A Complete Beginner’s Guide To Understanding Cryptocurrency

If you’re reading this, you already know that cryptocurrencies are the look and feel of new money. And because you’ve been paying attention, you know that it’s a movement that’s, well, pretty unstoppable.

In the past few years, Crypto Trading Strategy has garnered much attention from investors. This is primarily because of the growing profitability associated with it. Many new-age investors are also willing to make a cryptocurrency investment, and so if you too are one from the league, then this blog is going to help you understand the details of cryptocurrency and important factors that should be on your readar when investing in it.

Before going ahead to understand the tips that will help you become a pro trader in the crypto ecosystem, it is important to understand the key terminology associated with it. Acquainting oneself with the terms add jargon of the cryptocurrency ecosystem will make it easier for you to understand the market trend.

What Is A Cryptocurrency? An Overview

What is cryptocurrency (crypto)? This question was probably spreading all throughout the internet. The answer depends on which definition of “currency” you use, but let me define it how I prefer to – cryptocurrency is a digital asset designed to work as a medium of exchange.

Basically, Cryptocurrency is a peer-to-peer version of electronic cash that runs on a decentralized platform. There are no intermediaries involved. There is no requirement for a central banking clearance system. Since there is no 3rd party intervention, one doesn’t have to pay the processing fee or the transaction fees. It eventually reduces the overall cost of cryptocurrency exchange.

Although it’s not as widely known as American dollars, British pounds, or even Bitcoin, cryptocurrency is becoming a mainstream form of payment and a hot topic across the globe.

Now, if you have already figured out what cryptocurrency is, and you have a portfolio of cryptocurrencies — congratulations, you are one of the winners. But for the rest of us who are beginners in this space, there’s a lot more to learn when it comes to understanding cryptocurrencies — a.k.a crypto (this will be referred to as “cryptocurrency” from now on). 

The Framework of Cryptocurrency

The Framework of Cryptocurrency

The defining feature of a cryptocurrency is the framework on which this entire transaction operates. It is a distributed ledger technology. Initially, the role of Blockchain was merely limited to cryptocurrency transactions, but over some time, the developers have made the technology evolve and emerged as a mainstream sister. 

Blockchain is now finding applications across the different industrial niches. This is primarily because of some of the significant features associated with this technology which eventually transpired into Bitcoin and cryptocurrencies. these features are listed below:

1. Decentralization- An important point about Blockchain is that it is a type of distributed ledger technology, although most of the time, we associate or consider Blockchain and distributed Ledger technologies synonymous. Decentralization here means that the information is not stored on the central server. Rather, it is distributed across the different nodes. The function of these nodes is to validate and approve the transactions.

2. Time stamping- Every information that finds an entry in the Ledger is time stamped. All the transaction records find an entry in the form of blocks which are arranged in a sequence. Each block is associated with certain alphanumeric digits, which gives it uniqueness. It is this time stamping and uniqueness of the block that makes it difficult for the breaches and hackers to change the sequence or figure out any loophole in it. 

3. Encryption via cryptography- As we have mentioned above, information gets entered into a blockchain Ledger. This information is encrypted cryptographically. This further adds to the digital security of the platform.

4. Faster transactions- Blockchain operates or peer-to-peer networking, which means there is no need to wait for 3rd party validation and approval of the transaction. It adds to the speed of the transaction, thus making Blockchain or decentralized transactions the preferable form by the companies who are involved in cross-border exchanges.

What Adds Uniqueness To Cryptocurrencies?

The key features associated with Blockchain and cryptocurrency give it a unique look.

  • A limited number of cryptocurrencies – Every cryptocurrency comes with a limited number of points that are in circulation. 
  • Acceptability- Unlike the earlier times today, Bitcoin is finding application and usability across different industrial niches. In the US alone, around 2300 companies are ready to embrace Bitcoin payment.

An important point to note about cryptocurrencies is that it is highly volatile and vulnerable to market changes. Even the slightest change in the market or rumor can impact the value of cryptocurrency. Recently the value of Bitcoin has fallen by 20%. 

Final Words

Now that you are aware of the mini-guide of cryptocurrency, the next move should be to start investing in it. Understanding how the crypto market operates at the significant factors impacting its value will make it easier for you to plan your investment.

The first step should be registering on a credible platform like Bitcoin. Make sure that you do not decide in haste; rather you must focus on understanding how the crypto market operates and then form your decision.

So, if you want to move ahead, start reading more and researching about the crypto market. Trust Pedia provides you access to all the latest information and updates of the crypto market. Here you can also check the reviews of the crypto exchanges. It is eventually going to help you find the best trading platform.

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