What is cryptocurrency? How does it work?

What is crypto?
Cryptocurrency is a digital payment system that doesn’t rely on banks to verify transactions. It’s a peer-to-peer system that can enable anyone anywhere to send and receive payments. Instead of being physical money carried around and exchanged in the real world, cryptocurrency payments exist purely as digital entries to an online database describing specific transactions. When you transfer cryptocurrency funds, the transactions are recorded in a public ledger. Cryptocurrency is stored in digital wallets.

Cryptocurrency received its name because it uses encryption to verify transactions. This means advanced coding is involved in storing and transmitting cryptocurrency data between wallets and to public ledgers. The aim of encryption is to provide security and safety.
The first cryptocurrency was Bitcoin, which was founded in 2009 and remains the best known today. Much of the interest in cryptocurrencies is to trade for profit, with speculators at times driving prices skyward.

How does cryptocurrency work?

Cryptocurrencies run on a distributed public ledger called blockchain, a record of all transactions updated and held by currency holders.
Units of cryptocurrency are created through a process called mining, which involves using computer power to solve complicated mathematical problems that generate coins. Users can also buy the currencies from brokers, then store and spend them using cryptographic wallets.
If you own cryptocurrency, you don’t own anything tangible. What you own is a key that allows you to move a record or a unit of measure from one person to another without a trusted third party.
Although Bitcoin has been around since 2009, cryptocurrencies and applications of blockchain technology are still emerging in financial terms, and more uses are expected in the future. Transactions including bonds, stocks, and other financial assets could eventually be traded using the technology.
To date, there are 21,844 total cryptocurrencies but only around 9,314 cryptocurrencies are active. Some of the best known are:

Bitcoin

Founded in 2009, Bitcoin was the first cryptocurrency and is still the most commonly traded. The currency was developed by Satoshi Nakamoto – widely believed to be a pseudonym for an individual or group of people whose precise identity remains unknown.

Ethereum

Developed in 2015, Ethereum is a blockchain platform with its own cryptocurrency, called Ether or Ethereum. It is the most popular cryptocurrency after Bitcoin.

How to buy cryptocurrency

You may be wondering how to buy cryptocurrency safely. There are typically three steps involved. These are:
The first step is deciding which platform to use.

1. Choosing a platform

Traditional brokers: These are online brokers who offer ways to buy and sell cryptocurrency, as well as other financial assets like stocks, bonds, and ETFs. These platforms tend to offer lower trading costs but fewer crypto features.
Cryptocurrency exchanges: There are many cryptocurrency exchanges to choose from, each offering different cryptocurrencies, wallet storage, interest-bearing account options, and more. Many exchanges charge asset-based fees.
When comparing different platforms, consider which cryptocurrencies are on offer, what fees they charge, their security features, storage and withdrawal options, and any educational resources.

2. Funding your account

Once you have chosen your platform, the next step is to fund your account so you can begin trading. Most crypto exchanges allow users to purchase crypto using fiat currencies such as the US Dollar, the British Pound, or the Euro using their debit or credit cards – although this varies by platform.
Crypto purchases with credit cards are considered risky, and some exchanges don’t support them. Some credit card companies don’t allow crypto transactions either. This is because cryptocurrencies are highly volatile, and it is not advisable to risk going into debt — or potentially paying high credit card transaction fees — for certain assets.
Some platforms will also accept ACH transfers and wire transfers. The accepted payment methods and time taken for deposits or withdrawals differ per platform. Equally, the time taken for deposits to clear varies by payment method.
An important factor to consider is fees. These include potential deposit and withdrawal transaction fees plus trading fees. Fees will vary by payment method and platform, which is something to research at the outset.

3. Placing an order

You can place an order via your broker’s or exchange’s web or mobile platform. If you are planning to buy cryptocurrencies, you can do so by selecting «buy,» choosing the order type, entering the amount of cryptocurrencies you want to purchase, and confirming the order. The same process applies to «sell» orders.
There are also other ways to invest in crypto. These include payment services like PayPal, Cash App, and Venmo, which allow users to buy, sell, or hold cryptocurrencies. In addition, there are the following investment vehicles:
Bitcoin trusts: You can buy shares of Bitcoin trusts with a regular brokerage account. These vehicles give retail investors exposure to crypto through the stock market.
Bitcoin mutual funds: There are Bitcoin ETFs and Bitcoin mutual funds to choose from.
Blockchain stocks or ETFs: You can also indirectly invest in crypto through blockchain companies that specialize in the technology behind crypto and crypto transactions. Alternatively, you can buy stocks or ETFs of companies that use blockchain technology.
The best option for you will depend on your investment goals and risk appetite.

How to store cryptocurrency

Once you have purchased cryptocurrency, you need to store it safely to protect it from hacks or theft. Usually, cryptocurrency is stored in crypto wallets, which are physical devices or online software used to store the private keys to your cryptocurrencies securely. Some exchanges provide wallet services, making it easy for you to store directly through the platform. However, not all exchanges or brokers automatically provide wallet services for you.
There are different wallet providers to choose from.
Hot wallet storage: «hot wallets» refer to crypto storage that uses online software to protect the private keys to your assets.
Cold wallet storage: Unlike hot wallets, cold wallets rely on offline electronic devices to securely store your private keys.
Typically, cold wallets tend to charge fees, while hot wallets don’t.

What can you buy with cryptocurrency?

When it was first launched, Bitcoin was intended to be a medium for daily transactions, making it possible to buy everything from a cup of coffee to a computer or even big-ticket items like real estate. That hasn’t quite materialized and, while the number of institutions accepting cryptocurrencies is growing, large transactions involving it are rare. Even so, it is possible to buy a wide variety of products from e-commerce websites using crypto. Here are some examples:

Technology and e-commerce sites

Several companies that sell tech products accept crypto on their websites, such as newegg.com, AT&T, and Microsoft. Overstock, an e-commerce platform, was among the first sites to accept Bitcoin. Shopify, Rakuten, and Home Depot also accept it.

Luxury goods

Some luxury retailers accept crypto as a form of payment. For example, online luxury retailer Bitdials offers Rolex, Patek Philippe, and other high-end watches in return for Bitcoin.

Cars

Some car dealers from mass-market brands to high-end luxury dealers have already accepted cryptocurrency as payment. The biggest electric car firm Tesla has also accepted dogecoin as a payment method to buy . 

Insurance

In April 2021, Swiss insurer AXA announced that it had begun accepting Bitcoin as a mode of payment for all its lines of insurance except life insurance . Premier Shield Insurance, which sells home and auto insurance policies in the US, also accepts Bitcoin for premium payments.
If you want to spend cryptocurrency at a retailer that doesn’t accept it directly, you can use a cryptocurrency debit card, such as BitPay in the US.
Unfortunately, cryptocurrency crime is on the rise.

Cryptocurrency fraud and cryptocurrency scams

Fake websites: Bogus sites which feature fake testimonials and crypto jargon promising massive, guaranteed returns, provided you keep investing.
Virtual Ponzi schemes: Cryptocurrency criminals promote non-existent opportunities to invest in digital currencies and create the illusion of huge returns by paying off old investors with new investors’ money. One scam operation, BitClub Network, raised more than $700 million before its perpetrators were indicted in December 2019.
«Celebrity» endorsements: Scammers pose online as billionaires or well-known names who promise to multiply your investment in a virtual currency but instead steal what you send. They may also use messaging apps or chat rooms to start rumours that a famous businessperson is backing a specific cryptocurrency. Once they have encouraged investors to buy and driven up the price, the scammers sell their stake, and the currency reduces in value.
Romance scams: The FBI warns of a trend in online dating scams, where tricksters persuade people they meet on dating apps or social media to invest or trade in virtual currencies. The FBI’s Internet Crime Complaint Centre fielded more than 1,800 reports of crypto-focused romance scams in the first seven months of 2021, with losses reaching $133 million.
Otherwise, fraudsters may pose as legitimate virtual currency traders or set up bogus exchanges to trick people into giving them money. Another crypto scam involves fraudulent sales pitches for individual retirement accounts in cryptocurrencies. Then there is straightforward cryptocurrency hacking, where criminals break into the digital wallets where people store their virtual currency to steal it.

Is cryptocurrency safe?

Cryptocurrencies are usually built using blockchain technology. Blockchain describes the way transactions are recorded into «blocks» and time stamped. It’s a fairly complex, technical process, but the result is a digital ledger of cryptocurrency transactions that’s hard for hackers to tamper with.
In addition, transactions require a two-factor authentication process. For instance, you might be asked to enter a username and password to start a transaction. Then, you might have to enter an authentication code sent via text to your personal cell phone.
While securities are in place, that does not mean cryptocurrencies are un-hackable. Several high-dollar hacks have cost cryptocurrency start-ups heavily. Hackers hit Coincheck to the tune of $534 million and BitGrail for $195 million, making them two of the biggest cryptocurrency hacks of 2018.
Unlike government-backed money, the value of virtual currencies is driven entirely by supply and demand. This can create wild swings that produce significant gains for investors or big losses. And cryptocurrency investments are subject to far less regulatory protection than traditional financial products like stocks, bonds, and mutual funds.

Tips to invest in cryptocurrency safely

According to Consumer Reports, all investments carry risk, but some experts consider cryptocurrency to be one of the riskier investment choices out there. If you are planning to invest in cryptocurrencies, these tips can help you make educated choices.

Research exchanges

Before you invest, learn about cryptocurrency exchanges. It’s estimated that there are over 500 exchanges to choose from. Do your research, read reviews, and talk with more experienced investors before moving forward.

Know how to store your digital currency

If you buy cryptocurrency, you have to store it. You can keep it on an exchange or in a digital wallet. While there are different kinds of wallets, each has its benefits, technical requirements, and security. As with exchanges, you should investigate your storage choices before investing.

Diversify your investments

Diversification is key to any good investment strategy, and this holds true when you are investing in cryptocurrency. Don’t put all your money in Bitcoin, for example, just because that’s the name you know. There are thousands of options, and it’s better to spread your investment across several currencies.

Prepare for volatility

The cryptocurrency market is highly volatile, so be prepared for ups and downs. You will see dramatic swings in prices. If your investment portfolio or mental wellbeing can’t handle that, cryptocurrency might not be a wise choice for you.
Cryptocurrency is all the rage right now, but remember, it is still in its relative infancy and is considered highly speculative. Investing in something new comes with challenges, so be prepared. If you plan to participate, do your research, and invest conservatively to start.

—-
Source: Kaspersky, Exploding Topics

Two research teams reverse the signs of aging in mice, raising the hope for similar results in humans.

Elon Musk’s latest drama: a lawsuit over his Tesla buyout tweets

Tômtex- a company owned by a Vietnamese turns seafood shells and coffee grounds into garment leather

This innovative AI can imitate your voice of any tones and emotions using just three seconds of your audio.

Vietnam’s Tech Awards 2022: Shopee Express won The Best Delivery App award while Lazada was recognized as The Best E-commerce Platform in 2022

Uniqlo owner increases pay in Japan up to 40%

Goldman Sachs predicts India will overtake the US to become the second largest economy in 2075, while Indonesia will jump up to the forth spot.

9 amazing apps using ChatGPT that make your life easier

Elon Musk broke the Guinness World Records for losing the most money in history

Son Doong Cave in Vietnam was selected by The Travel as one of the Top 10 Most Incredible Caves in the World

techbiz.network google and microsoft mass lay-off

Google followed Microsoft’s announcement of a 10000 employee layoff with a 12000 employee layoff

On Friday, the CEO of Alphabet- Google’s parent company, Sundar Pichai, informed staff that the company would cut 12,000 jobs …
techbiz.network pique and casio

Casio’s stock price plummeted after announcing the brand’s partnership with Gérard Pique

Shakira is a well-known face in the music industry and may be one of the world’s most popular singers. This …
techbiz.network google and microsoft mass lay-off

Google followed Microsoft’s announcement of a 10000 employee layoff with a 12000 employee layoff

On Friday, the CEO of Alphabet- Google’s parent company, Sundar Pichai, informed staff that the company would cut 12,000 jobs …
techbiz.network David Sinclaire reverses the sign of aging

Two research teams reverse the signs of aging in mice, raising the hope for similar results in humans.

A decade after Kyoto University biologist Shinya Yamanaka was awarded a shared Nobel Prize for discovering a cocktail of proteins …
techbiz.network christmas sweets

Most popular Christmas sweets in the world

Christmas is a special occasion when family members gather around the table and enjoy good food together. During Christmas a …
techbiz.network thanksgiving traditions

American Thanksgiving traditions and festivities

Thanksgiving is a national holiday in several countries such as USA, Canada, Grenada, Liberia, Saint Lucia. However, people in many …
techbiz.netwok son doong cave

Son Doong Cave in Vietnam was selected by The Travel as one of the Top 10 Most Incredible Caves in the World

Son Doong Cave in Vietnam, known as one of the largest caves in the world and for its unique beauty, …
techbiz.network Sapa

Things you should know when visiting Sapa, Vietnam

Sapa (or Sa Pa) is a popular tourist destination among both Vietnamese and international tourists. But even if you have …
techbiz.network tech awards 2022

Vietnam’s Tech Awards 2022: Shopee Express won The Best Delivery App award while Lazada was recognized as The Best E-commerce Platform in 2022

Shopee Express won the best delivery application award at the recent Vnexpress newspaper’s Tech Award 2022, beating out other nominees like …
techbiz.network uniqlo raise pay in Japan

Uniqlo owner increases pay in Japan up to 40%

Uniqlo owner, Fast Retailing Co, announced on Wednesday that it would increase the yearly pay for full-time workers in Japan …
Talks with Leaders, Ep8: 1st AI Doctor Assistant in Vietnam provides 90+% correct diagnosis within 5s

Talks with Leaders, Ep8: 1st AI Doctor Assistant in Vietnam provides 90+% correct diagnosis within 5s

In this eighth episode, we’ll learn about VinBrain, a VinGroup subsidiary dedicated to developing AI and IoT technologies for …
techbiz.network blockchain meets metaverse

Talks with Leaders, Special episode: Blockchain meets Metaverse, featuring business leaders, investors, tech experts and global influencers

On November 14, 2021, the live webinar Blockchain meets Metaverse was successfully organized by TechBiz with the participation of …
techbiz.network Vall-E

This innovative AI can imitate your voice of any tones and emotions using just three seconds of your audio.

According to reports, a new language model from Microsoft Vall-E, can mimic any voice using only a three-second sample. The …
techbiz.network google and microsoft mass lay-off

Google followed Microsoft’s announcement of a 10000 employee layoff with a 12000 employee layoff

On Friday, the CEO of Alphabet- Google’s parent company, Sundar Pichai, informed staff that the company would cut 12,000 jobs …

techbiz.network polygon x Nike

Nike has unveiled “.Swoosh”, a new web3 platform to sell NFT-based products and virtual clothing

In a press release published on November 14, Nike introduced “.Swoosh”, a new web3 platform powered by the polygon network …

techbiz.network Polygon 2022

Polygon claims 2022 a “Breakout Year” and predicts major trends for 2023

Polygon has published a report summarizing its achievements in 2022 and presenting expectations as well as plans for 2023. In …

techbiz.network genesis and ftx crisis

The crypto lender Genesis Global Capital is in danger of going bankrupt. The crypto market is waiting in fear for another dump.

A report from Bloomberg on November 22 states that Genesis has $2.8 billion in unpaid debts on its balance sheet, …

techbiz.netwok son doong cave

Son Doong Cave in Vietnam was selected by The Travel as one of the Top 10 Most Incredible Caves in the World

Son Doong Cave in Vietnam, known as one of the largest caves in the world and for its unique beauty, …
techbiz.network Toomtext turns food waste into leather

Tômtex- a company owned by a Vietnamese turns seafood shells and coffee grounds into garment leather

Tômtex, a flexible bio-material created by Vietnamese designer Uyen Tran from seafood waste, is a substitute to leather that …
techbiz.network estee lauder

Estée Lauder- the story and philosophy behind the success of a leading beauty brand

The Estée Lauder Companies IncThe Estée Lauder Companies Inc. is one of the world’s leading manufacturers, marketers, and sellers of …

techbiz.network OEM advertising

Is OEM advertising the next disruptive solution that helps businesses win customers?

Many factors have shown that OEM advertising will be the next big thing for user acquisition. If you are a …

techbiz.network estee lauder

Estée Lauder- the story and philosophy behind the success of a leading beauty brand

The Estée Lauder Companies IncThe Estée Lauder Companies Inc. is one of the world’s leading manufacturers, marketers, and sellers of …

techbiz.network christmas sweets

Most popular Christmas sweets in the world

Christmas is a special occasion when family members gather around the table and enjoy good food together. During Christmas a …
techbiz.network thanksgiving traditions

American Thanksgiving traditions and festivities

Thanksgiving is a national holiday in several countries such as USA, Canada, Grenada, Liberia, Saint Lucia. However, people in many …

techbiz.network tech awards 2022

Vietnam’s Tech Awards 2022: Shopee Express won The Best Delivery App award while Lazada was recognized as The Best E-commerce Platform in 2022

Shopee Express won the best delivery application award at the recent Vnexpress newspaper’s Tech Award 2022, beating out other nominees like …
techbiz.network uniqlo raise pay in Japan

Uniqlo owner increases pay in Japan up to 40%

Uniqlo owner, Fast Retailing Co, announced on Wednesday that it would increase the yearly pay for full-time workers in Japan …

Leave a Reply