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Cryptocurrency 101: The Beginners Guide to Cryptocurrency

What is cryptocurrency 101? If you’re reading this, you’ve probably already heard about people ‘Investing in Cryptocurrency’. But just what in the heck does that mean?! And how exactly can you start investing in cryptocurrency?

So I am here to share with you Cryptocurrency 101: The Ultimate Beginner’s Guide to Cryptocurrency.

Learn, enjoy, take action and more importantly share everything!

“Wealth is not about having a lot of money. It is about having a lot of options.” 

Cryptocurrency is deemed to be one such option. If you are a beginner, you may be anxious before investing, at times wondering is cryptocurrency safe? It is normal to be extra vigilant.

However, cryptocurrency is a highly secure option for investment. If you are looking for valuable information about investing in Cryptocurrency, you have come to the right place.

Not aware what cryptocurrencies are? Here’s a roundup to simplify the concept.

TABLE OF CONTENTS

Cryptocurrency 101: What is Cryptocurrency?

Image source: http://www.whatinvestment.co.uk/

So you want to learn more about cryptocurrency 101? First, you need to know what a cryptocurrency is.

A cryptocurrency is a currency that only exists on the internet. It is a digital currency.

It is a medium of exchange like normal currencies such as the US Dollar but designed for the purpose of exchanging digital information through a process made possible by certain principles of cryptography.

Cryptography is used to secure the transactions and to control the creation of new coins.

Catching up on a fast pace, Cryptocurrency is said to be the money of the future. To be more precise, cryptocurrency is a digital currency that uses cryptography for security. It is not owned by any government or statutory body. But, it is fully safe for trade transactions.

A History of Cryptocurrencies

The first cryptocurrency to be created was Bitcoin back in 2009.  It was created by a pseudonymous developer named Satoshi Nakamoto. It was a new way to transfer value directly to a recipient without fees. 

Bitcoin is an emerging encrypted form of digital money or cryptocurrency, that’s growing in popularity and value internationally. Bitcoin is attractive to users and investors because of its immediacy, lack of oversight and anonymity.

How do Cryptocurrencies work?

Bitcoin uses SHA-256, which is a set of cryptographic hash functions designed by the U.S National Security Agency. Bitcoin is a cryptocurrency that is based on the proof-of-work system.

In April 2011, Namecoin, the first altcoin, was created to form a decentralized DNS to make internet censorship more difficult. In October 2011, Litecoin was released and became the first successful cryptocurrency to use scrypt as its hash function rather than SHA-256. This gave the general public the ability to mine for litecoins without the purchase of specific hardware such as the ASIC machines used to mine Bitcoin.

Litecoin began receiving media attention in late 2019 – reaching a market cap of $1 billion. Ripplecoin, created in 2011, was built on the same protocol as Bitcoin but services as a payment system – think of it like a Paypal for cryptocurrencies that supports any fiat currency, cryptocurrency, commodity or even frequent flier miles.

Today there are hundreds of other cryptocurrencies, often referred to as Altcoins.

Cryptocurrency 101: What Are Different Types of Cryptocurrencies?

Now that you’re familiar with the term Cryptocurrency, know that Bitcoin is the trendsetter of cryptocurrencies. The currencies joining Bitcoin are called altcoins.

 

Altcoins are said to be a modified or improved versions of Bitcoin. And, apart from Bitcoin, here’s a list of cryptocurrencies that are upsurging the market.

The 6 Most Important Cryptocurrencies Other Than Bitcoin

  • Litecoin (LTC) – Launched in the year 2011, it is often referred to as ‘silver to Bitcoin’s gold.’
  • Ethereum (ETH) – Launched in 2019, it can be used to decentralize, codify, secure and trade anything.
  • Zcash (ZEC) – Launched in the year 2019, it claims to provide extra security or privacy to the transactions.
  • Dash – Also known as Darkcoin, it is a secretive version of Bitcoin.
  • Ripple (XRP) – Launched in 2012, it’s structure doesn’t require mining.
  • Monero (XMR) – Launched in April 2019, it is a private, secure and untraceable currency.

View the full list of all active Cryptocurrencies:

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Details
  •  Fees: 2% fees for buyers.
  • Pro: One of the fastest ways to buy bitcoins.
  • Con: 2% fees for buyers are a bit high for cash trading.
Summary
  • User Interface: Easy to Navigate
  • Fees: Average
  • Reputation: Trusted

If you wanted to create a BitQuick account you can create a BitQuick account by clicking this link.

6) LocalBitcoins

LocalBitcoins is an escrow service which also helps to match bitcoin buyers and sellers. The most common method of payment for the purchase is cash deposit. However, users may advertise trades for whichever payment method they prefer.

Buying bitcoins via an in-person meeting, secured and facilitated by LocalBitcoins, may be one of the fastest and most private ways to buy bitcoins in any country.

Details
  •  Fees: Transactions to wallets of other LocalBitcoins users are free.
  •  Pro: One of the fastest and most private ways to buy bitcoins in the United States.
  •  Con: Can be more difficult to purchase larger amounts of bitcoins.
Summary
  • User Interface: Difficult to Navigate
  • Fees: Low
  • Reputation: Trusted

If you wanted to create a LocalBitcoins account you can create a LocalBitcoins account by clicking this link.

How to Store Cryptocurrencies?

Image source: bitemycoin.com

Before anything else, you’ll need a wallet. Yes! Even digital money requires a wallet. You store your cryptocurrencies in a wallet. Also, you can purchase cryptocurrency, buy into an initial coin offering (ICO), or execute smart-contracts using the wallet.

Every wallet has a public address and a private address. The public address is the address where you receive funds from people. The private address is the “password” to access and send funds. Never share your password. Otherwise, you might lose all the money in your wallet.

How to secure your Bitcoin and Altcoin Investments

  • Online Wallet – It is the easiest way of storing money. And also, the least secure. However, it is fine for purchasing things and funding your trading accounts.
  • Paper Wallet – The least convenient but hacker proof wallet of all times. It contains all data necessary to generate any number of private keys.
  • Mobile Wallet – This wallet works when you download apps. Like Cryptonator, Mycelium, Venmo and so forth.
  • Desktop Wallet – It is similar to the mobile wallet, just used on desktops instead.

What Keeps the Cryptocurrencies Safe and Updated?

There are two terms that justify the security of cryptocurrencies: Blockchain & Escrow.

What is Blockchain?

Blockchain, regarding cryptocurrency, deals with the way in which data is structured. Also, it records all transactions to keep track of who had paid what and how much. Moreover, it makes payments faster and more secure. cryptocurrency 101

This process altogether throws light on Cryptocurrency Mining, which is an interesting concept again. Crypto miners verify the transactions recorded in the blockchain and write them into a general public ledger. Also, the crypto miners are paid a small reward for accounting & validating services by receiving little coins every couple of days.

What is escrow?

Escrow is a financial agreement between two parties, where a third party arbitrates in & controls the transaction with secure hands. Initially, the seller and buyer need to sign an agreement. The transactions are to be held only after checking whether the requirements are met or not. cryptocurrency 101

What is the future of Cryptocurrency?

Image source: aasof.com

The market of cryptocurrencies is similar to the stock market, fast and unpredictable. Nearly every day new cryptocurrencies appear, old ones die, early adopters get wealthy and investors lose money. Every cryptocurrency comes with a promise, mostly a big story to turn the world around. cryptocurrency 101

Is cryptocurrency a bubble?

As per the research carried out by Technavio analysts, in 2019, the worldwide cryptocurrency market grew remarkably by 622.7%.

Websites like Overstock.com, Expedia, Newegg, Expedia and similar accepted Bitcoin, along with the other traditional payment methods. Note that other altcoins like Litecoin or Ether are not accepted. However, the fact that Bitcoin is accepted is a step forward towards the adoption of other cryptocurrencies. cryptocurrency 101

So, now that you’re gone through the entire cryptocurrency 101 ultimate guide with the beginner’s knowledge of how investing in cryptocurrencies works, you can make your first investment easily.

Apart from investing and increasing the value of your coins, you can also use these coins to pay bills for parties, groceries, and whatnot.

Bitcoin, in words of Nassim Taleb“Bitcoin is the beginning of something great. A currency without a government, something necessary.”

Author Bio: This cryptocurrency 101 guide was written by the My Millennial Guide team in partnership with 9ightouts with the idea that EVERYONE should be learning about cryptocurrencies – it’s always important to know all of your investing options. More about 9ightouts: 9ightouts is a blog intended to present more information about cryptocurrency, a raging trend of the decade. You can follow them on Facebook, Twitter, and Instagram!

Related: The Best Bitcoin Exchanges and A Beginners Guide to Investing in Cryptocurrency

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