the goods and services.
Cryptocurrency totally relies on a technology called blockchain for it to work. Blockchain is a decentralized technology that uses many computers to manage and records transactions. The excellent part of this technology is its security. The understanding digital currency you need to have a basic understanding of blockchain: which is both public ledger transactions and technology, as well as the concept of cryptography. Since cryptocurrency is a digital currency, where transactions are recorded on a public digital ledger known as a blockchain, and the process secured by cryptography. And also, cryptocurrencies are traded online, cryptocurrency exchanges such as Bitcoin it symbol (BTC)which is the most popular cryptocurrency; other cryptocurrencies like Ether(ETH), Ripple(XRP), litecoin(LTC), and alternatives to Bitcoin are called “altcoin.”
Many cryptocurrencies and their worth
There are over 10,000 thousand different cryptocurrencies that are traded worldwide, according to coinmarketcap.com, a renounced market website, say as cryptocurrencies continue to proliferate, raising money through initial coin offerings, or icos. Stated that the total value of all cryptocurrencies on May 27, 2021, was more than $1.7 trillion, that is, rises from $2.2 trillion from April. While bitcoins the major digital currency was pegged at about $648 billion –down from April of $1.2 trillion.
Cryptocurrencies by market capitalization
The 11 top best largest trading cryptocurrencies recorded by coinmarketcap, data analytics are shows below;
|Binance coin||$44.88 billion|
|USD coin||$25.38 billion|
|Binance USD||$9.44 billion|
How does cryptocurrency work for dummies?
Cryptocurrencies are decentralized exchange markets, which shows they are not controlled by a central bank such as a government authority. Rather they run across a network of several computers. More so, cryptocurrency can be bought and sold via exchanges and stored in a wallet.
This is completely different from the traditional market; cryptocurrency is operated as a shared digital record of ownership, stored on a blockchain. Users send or receive cryptocurrency units from other users; they send them to that user’s digital wallet. Once the transaction is verified and added to the blockchain through a process called mining. That is how new cryptocurrency tokens are created.
How does one trade or obtain cryptocurrency
Obtaining cryptocurrency is done by exchange of goods and services, Users can trade dollars for cryptocurrencies or trade cryptocurrencies for another cryptocurrency. This is generally done on brokers and exchanges, brokers are third parties that buy/sell cryptocurrency, these are exchanges like online stock exchanges for cryptocurrency. And another way of trading is using peer-to-peer exchanges. One has to be aware that cryptocurrency is a risky business price tends to be volatile, one must be careful while investing and trading crypto.
What is blockchain
A blockchain is a registered digital record that is shared. For cryptocurrencies, is a transaction unit of the cryptocurrency, which means how ownership has changed in a period of time. This works by recording transactions in blocks with new blocks added at the front of the chain.
As blockchain data is always stored on multiple computers across a network instead of a single location –this is usually readable by everyone within the network, which makes it both transparent and very difficult to alter, as no loophole vulnerable to hacks or human, or software error.
These are blocks linked together by cryptography –complex mathematics and computer science. Any attempt to alter data disrupts the cryptographic links between blocks and easily be identified as fraudulent by computers in the network. How does cryptocurrency work for dummies –what you must know?