Last Updated on September 27, 2021 by Justin Su
Do you know what is cryptocurrency? Want to know what is a cryptocurrency and who controls cryptocurrencies like Bitcoin?
In this article, I am going to cover one of the hottest topics of the decade and it is cryptocurrency.
I have shared many articles on how to make money online but this time we are going to learn about cryptocurrency in simple language.
If you are a newbie then I am sure you will love this article, if you do then do not forget to share the article on social media or with your friends.
What Is Cryptocurrency?
Cryptocurrency is online digital money or currency similar to USD or INR. Cryptocurrencies are also known as Digital Currency and Virtual Currency. Crypto coins are used to pay for the exchange of goods or services.
The word CryptoCurrency is a combination of two words Cryptography and Currency. Cryptocurrencies are using a technology called Blockchain that is managed by peer2peer networks.
Don’t know what is Cryptography? Here is the meaning is given by TechTarget, “Cryptography is a method of protecting information and communications through the use of codes so that only those for whom the information is intended can read and process it. The prefix “crypt-” means “hidden” or “vault” — and the suffix “-graphy” stands for “writing.””
Cryptocurrencies are untouchable and can be used online only. That makes cryptocurrencies safe.
Which Are Cryptocurrencies?
The first and known cryptocurrency is Bitcoin. As a newbie, you might hear the word Bitcoin more than any other cryptocurrencies like Ethereum, Litecoin, or Dogecoin.
Each cryptocurrency has its own use cases and features. Like Ethereum can be used to create smart contracts, run applications, and create tokens.
Bitcoin was launched in 2009 by an unknown person or group of people by name of Satoshi Nakamoto. The number of bitcoins that can be generated in total can’t exceed more than 21 million.
Bitcoin was founded by aiming to provide financial freedom to users. The major feature of Bitcoin is decentralized. It means no one has control over it.
Cryptocurrencies can be created by anyone and can add any feature he wants. If you create any cryptocurrency then it will be called Altcoin and cryptocurrencies that are created on other blockchains like Ethereum then it will be called Token.
Will publish an article explaining the difference between Altcoin and Tokens.
Who Controls Cryptocurrencies?
It is said that cryptocurrencies are decentralized and can’t be controlled by anyone. It means if cryptocurrencies are once generated then they can’t be controlled by anyone.
But in my opinion, Cryptocurrency rates can be manipulated by whales (the person or group of people who hold a huge amount of cryptocurrencies). I am not talking about the effect of tweets or news that comes from influencers or governments.
If you have seen the charts, there are green and red bars. I recently saw a moment of trades where the bitcoin rate went from $51K USD to $47K USD within a second. Think by yourself how the coin rate can go down from $51K USD to $47K USD?
When it comes to tokens then they can be easily manipulated by the owner by minting more tokens, stopping transactions, or by adding any other features to the token. Again, it is up to market users who have a responsibility to check the code of the token before using it.
Cryptocurrencies Are Safe To Invest For Beginners?
Either you are investing in stocks or cryptocurrencies, you have to remember that never invest more than what you can afford to lose.
Cryptocurrencies can be an option to invest but it is not a reliable way for investment. You don’t want to depend on a single Tweet right?
The rates can go anywhere from anywhere. If you have invested in any Bitcoin when it was $60K USD then you are in 25% loss. It means if your investment amount is 1000 USD then now it is worth 750 USD only.
But if you have invested in Bitcoin in 2020 then you are in more than 50% profit. It means if you have invested $1000 in 2020 then it is now worth $2000.
Cryptocurrencies investment takes time to generate profit. If you want to invest for the long run then Bitcoin or cryptocurrencies can be a good option but for the short term, it is not a good choice.
There is no good time to invest or no bad time to invest. It is all about invest & wait.
Cryptocurrencies Are Legal?
The legality of cryptocurrency depends on each country. In the United States, cryptocurrencies are Legal and in China, it is banned.
In India, it is not either legal or illegal and in El Salvador, it is legal tender. Legality goes country by country.
What Is Cryptocurrency Backed By?
Cryptocurrency is not backed by any other assets even though its value increases & decreases.
How I Can Get Free Crypto coins?
How I Can Have Cryptocurrency?
Do you want to buy cryptocurrency? Then you have to choose which coin you want to buy. Do research before buying any coin so you don’t fall into any scam.
Yes, there are many scam coins or not well-performing coins too. Which may look like a great currency but they can’t survive for long.
Anyone can buy cryptocurrency using exchanges. You can buy coins on exchanges like Binance through your Credit or Debit cards.