What is crypto?
Crypto is a digital payment system that does not rely on banks to verify transactions. It is a peer-to-peer system that allows anyone, anywhere to send or receive payments. Crypto payments are digital data on the Internet that describe specific transactions rather than physical money that is transferred and exchanged in the real world; When you transfer a cryptocurrency, the transactions are recorded in the general ledger. Thus, the crypto currency is stored in digital wallets.
Crypto uses encryption technology to verify transactions. This means that crypto data is stored and transferred between wallets and public ledgers through cryptography. The goal of encryption is to provide security and safety.
The first cryptocurrency to appear was Bitcoin, founded in 2009, and it remains the most popular to this day. Interest in crypto comes from trading for profit; Speculators sometimes push prices up.
How does crypto work?
Many cryptocurrencies are based on blockchain technology; This technology allows a decentralized network to review and approve all transactions made. Blockchain is like a digital ledger; Everyone in the network gets a copy of the ledger. Therefore, if anyone tries to modify or change it, their copy will be rejected by others.
Blockchain technology is simply a database to store large amounts of information, and uses a decentralized 'peer-to-peer' network to verify any new transactions that are added to the blockchain, and does not allow any of that information to be edited or modified. The approach to trust that crypto takes is fundamentally different from traditional currencies.
While traditional currencies are issued and regulated by a bank or central authority, there is no central organization that manages cryptocurrencies like Bitcoin or Ethereum. There is also no trusted third party - such as a bank - to supervise the transfer of funds between two parties. Therein lies the appeal of crypto, but this may complicate matters when it comes to actually paying for things.
The most popular crypto currencies
There are thousands of crypto currencies. Among the most famous are the following:
Bitcoin
Founded in 2009, Bitcoin was the first cryptocurrency, and it remains the most widely traded currency today. The coin was developed by 'Satoshi Nakamoto' and is believed to be a pseudonym for an individual or group of people whose exact identity remains unknown.
Ethereum
Ethereum was developed in 2015, and is a blockchain platform that has its own cryptocurrency, called: ‘Ether’ or ‘Ethereum’. It is one of the most popular cryptocurrencies after Bitcoin.
Litecoin
This currency is very similar to Bitcoin, but it has developed new innovations in the field of payments and speed in completing operations to allow more transactions.
How to store cryptocurrencies?
When you purchase a cryptocurrency, you will need to store it securely to protect it from hacking or theft. Crypto is typically stored in cryptocurrency wallets, which are online hardware or software used to securely store the digital keys for your crypto. Some exchanges offer wallet services, making it easy for you to store directly through the exchange. But this service (wallet services) is not automatically provided by all exchanges or brokers.
There are many wallet providers to choose from. There are two types of wallet: hot wallet and cold wallet:
Hot Wallet Storage:
A “hot wallet” refers to encrypted storage that uses online software to protect the private keys of your assets.
Cold Wallet Storage:
Unlike a hot wallet, cold wallets (also known as hardware wallets) rely on offline electronic devices to securely store the digital keys of your crypto.
Four tips for investing in crypto safely
According to a range of peer-reviewed investment studies, all investments carry a certain level of risk, but some experts consider crypto to be one of the riskier investment options. If you are planning to invest in crypto, these tips can help you make the right decisions:
Search for stock exchange
Before you start investing, learn about the available crypto exchanges. There are about 500 exchanges for you to choose from. Do your research, check out reviews, and consult with more experienced investors before moving forward.
Learn how to store your crypto currency
If you buy crypto currency, you must store it. You can hold your cryptocurrencies, either on an exchange or in a digital wallet. Since there are different types of wallets, each has its own advantages, technical requirements, and security. As with inches; You should check which storage options are right for you before investing.
Type of your investments (Diversify)
Investment diversification is key to any good investment strategy, and this is even more important when you invest in crypto. Do not, for example, put all your money into Bitcoin - just - because that is the name by which you know it. There are thousands of options, and it is best to spread your investments across several currencies.
Prepare to lose
The crypto market is very volatile, so be prepared for ups and downs in the value of your crypto currency. You will see huge price fluctuations. If your investment portfolio or mental health cannot handle these fluctuations, investing in crypto may not be a suitable option for you.
Is crypto safe?
Cryptocurrency is usually created using blockchain technology. Blockchain, in short, is the way transactions are recorded in “blocks” and with timestamps. It's a fairly complex technical process, but the result is: the creation of a digital ledger of crypto transactions that is difficult for hackers to manipulate.
Additionally, these transactions require two-factor authentication. For example, you may be asked to enter your username and password to initiate a transaction. Next, you may have to enter an authentication code sent via text message to your personal phone.
This does not mean that cryptocurrencies are unhackable. Hacks have cost crypto startups thousands of dollars; Hackers hacked 'Coin-check' worth $534 million. They also hacked 'BitGrail' worth $195 million, making them two of the biggest crypto hacks of 2018.
finally
The value of crypto depends entirely on supply and demand, unlike traditional government-backed currencies, which makes it highly volatile and results in large gains or losses for investors. Crypto investments are also subject to much less regulatory protection than traditional financial products such as stocks, bonds, and mutual funds.
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