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The Basics of Cryptocurrency and How it Works

The Basics of Cryptocurrency and How it Works

11 Dec 2020

Reading Time: 3 minutes

Cryptocurrency can seem complicated to those who have not any experience with it before. That may make some uneasy about using it in the future. So, to help guide you through this process, we will talk about what cryptocurrency is, how it works and what it can do for you.

What is cryptocurrency?

In its simplest form, Cryptocurrency is an online and digital decentralised currency that people use the same way they would use regular money. You can use real money to buy, spend or trade it for another. You can also mine cryptocurrency, but we will discuss that later.

What is it used for?

Cryptocurrency is used to buy things online and people use it for multiple reasons such as.

  • Safety 

Cryptocurrency has built-in features that make fraud or robbery almost impossible.

  • Trust 

Many people are starting to distrust banks, so they opt into a currency that is not regulated by banks or the government.

Where does it come from?

We know where our money comes from, it is printed by the government and handled by the banks and its value is tied to our import and exports of goods. So, if a country has a high amount of Gold that they export, then their currency will be worth more than others.

Cryptocurrency is different, and most of the time, its value is not tied to any outside source. Unlike money, cryptocurrency is not printed; it is mined online.

What is mining?

Mining is the primary way that people earn cryptocurrency. Although it may seem complicated, it is actually a very straight forward process. To mine cryptocurrency, you first need a program that will connect your computer to a cryptocurrency blockchain. Once that is done, your computer will start processing data on that blockchain. After you process a certain amount of data, you will be rewarded with the cryptocurrency of your choice.

What is a Blockchain?

A blockchain is like a ledger where all data and transactions that are done for that cryptocurrency are logged and recorded. This information can be seen by everyone on the blockchain. This means that anyone can verify a payment which makes it very difficult to be scammed or cheated when using cryptocurrency.

How do you collect the cryptocurrency you mine?

You will have what is called a "wallet" which is just like a regular wallet except it is not physical and is encrypted and key protected. Once you link your wallet to the program you are running, any cryptocurrency you mine will be immediately transferred there.

How do you sell your cryptocurrency?

This is what is so great about cryptocurrency as you can sell it virtually anywhere. Still, the most common place people sell their crypto is on exchange websites. Exchange sites act as a market and show the current prices of all cryptos and how much has been traded that day. You can also buy cryptocurrency here, or you can trade your current crypto for another.

When I sell my cryptocurrency, who am I selling to?

Exchanges are like markets but with an added step, see when you sell your cryptocurrency you go through the exchange which connects you to a person looking to buy. Essentially, you're selling your cryptocurrency to an exchange who then sells it to a person who wants to buy. Exchanges will also buy their own cryptocurrency and keep it in storage where they can keep it for a later date. They will either sell it for a profit or use it to help stimulate the market at times of low supply.

How are cryptocurrency prices decided on?

Like most things, the price of cryptocurrency comes down to two important things, supply, and demand. If there is a large supply of a crypto but not enough buyers, the value of that crypto will go down along with the price, but if the supply is low and the demand is high. You will see the price increase.

Several other factors do influence the price, such as peoples trust in traditional currency and any new innovations such as new technology.

What is a "stablecoin"?

A stablecoin is a type of cryptocurrency which has is value pegged to an outside source such as Gold or the American dollar. People use them as a safe bet as they do not fluctuate in price as much as traditional cryptocurrency.

The world of cryptocurrency is always growing, so it is important to stay up to date with all things going on in the industry. Still, with this rundown, you should have a basic understanding of what cryptocurrency is and how it works.

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The Peoples Reserve is a new Stablecoin Built…

For The People It is a Digital currency that is coded to the last highest price of gold. The wallet delivers a digital mining reward, of free coins, at 12% per annum compounding.

The coin features two value stabilisation features…
1) A non-collateralised algorithm, based on the Quantity Theory of money.

2) A self-fulfilling, fiat-backed reserve pool.

3) There is soon to be - hundreds of businesses accepting the coin for payment valued at the last highest price of gold to add consensus and further backing to the coin.

Additional Features, coming to the coin include…

- Transaction Privacy.

- A Reserve Pool where a percentage of coin sales will support worthy causes.

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