Introduction to Cryptocurrency

Introduction to Cryptocurrency

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Cryptocurrency, sometimes referred to as crypto or crypto-currency, is any form of currency that exists virtually or digitally and secures transactions with the use of cryptography. Cryptocurrencies do not have a central regulating or issuing authority but instead make use of a decentralized system to issue new units and record transactions. This form of payment was introduced because of the need to have a system with limited control from the government. 

This digital payment system does not verify transactions through banks. It is a peer-to-peer system that can allow the sending and receiving of payments by anyone in any location. Cryptocurrency payments purely exist as digital data entered into a database that describes specific transactions instead of moving and exchanging physical money in the real world. When money is transferred in cryptocurrency, such transaction is recorded in a public ledger referred to as the blockchain. Cryptocurrencies are stored in digital wallets which can be accessed via the internet.

Crypto is the name given to the form of payment system because it uses cryptography to verify transactions. It implies that advanced cryptography is involved in the storage and transfer of cryptocurrency data between public ledgers and wallets. The goal of encryption is to provide safety and protection.

Bitcoin was the first cryptocurrency to be introduced. It was founded in 2009 and remains the most popular to this day. Most people who use cryptocurrencies trade them for profit, and sometimes speculators push prices to record highs.

 Understanding Cryptocurrencies

Cryptos are virtual or digital currencies backed by cryptographic systems. They permit for a safe online payment without using external intermediaries. The term "crypto" refers to the different encryption techniques and encryption algorithms that protect these entries, such as public and private key pairs, elliptic curve cryptography, and hash functions.

Blockchain technology is fundamental to the functionality and appeal of Bitcoin and other cryptocurrencies. A blockchain, as the name suggests, is a group of blocks of information connected to an online ledger. The blocks contain a set of transactions which have been verified independently by each validator in the network.



The blockchain validates each cryptocurrency transaction. A blockchain is an ever-growing list of records, referred to as blocks that are linked and protected by cryptography. Each block typically has a hash pointer that links to a previous block, a transaction data, and a timestamp. Blockchain technology by design is inherently resistant to data modification. It is an open, distributed ledger which can save transactions in a verifiable and efficient manner. As a distributed ledger, blockchains are controlled by a peer-to-peer network that follows a protocol to validate new blocks. As soon as the data in a given block is recorded, it cannot be retroactively modified without changing all subsequent blocks, requiring the collusion of the majority of the network.

By design, Blockchains are secure and are quintessential of a distributed computing system that has high Byzantine fault tolerance. Therefore, decentralized consensus was achieved using blockchain technology.

Each new block created has to be verified before it can be confirmed. This makes it nearly impossible to forge transaction records. The content of the online ledger must be approved by a network of individual computers or nodes that maintain the ledger.

According to experts, blockchain technology could serve many supply chains, industries, and processes such as crowdfunding and online voting. Financial institutions are using blockchain technology to minimize transaction fees by simplifying the processing of payments.

What can be bought with cryptocurrencies?

When Bitcoin was first launched, it was intended to be a means of everyday transactions, making it possible to purchase everything from computers to household items or even expensive items such as aircraft. This has not been fully achieved, and while the number of businesses accepting cryptocurrencies is increasing, the large transactions involving crypto are not many. However, it is possible to purchase a wide range of products on e-commerce sites using cryptocurrencies. Cryptocurrency is also used a means of conversion from one form of payment or currency to the other on per-to-peer sites.

How to mine cryptocurrencies?

Cryptocurrencies are released into the world through mining. While in theory, anyone can mine crypto, it is more and more difficult with the systems that require proof-of-work.

As the Bitcoin network continues to grow, it becomes more complex and requires more processing power. Before now, an average person could be able to mine bitcoin, but now it's very expensive.

Proof-of-work cryptos also need huge amounts of energy for mining. For instance, mining Bitcoin currently consumes electricity at an annual rate of 127 terawatt-hours. This exceeds the entire annual electricity consumption of Norway.

Though in a proof-of-work system, it is unrealistic for just anybody to earn cryptocurrency through mining, less powerful computing is needed in the proof-of-stake system. This is because validators are randomly selected based on the amount they stake. However, to participate requires that you already own cryptocurrency.

How to protect your cryptocurrencies:

Understand the system:

Before you invest in cryptocurrency, make sure you comprehend how the entire system works, where it can be used, and how to trade it. Read the websites for the currency itself (eg Lietecoin, Bitcoin, or Ethereum).

to fully acknowledge how it works, and also read independent articles about the cryptocurrencies you are interested in.

Use a reliable wallet:

To choose the right wallet for your needs, you have to do some research. If you choose to use a native app on your computer or mobile device to manage your cryptocurrency portfolio, you will need to protect that wallet in a secure manner. Don’t just choose any wallet to protect your cryptocurrency. You need to make sure that you are making use of a trustworthy wallet.

Backup your Crypto Asset:

 Think about what will happen if your mobile device or computer where you keep your wallet gets lost, stolen, or becomes inaccessible. You will have no way to recover your cryptocurrency without a backup strategy and may lose your investment.

How to make money with cryptocurrency


The first thing you should do is buy crypto except you choose to invest in cryptocurrency stocks. Once you have your first crypto investment, you can try one or all of these strategies to make money with cryptocurrency:


1.     Staking

2.     Lending

3.     Trading

4.     Gaming

5.     Mining

6.     Giveaways


1. Staking


Some cryptocurrencies allow their owners to earn more crypto through a process known as staking. Cryptocurrency involves using your crypto to assist in the verification of transactions on the blockchain. Although staking can allow you to increase the amount of cryptocurrency you have without the need to buy more, note that there are risks involved. Hence, you need to learn the much as you can before embarking on this endeavor.


If you want to keep cryptocurrency in a cryptocurrency wallet, you can stake it for a while. You will get more crypto to hold because you are helping to provide funds for blockchain activities.


Staking will help you earn crypto because you will often receive a high rate of dividends or interest. However, you often have to spend some time locking your crypto in the blockchain, and you will risk keeping your crypto.


2. Lending:


You can also choose to lend your cryptocurrency, sometimes with yearly percentage returns of 15% or greater. The downside to it is that it will make your crypto asset more difficult to sell. Again, do your due diligence before you embark on this sort of venture.


3. Trading


If your goal is quick income, you can purchase Bitcoin or Altcoin and keep it until its value increases, then sell at a profit. You can also perform day trading on a cryptocurrency trading platform.


But be careful: day trading and cryptocurrency trading are both high-risk, so don't invest more than you can afford to lose. Also, bear in mind that cryptocurrencies can have high volatility, so invest wisely.


4. Gaming


This is a fun way to earn some crypto assets for yourself. You can earn crypto via NFT games such as Zed Run, Gods Unchained, and Axie Infinity. Compete with players around the world and complete tasks to win NFTs or crypto that you can, sell, reinvest in the game, or keep.


Free demos are offered by some of these games so you can try them out to be sure you will enjoy them, but to play for profit, most of the time you need to invest in NFTs.


5. Mining


This refers to the digital system through which new crypto coins are produced. Not all coins can be produced through mining, but most of them are, for example, bitcoin. This can be quite a profitable venture. However, note that it requires a lot of equipment and is not very powerful. This means that it is expensive to begin and you may not get a return on your investment. If you want to start crypto mining, you need to know the local laws in your area. Mining is illegal in many countries and some states in the US.


6. Giveaway


You can get free crypto in different ways, from doing small tasks on websites in exchange for crypto money, which is known as faucets to searching for giveaways, which are also called airdrops.


You can't make much money even though it's easy to get free crypto via faucets or airdrops. You have to be cautious because some of these "freebies" could be scams in disguise and will give you malicious content instead.


How much do I need to start investing in crypto?


Around 5% to 30% of your capital should be invested in cryptocurrency. 5% should be considered very safe and 30% too risky. An investment of 50% or more is not recommended.


The final decision is yours to make. Although market factors should influence your decision, the amount of money you can afford to lose, and your risk tolerance is also determinant factor.


Still, bothered your final decision might be wrong?

If you're still scared of investing in Bitcoin for the first time, follow these tips to help you begin safely:


     â€¢       Invest as little as $10 on any cryptocurrency broker or cryptocurrency exchange that            comes highly recommended. This way you can begin and you will have a better                      understanding of how to invest in cryptocurrency.

     â€¢       Spread out the budget you want to use and invest it over a period of time. 

     â€¢       Choose the best platform to buy Bitcoin

     â€¢       You can always reconsider your decision at any time in the future.


While all cryptocurrency markets can be volatile and unpredictable, there could be fewer risks associated with the larger, more widespread cryptocurrencies as compared to the less traded, more speculative ones. However, high price fluctuations are a common feature with even bigger and popular cryptocurrencies. Therefore, it is good to consider the types of cryptocurrencies you have in your portfolio and how much money you want to invest.



How to open a crypto account?


A crypto account or wallet is a place where you can store your crypto safely. There are different types of crypto accounts or wallets. The type of account you need depends on the amount of risk you are willing to take and what you want to do with your crypto.


Hardware wallets


This is a physical device about the size of a flash drive that stores your private crypto keys away from the web. Due to their complexity and cost, most people don't use hardware wallets, but they have some advantages – for example, even if your computer is hacked your crypto will be protected. However, this enhanced security makes them less convenient to use compared to software wallets and can cost more than $100 to purchase.


Cryptocurrency has revolutionized finance and banking around the world. Thanks to cryptocurrency, anyone with the internet can trade, spend, and borrow money around the world, and nobody can stop them.


People like Bill Gates, co-founder of Microsoft Corporation, and Elon Musk, CEO of Tesla, support cryptocurrency as it is much better and more secure than physical money and it also holds a better future for the world's economy.


On the other hand, some people think of cryptocurrency as a bane to the world's economy; Warren Buffet, CEO of Berkshire Hathaway and CEO of Globe Mastercard says cryptocurrency is a platform of criminal activities and will destroy the world's economy.


Well, one thing is clear, this conflict is going to stay put for a little longer


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