How They Work and How to Invest
If everything related to cryptocurrencies sounds strange to you and you don’t know much about what they are, how they work or the types that currently exist, keep reading and we will give you everything you need to know.
The world of cryptocurrencies is a part of technology that many people are unaware of, even though they might have heard of it. The rise of these currencies has been tremendous in recent years. Obviously, looking at any form of communication, these virtual currencies are bound to show up from time to time, so maybe we know they exist, but we don’t really know everything.
What Are Cryptocurrencies
A cryptocurrency is a digital medium of exchange that acts like a currency. As we all know, cryptocurrencies are completely digital both in terms of transactions and the creation of new currencies.
We are talking about a completely different system from the banking and physical systems that we know, while they are controlled, cryptocurrencies are not subject to any type of control.
The main characteristic is that they are volatile values, which encourages speculation about them, and as a result, people who do not know the whole world can face monetary losses.
Then there are two concepts that should also be known. The first of them is that, as we have already said, we are talking about a decentralized network, which means that everything is located in different nodes that are distributed throughout the world and contain information about all transactions.
The other is the miners, who are part of the nodes that are most likely to earn new crypto as it is generated. In addition, there are exchange houses, and companies that allow you to buy crypto with cash, which makes it easier for us to become holders of some virtual currency.
How Do Cryptocurrencies Work?
Once we have understood what we are talking about and clarified important concepts, we can better understand how they work. This activity is directly related with its own internal algorithm, since it will mark the number of new units per year.
This makes the whole world of cryptocurrency more complicated because every algorithm is different and therefore every cryptocurrency behaves differently, and each has a different value.
As we have already said, the entire cryptosystem consists of nodes connected by a chain of blocks. This is interesting to know because every transaction we make will be written on the block, thus passing it on to other transactions, so all the data generated cannot be changed or recorded.
What Are They For?
Believe it or not, they have many more uses than you can imagine, and there are more ways to use them than you can imagine.
Investment: This is the most common way to use them because it is quite easy since everything is done online and it is the most profitable system.
Stores: There are already stores that can pay with digital currency. In most cases, we are talking about merchants that accept this form of payment. This all got significantly better when PayPal started accepting them.
ATMs: There are currently more than 38,000 ATMs that can convert cryptocurrencies to the currency of the country where they are located.
Freelancers: It is becoming more common to pay freelancers with digital currency, and there are already platforms like Gitcoin, LaborX, and Ethlance that offer sections to pay freelancers with this system.
Donations: They can also be used to make charitable donations by paying a small donation to the company that develops the product or directly to an NGO with a charitable cause.
Website: You can create a website from an existing domain registrar and use a web host that accepts this type of currency, such as Namecheap.
Events: Tickets for sporting events can also be paid for in cryptocurrency.
Cards: We can purchase Amazon, PlayStation, Steam or similar gift cards on certain websites. The most important is Bitrefill.
Vacations: Some websites dedicated to finding the best deals on flights, hotels or vacations already accept payments in digital currency.
Types Of Cryptocurrencies
Cryptocurrencies can be classified in different ways to better understand each of them.
Bitcoin: Since it was the first currency to come out, it is considered a benchmark in the market, which is why it has its own classification.
Altcoins: These are all currencies other than Bitcoin, hence the name altcoins, alternative currencies. At the moment, the main one is Ethereum.
Stablecoin: This type of coin is different because its value and price are fixed and will not change. An example of a stablecoin is Tether.
Shitcoins: They are currencies that do not add any value to the chain of blocks. They enter the market for the sole purpose of speculating on the price.
Memecoins: For many, these are variations of shitcoins. They are based on popular internet memes, and although some start to gain value, the truth is that since they have no utility, their original purpose has always been easy money. The most popular are Dogecoin and Shiba Inu.
Tokens: These are currencies that cannot function outside the network of another cryptocurrency. That is, those who do not have their own blockchain.
How to Invest in Cryptocurrencies
We can use cryptocurrencies in different ways.
– Virtual wallet
The first way we can use them is in a virtual wallet. The company that controls everything is the stock market. In this type of business, we can buy them, sell them, and try to make money with this operation, knowing that they charge an administrative commission for each operation.
The prices of the digital currencies that we buy can vary significantly in a short period of time because, as we said before, they are not centralized and controlled by any company like conventional currencies.
These companies also protect us from potential fraud by verifying the value of cryptocurrency themselves to provide customers with transparency in all their transactions. Some of the best cryptocurrency exchanges are Coinbase, Bitpanda, Binance, Bit2Me, and Crypto.com
– Runner
We may also use the services of an authorized broker or agent as our intermediary with these products. You can enter into a contract for difference (CFD), which is a contract to exchange the difference in the value of an asset between the open and close of the market. This will lead to better contract terms and increased security.
Mining: What It Is and How It Works
One way to obtain cryptocurrencies is through mining. With this system we can get coins that we can invest in or use to buy things later.
Mining involves solving complex math problems in exchange for rewards. To achieve this, we need a miner or a powerful computer as it will be working for a long time.
How To Check Prices in Real Time?
Naturally, if we want to sell our cryptocurrencies, we want to do it while earning more. To do this, you have to look at the evolution of its price and be able to make the right decision, since we are talking about coins with a highly variable value, both due to their sharp falls and their sharp rises.
We will have two ways to see the value of cryptocurrency in real time, using Google or specialized websites.
Search In Google
The first way is to use the Google search engine, because it introduces a module that can show the value of our cryptocurrency in real time. To do this, we just need to go to the search engine and enter something like Ethereum value in the search bar.
At this point, we will see how Google obtains information about the value of our chosen cryptocurrency on the screen. In addition, we will have a system that will be able to show how much it is worth compared to different currencies at that specific moment.
We will also see a graph with more than a month of historical value with the possibility to change it using different tabs.
Professional Websites
There are also pages dedicated to such information where we can see the value of cryptocurrency in real time. Some of them offer more advanced options than what we see on Google.
Coinbase: This is one of the best-known sites when it comes to buying cryptocurrency and also has its own monitoring system. All we have to do is register and save our assets.
Bitstamp: This is a direct competition to the previous network, since it also allows to buy and exchange currencies. Of course, it has an index where we can look at the state of the crypto.
Cryptocards: Of all the tools that we have seen, this is the most interface focused website. It shows an interactive map with the total market value of all assets.
Coinex: If you do not want to register for information about the value of your cryptocurrency, then you should choose Coinex, as it will show you all the information you need, such as the current price, the change in value in the last 24 hours and their evolution.
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