Crypto, or cryptocurrency, is a currency which exists virtually or digitally, and which uses cryptography in order to secure the transactions. There is no regulating or central issuing authority for cryptocurrencies. Instead, they use a decentralised system for recording transaction and issuing new units.
Cryptocurrencies are digital payment systems which don’t rely on a bank to verify each transaction. Rather, they’re peer-to-peer systems that allow anybody anywhere to receive and send payments. When cryptocurrency funds are transferred, the transaction is recorded within the public ledger, and the funds are stored in a digital wallet.
As cryptocurrencies use encryption for verifying transactions, they are supposed to be safe and secure.
How Do Cryptocurrencies Work?
A cryptocurrency runs on blockchain, or a public ledger, where records of every transaction are held and updated. Crypto units are made through “mining”, a process than involves the use of computer power for solving complex mathematical problems to generate coins. It’s also possible to purchase cryptocurrencies from brokers before storing them and spending them using a digital wallet.
Examples Of Cryptocurrencies
There are many different cryptocurrencies, but some are better known than others.
Bitcoin is the most famous cryptocurrency as it was the first of its kind. Established in 2009, it remains the most frequently traded crypto. Ethereum, established in 2015, is also well-known, with others like Ripple and Litecoin following up behind.
If you wish to purchase cryptocurrency, you need to choose your purchasing platform – either a cryptocurrency exchange or broker. Next, you have to put funds into your account to allow you to start trading. Usually, you can buy crypto using government-issued, fiat currencies.
You may also be able to use a credit card, but not in every case and it can be risky to do this. Bank transfers are sometimes allowed too. There may be fees applied for depositing and withdrawing as well as for trading, and these vary according to platform and payment method.
You place your order on the exchange or broker’s mobile or web platform by selecting your order type, inputting the amount you wish to buy, then confirming your order. You may also be able to invest in cryptocurrencies by using payment services such as Cash App, Venmo, or PayPal.
Keeping your cryptocurrency safe after purchase is vital. Usually, you’ll do this in a crypto wallet where your private keys can be securely stored. Some exchange will provide a wallet service, but not all. You can choose from a cold or hot wallet. A hot wallet utilises online software for protecting your private keys, a cold wallet uses an electronic offline device to achieve this goal.
What Can Be Bought With Crypto?
There are many things you can buy using cryptocurrencies including:
- Items on some e-commerce and technology websites
- Luxury goods
Is Crypto Safe?
Although cryptocurrency is supposed to be secure, there are more scams these days including fake websites, and fraudsters posting as legitimate traders. Nevertheless, if you do your research well and take care, you can buy cryptocurrency safely.