What is cryptocurrency and how to beginners use it in 2022?
Hey guys, welcome back. So today we are going to discuss cryptocurrency. This term has become very popular among all of us nowadays. Many of us know about it very well and use it also whereas many of them are still present here in between us for whom this term is totally new and they are completely unknown with this. Some of us have listened but yet don’t know what is this cryptocurrency? and how is this used? what are the merits and demerits of this? Etc. So, today I will try to clear all your doubts and questions regarding cryptocurrency in this article and many other topics related to this.
How cryptocurrency works:
cryptocurrency is very similar to a barter system in which money was not used to get things rather there is a way of exchanging things among two parties. Didn’t understand this method? Or might have forgotten. No issues let me, first of all, give you an example regarding cryptocurrency so that you may understand it easily.
So, suppose there are two friends Ram and Shyam. Ram asked Shyam to do a work of ten rupees and afterward instead of giving him ten rupees, he said I am giving you a pen worth ten rupees. So then they decided that let’s make this a digital pen.
after that another problem arose that is ok, we can make a version of the digital pen but it can be copied, it can be multiplied, anyone can make hundreds of copies of it, anyone can attach it and send it through e-mails.
Highlights:
- What is a cryptocurrency and how do beginners understand it?
- How do I start with cryptocurrency?
- How to start investing in Bitcoin for beginners
So there is a solution for it Ram made a document named “ledger” where he noted down that he has given him a digital pen. Now, this data is only noted by one of them so if he wants then he can make can kind of changes in that. So after this finally came that revolutionary solution and that was, how about if all this ledger is stored in all the computers and all the computers have full details of Ram and Shyam that how many pens are remaining with Ram after giving one to Shyam and vice-versa. So now if anyone in between does any kind of fraud then all the calculations will be mismatched from all other computers and that person would be caught easily.
What is a cryptocurrency and how does it work?
Now, with this above example only we will understand cryptocurrency and all the related points also. So now starting with:-
1) Cryptocurrency:-
The digital pen which they exchanged was known as cryptocurrency. Crypto means secret and currency means the medium through which things are purchased. There is much time of cryptocurrency are there like bitcoins, ripples, dogecoins, etc. These are private currencies.
2) Peer-to-peer networking:-
The digital ledger is maintained by all the persons on the computers digitally. This is known as peer-to-peer networking means person-to-person networking.
3) BlockChain:-
The ledger is maintained by many people commonly in many computers which are interconnected with each other. So, this type of ledger is not only of one it is of many others simultaneously. The process by which it is maintained is known as the blockchain. This means when transactions are fulfilled in one block another block is added then the third and so on and any transaction that starts in the new block is connected with the previous transaction so all the transactions are connected with each other and the blocks work as a chain.
3) Miners and mining:-
So now suppose Ram and Shyam both of them have a cryptocurrency and Ram has given one coin to Shyam. After this, all the transactions done by Ram is being checked on all the computers that whether he really had two bitcoins or not, and after getting one bitcoin from Ram how many coins did Shyam have with him. All these transactions are checked and the transaction is completed. So all this process is maintained by people and those people are known as miners and this is process is known as mining.
4) Cryptography:-
It means everything is coded in cryptocurrency by which who is having how much digital currency is not known by anyone else because of the code. So, with the help of this even if all the transactions are transparent and maintained by thousands of computers then also no one knows how much currency one has.
5)Price:-
In every cryptocurrency, it is already fixed how many coins will be produced in total. The price of them is fixed according to the demand. If the demand is high then the price goes up and vice-versa.
Also Read: These are the ways by which we can get a bright future
What are cryptocurrency’s advantages and disadvantages? :
Advantage cryptocurrency
- 1) It is a decentralized form. It is not controlled by any one country, person or company. It is controlled by everyone.
Disadvantage cryptocurrency
- As it is not governed by any government or authority so you can’t make any complaints to anyone.
- It is also used for unethical purposes.
- The process of mining is not eco-friendly.
Conclusions:-
In India, cryptocurrency is legal only for investment but it is still not used in the place of money. But you can invest in it, hold it and do trade with this.
I guess now you have fully understood What is Cryptocurrency? So, if you also want to invest and do trade in Cryptocurrency then you will get many applications related to this some will take fees for the facilities they are giving and some apps are free. You can choose accordingly. Hope this article was helpful to clear all your doubts, questions, and queries.
