Cryptocurrency, also known as crypto, is a virtual or online currency that uses the art of cryptography to secure it. In comparison to traditional forms of currencies (known as fiat) which are typically issued by governments and controlled by banks. Cryptocurrencies, on the other hand, are decentralized and work on platforms that use blockchain technology.
How does Cryptocurrency Work?
It functions based on a little thing you've probably heard being thrown around - blockchain – which is a ledger imposed by a network of computers (referred to as nodes). Then, the nodes will confirm and validate the transactions going through, thus recording all transactions on shared ledgers that are available for everyone to view.
This is revolutionary, as there has never been an instance where all financial transactions and ledgers have been available for public viewing. However, it is important to note that due to cryptocurrency being decentralized in nature, it cannot be manipulated by the government or be interferred by any central authority.
What is Cryptocurrency Mining?
Mining is a popular term that is used often in the world of cryptocurrency. Mining in cryptocurrency isn't done traditionally with a pick and axe, but instead with lines of code. It involves solving complex and intricate mathematical puzzles and problems in order to confirm, validate and record all transactions on the blockchain.
Cryptocurrency miners require very powerful computer systems in order to support these operations. Those who are successful with their mining receive transaction fees as well as any newly discovered cryptocurrency coins.
Examples of Cryptocurrency
There are many types of cryptocurrency and new tokens being created daily. Here are some of the most popular cryptocurrency coins of all time:
Bitcoin (BTC)
The first and most popular cryptocurrency in the world; Bitcoin was introduced in 2009 by the anonymous Satoshi Nakamoto, along with the document that changed finance forever.
Ethereum (ETH)
Ethereum is the second most well-known name in cryptocurrency. It is a decentralized platform that enables users to create and execute smart contracts. The token for it is Ether, more commonly referred to as ETH.
Litecoin
Born in 2011 and considered to be silver to Bitcoin's gold, Litecoin is a fairly popular cryptocurrency token. It offers a faster transaction time, which is very favourable among its users, and also uses a different hashing algorithm.
What is a Stablecoin?
Like its name would suggest, a stablecoin's value is stable. This is because stablecoins are tied to fiat, therefore they have collateral backing. An example would be USDT, which is a stablecoin pegged to the US Dollar. There are a few stablecoins in cryptocurrency that users can invest in, but they do not yield great rewards.
How To Earn Cryptocurrency?
You can earn cryptocurrency through activities such as cryptocurrency mining, trading cryptocurrency, and staking cryptocurrencies. You can also participate in DeFi activities such as liquidity provision and token farming. We also encourage users to seize opportunities in airdrops competitions (like we have on Toobit) and to accept crypto payments for services.
How to Buy Cryptocurrency?
You can buy cryptocurrency on a cryptocurrency exchange, such as Toobit. Toobit offers all the latest cryptocurrency tokens, smart contracts, and more at the lowest fees. Users can purchase cryptocurrency with fiat, credit card, or even other cryptocurrencies. Note that some platforms may require you to sign up for a profile, which will include an identity verification process for security purposes.
How to Store Cryptocurrency?
There are several ways that users can store the cryptocurrency that they own.
Hot Wallet
A hot wallet is a wallet that is connected to the Internet. Some examples of hot wallets would include E-wallets, mobile wallets, and desktop wallets. Hot wallets provide the convenience of viewing your cryptocurrencies at any time, anywhere. However, it is because of this that hot wallets are susceptible to online threats.
Cold Wallet
A cold wallet is a wallet that is not connected to the Internet. Some examples of cold wallets would include paper wallets or hardware wallets. Cold wallets provide higher security than hot wallets, mainly because they are completely immune to any online hacking. However, cold wallets are not invincible and are still susceptible to robbery and other forms of natural disasters.