Cryptocurrency Explained: is it safe? [2023]

What is Cryptocurrency?

Cryptocurrency is one of the hottest topics in the world of finance and technology today. But what exactly is it and how does it work? In this blog post, we will answer some of the most common questions about cryptocurrency and give you an overview of its benefits and drawbacks.

How does Normal Currency Work?

Before we dive into cryptocurrency, let’s first understand how normal currency works. Normal currency, also known as fiat currency, is a type of money that is issued by a government or a central authority, such as a central bank. Fiat currency has legal tender status, which means that it is accepted as a medium of exchange for goods and services within a country or a region.

Fiat currency derives its value from the trust and confidence that people have in the issuing authority. For example, people trust that the U.S. dollar will maintain its purchasing power over time because they believe that the U.S. government will manage its supply and demand effectively.

Fiat currency is usually stored in physical form (such as paper bills or coins) or digital form (such as bank accounts or electronic wallets). When people want to transfer money to each other, they can use cash, checks, debit cards, credit cards, wire transfers, or other payment methods that involve intermediaries, such as banks or payment processors.

How is Cryptocurrency Different from Normal Currency?

Cryptocurrency is a different kind of money that exists only in digital form. It is not issued by any government or central authority but rather by a network of computers using cryptography to secure transactions and verify ownership records. Cryptography is a branch of mathematics that deals with creating and solving codes to protect information from unauthorized access or alteration. Cryptography enables cryptocurrency users to send and receive payments without revealing their identities or trusting any third party.

Cryptocurrency runs on a distributed public ledger called blockchain, which records all transactions in chronological order and makes them visible to everyone on the network. Blockchain ensures that no one can tamper with the transaction history or create counterfeit coins. Cryptocurrency is created through a process called mining, which involves using computer power to solve complex mathematical problems that generate new coins. Anyone can participate in mining but it requires a lot of resources and electricity.

Cryptocurrency users store their coins in digital wallets, which are software applications that allow them to access their funds and make transactions. Users can choose from different types of wallets depending on their preferences for security, convenience, and functionality.

What is Blockchain?

Blockchain is the underlying technology behind cryptocurrency. It is essentially a database that stores information in blocks linked together by cryptographic hashes.

A hash is a unique string of numbers and letters generated by applying an algorithm to input data. Hashes are used to verify the integrity of data by comparing them with previous hashes.

A block contains information about transactions (such as sender address, receiver address, and the amount transferred), timestamp (when the block was created), nonce (a random number used for mining), hash (of the current block), and previous hash (of the previous block).

A blockchain consists of multiple blocks connected by hashes forming a chain from the first block (called genesis block) to the most recent block (called head block). The blockchain grows as new blocks are added to it by miners who compete to solve mathematical puzzles using their computing power.

The blockchain serves as an immutable record of all transactions that have ever occurred on the network since its inception. Anyone can view the blockchain using special software called nodes that download copies of it onto their devices.

The blockchain also serves as a consensus mechanism that ensures agreement among all nodes on the state of the network. Nodes validate new blocks by checking their validity according to predefined rules called protocols before adding them to their copies of the blockchain.

If there are conflicting versions of the blockchain due to malicious attacks or network errors, nodes follow the longest chain rule, which states that the valid version of the blockchain is the one with the most cumulative proof-of-work behind it. Proof-of-work refers to the amount of computing power invested by miners into creating new blocks. The longest chain rule ensures the security, stability, and finality of transactions on the network. If you would like to know about Artificial Intelligence please click here.

Is Cryptocurrency Safe?

Though Cryptocurrency has many advantages over fiat currency, such as transparency, efficiency, low fees, global accessibility, and financial inclusion, it also comes with some risks and challenges, such as volatility, hacking, and scams, which have made Cryptocurrency look bad for many people. One thing is sure, cryptocurrency like bitcoin/Ethereum is not safe and is unhackable. but on the other hand, it is not bad either. most crypto scams and thefts occur in a a similar fashion to how normal currency is stolen. it is by scamming people, which is not the issue of Crypto currency itself. But the fact is, the very way crypto currency works, by having nothing to hold its value, it is volatile, and easily creatable.

one of the easiest ways to get scammed is to get on the hype train for some new or ‘futuristic’ on of a kind coin, which is the future according to it’s founder, only to find out it broke after 3 days. before you do any activity involving these novelty coins, make sure you are sure, and you are not being tricked by someone. another important factor is, it is not monitored by any country/organisation, which can either be good/bad, depending on how you look at it.

Benefits of Cryptocurrency

• Cheaper and faster money transfers: Cryptocurrency transactions can be made easily, generally at a low cost, and in a relatively private manner. Using a smartphone app, hardware wallet, or exchange wallet, almost anyone can send and receive a variety of cryptocurrencies. Some types of cryptocurrencies, such as Bitcoin, Litecoin, and Ethereum, can be purchased with cash at a Bitcoin ATM. A bank account is not always required to use crypto, so it is possible that someone could buy Bitcoin at an ATM using cash, and then send those coins to their digital wallet or phone. This may be a huge advantage for people who lack access to the traditional financial system. Payments for most cryptos settle within minutes and some within seconds. Conversely, wire transfers at banks can cost significantly more and often take three to five business days to settle.
• Relatively secure: Because cryptocurrencies are rooted in cryptography and blockchain security, decentralized cryptocurrencies tend to make for secure forms of payment. Crypto security is determined by hash rate: the higher the hash rate, the more computing power is required to compromise the network. Bitcoin is considered to be the most secure cryptocurrency as it has the highest hash rate among other networks. Note that using a crypto exchange is only as secure as the exchange itself; most incidents of crypto being hacked involve exchanges being hacked or users making mistakes such as falling for phishing scams.
• Decentralized systems: A defining feature of cryptocurrencies is that they are generally not issued by any central authority such as governments or banks; instead they are governed by consensus mechanisms among network participants. This means that they are theoretically immune to censorship interference or manipulation by any single entity. Decentralized systems also do not collapse at a single point of failure; if one node goes offline or gets corrupted another node can take over its role.
• Exponential industry growth: The cryptocurrency industry has been one of the fastest-growing markets in recent history; since its inception with Bitcoin in 2009 it has grown exponentially in terms of market capitalization value innovation adoption regulation etc. The total market cap of the cryptocurrency market in 2013 was about $1 6 billion; by 2021 it reached over $2 trillion. This indicates that there is huge potential for further growth development and innovation in this space.

Disadvantages of Cryptocurrency

• Difficult to understand: Cryptocurrency is based on complex blockchain technology which requires technical knowledge and skills to comprehend fully. Blockchain technology was introduced into practice on large scale just a few years ago; today there are still few experts who understand it well enough. For learning cryptocurrency or blockchain one needs
  to know many nuances details algorithms etc Without understanding these aspects it may be risky
  to deal with crypto.
• Volatile prices: Cryptocurrency prices are subject to high fluctuations due to various factors such as supply-demand news events speculation etc. This makes them unpredictable
  and risky for investors who may lose money if they buy high sell low miss opportunities etc Volatility also affects usability stability trustworthiness etc For example if someone wants
  to use crypto as a medium exchange they may face problems with price conversion acceptance etc Volatility may also discourage mainstream adoption regulation taxation etc
• Environmental impact: Cryptocurrency mining which involves solving complex mathematical problems verifying transactions add new blocks chain consumes huge amounts of electricity computing power resources etc Some estimates suggest that Bitcoin mining alone consumes more electricity than some countries such as Argentina, Netherlands, Norway, etc. This raises concerns about environmental sustainability carbon footprint climate change etc Moreover mining also creates electronic waste due to hardware obsolescence damage etc
• Illegal activities: Cryptocurrency transactions offer a high degree of anonymity and privacy security which makes them attractive for criminals who use them for illicit purposes

How to Get Some Cryptocurrency

Cryptocurrency is one of the hottest topics in the world right now. You’ve probably heard about Bitcoin, Ethereum, and other digital currencies that are making headlines and creating millionaires. But how can you get some cryptocurrency for yourself? And what are the best ways to invest in this exciting new asset class?

In this guide, I will show you how to get some cryptocurrency using different methods and platforms. Whether you want to buy, sell, trade, mine, or earn crypto, there is something for everyone. By the end of this guide, you will have a clear idea of how to get some cryptocurrency and join the crypto revolution! There are thousands of cryptocurrencies available today, each with its own features and functions. Some of the most popular ones include:

• Bitcoin (BTC): The first and most widely used cryptocurrency. It was created in 2009 by an anonymous person or group known as Satoshi Nakamoto. Bitcoin aims to be a global payment system that is fast, secure, and transparent.
• Ethereum (ETH): The second-largest cryptocurrency by market cap. It was launched in 2015 by Vitalik Buterin and others. Ethereum is more than just a currency; it is a platform that enables smart contracts and decentralized applications (DApps) that can run on its network.
• Binance Coin (BNB): The native token of Binance, one of the largest and most popular crypto exchanges in the world. It was launched in 2017 by Changpeng Zhao (CZ) and others. BNB can be used to pay for fees on Binance, as well as for various services and products within its ecosystem.
• Dogecoin (DOGE): A meme-inspired cryptocurrency that was created in 2013 as a joke by Billy Markus and Jackson Palmer. It features the image of a Shiba Inu dog as its logo and has a loyal fan base online. DOGE has gained popularity recently due to endorsements from celebrities like Elon Musk.

Buy Cryptocurrency with Fiat Money

One of the easiest ways to get some cryptocurrency is to buy it with fiat money (such as US dollars or euros). You can do this using various platforms such as:

• Crypto exchanges: These are online platforms where you can buy and sell cryptocurrencies using different payment methods such as credit cards, bank transfers, or even cash. Some examples of crypto exchanges include Coinbase, Binance, Kraken, Bitstamp, Kriptomat, etc.
• Crypto brokers: These are intermediaries who facilitate your crypto purchases at a fixed price or rate. They usually charge higher fees than exchanges but offer more convenience and simplicity for beginners. Some examples of crypto brokers include Coinmama, CEX.IO, etc.
• Crypto ATMs: These are physical machines where you can buy cryptocurrencies using cash or debit cards. They are usually located in public places like malls, gas stations, or airports. You can find nearby crypto ATMs using websites like Coin ATM Radar.

To buy cryptocurrency using any of these platforms, you need to follow these steps:

1) Choose which platform you want to use based on your location, payment method, and desired currency.
2) Create an account with the platform and verify your identity if required.
3) Deposit fiat money to your account using your preferred payment method.
4)Place your order to buy the amount of cryptocurrency you want at the current market price or rate.
5) Receive your cryptocurrency in your wallet, which you can use/store in any wallet.

Summary

In conclusion, cryptocurrency is a revolutionary innovation that has the potential to transform the world of finance and beyond. It offers many benefits such as decentralization, transparency, security, privacy, and efficiency. It also challenges the status quo and empowers individuals to take control of their own money and data. Cryptocurrency is not just a trend or a fad; it is a movement that is here to stay. If you are interested in learning more about cryptocurrency or getting started with investing in it, you can check out some of the resources below. Thank you for reading this post and I hope you enjoyed it!