What is Cryptocurrency: Currency is a type of promissory note provided by governments across the world. The respective country regulates it, and the currency’s value is mostly dependent on the country’s economy. But there are several rules and regulations on the handling and transferring of currency, especially foreign currency.
When it comes to forex transfer, you have to rely on banks and financial institutions. But cryptocurrency is a solution to this complexity in handling and transfer. Read on to know more about what is cryptocurrency and how cryptocurrency works.
What Is Cryptocurrency?
As the name wrongly suggests, cryptocurrency is not a currency, but it is cryptic. Cryptic, in a sense, that it is a highly encrypted digital tool that is available to use for everyone but with several added security features. Maintaining, transactions, creation of new units, and verification of ownership are all secure in an encrypted digital ledger or database. Although its name has the term “currency” in it, people consider it securities or assets rather than currency.
Usually, a company or a person introduces cryptocurrency and provides it to the public for purchase at a price or for mining. Cryptocurrency Mining is the process of decoding puzzles or finding cryptocurrency from the web. You can get a unit or more of cryptocurrency free of cost through mining, but it will require some web research skills.
How Cryptocurrency Works?
A single unit of cryptocurrency from an issuer generally works as a token that has monetary value. The value of this unit can change from time to time depending on the popularity of the respective cryptocurrency or some other factors. But usually, it is seen that the value always increases with time, much like equity, which is why people invest in cryptocurrency.
In cryptocurrency investment also, the buyer purchases cryptocurrency and holds it for a duration. They either sell it for profit or purchase other assets with it. But the functioning of cryptocurrency in transfers is also very different from regular currency.
A government issues regular currency and requires banks and financial institutions to transfer funds. All these banking transactions have official records. But when people use the physical form of money, there are no records of transactions. This, in turn, leads to several problems for the government when they need to track the flow of money through an individual or organization for taxation purposes. The creator creates cryptocurrency in such a way that an individual can only transfer or purchase through verified entries in the digital ledgers known as blockchains. This means that every transaction has electronic evidence, be it of one unit or a thousand units.
Types Of Cryptocurrencies and Where to Purchase Them Safely?
During the inception of cryptocurrency, India had banned cryptocurrency and blockchain transactions due to their ambiguity. But as of March 2020, the government raised all bans and restrictions on the purchase and transfer of cryptocurrency. So, if you want to purchase cryptocurrency, there will not be any legal proceedings. But today, there are several cryptocurrencies out there that make the purchase process confusing.
Here are the top three available cryptocurrencies today, that you can consider investing in.
Bitcoin (BTC)
Bitcoin was one of the first cryptocurrencies and is now a synonym for cryptocurrency. Initially, Bitcoins were only available through mining and had almost zero value. The current price of Bitcoin is more than USD 44,000, and its market capacity is a whopping USD 800 billion! [1]
Ethereum (ETH)
Ethereum, conceived in 2013, is the second most valuable cryptocurrency. The unit price of Ethereum is currently around USD 3,000, and its market capacity is USD 360 billion.
Binance Coin (BNB)
Binance Coin was launched in 2017 by Binance, the world’s largest cryptocurrency exchange in daily trades executed. Its unit price and market capacity are around USD 400 and USD 67 billion.
You can use mining to get cryptocurrencies for free, but it has to be from places that official sources mention. Some cryptocurrency creators also sell units from their websites. You can also purchase any cryptocurrency with the help of different trading platforms through online websites and mobile applications. But to maintain the security of purchase, do verify the genuineness of the service provider.
You must now have a clear understanding of what is cryptocurrency and how cryptocurrency works. As you also went through the sections on how to purchase cryptocurrency safely, you won’t have any troubles while purchasing them for yourselves. Make use of this knowledge, and you will never have to worry about the authenticity of your purchase.
Cryptocurrency is a good method to have protection from the any economic breakdowns that regular currencies might face. And the right cryptocurrencies can also provide high returns compared to any other savings or investment schemes that are generally not seen in currency.
