Cryptocurrency discussions are getting mainstream. From news anchors to parliaments to your neighbor and colleagues at work – everyone is talking about cryptocurrencies all of a sudden. Bitcoin has become a household name – and a global phenomenon. Over the past few years, cryptocurrencies and the blockchain technology have brought about major changes to the global fintech systems and this change is expected to become more prominent as years pass.
Despite the overwhelming number of people who are already investing in cryptocurrencies, there are still many who are yet to buy their first Bitcoin – or invest into the cryptocurrency markets. If you too, happen to be one of those people, here’s a complete beginner’s guide to cryptocurrencies – and everything you need to know about cryptocurrencies before you start investing.
What are Cryptocurrencies?
Cryptocurrencies are basically digital tokens which carry monetary value. Simply put, they are virtual currencies which do not exist in a physical form. They are a decentralized form of currency which do not have a central governing authority. There are over 1500 cryptocurrencies in the markets – and each of them has some unique proposition based on which people trade or use them.
Advantage of Cryptocurrencies over Cash
Cryptocurrencies have a number of advantage over a traditional banking system and cash-based economies. Since it is a digital form of payment, it is much faster when it comes to international payments. While banks take multiple days to process payments and often charge a high fee – cryptocurrency payments are faster and cheaper. Moreover, cryptocurrencies also offer a more secure and private means of transaction as opposed to a traditional banking channel.
Is Bitcoin the same as Cryptocurrency?
Bitcoin is a cryptocurrency but not all cryptocurrencies are Bitcoins. Bitcoin was the first cryptocurrency – but since then there have been over a thousand cryptocurrencies which have been in circulation. While there are over 1500 cryptocurrencies in the markets, the collective name for all non-Bitcoin cryptocurrencies is ‘Altcoin’ – or alternate cryptocurrencies. You can check out various online guides about cryptocurrency to get more details on this.
5 Popular Ways to Get Cryptocurrencies
While there are a number of ways using which you can get hold of cryptocurrencies, these are the top five ways in which you can get easily get hold of them:
- Mining: Mining for cryptocurrencies is one of the ways by which you can get your hands on cryptocurrencies. Mining is basically the process of generating cryptocurrencies by consuming processing power. A group of miners come together to form mining pools – and distribute the mining rewards with each other.
- Trading: Cryptocurrency traders usually buy cryptocurrencies from exchanges at a low price point – and sell them off at a higher price point in the future. Or purchase it from the exchanges and use it for regular transactions.
- ICOs: ICOs are a risky option – but a good way to get hold of newly introduced cryptocurrencies. Here, investors can trade the base currency that the ICO demands and get these new cryptocurrency tokens in exchange. However, they are a risky investment option given the number of Ponzi schemes and ICO frauds that take place.
- Airdrops: Sometimes cryptocurrencies are provided to users just on the account of holding other cryptocurrencies. This usually happens in case of forks – for example Bitcoin Cash and Bitcoin Gold were distributed to those who held Bitcoin during the forks. However, these instances are very rare.
- Bitcoin ATMs: Bitcoin ATMs are getting popular of late – but they are limited to major metropolitan cities. These machines can help a buyer easily pay for cryptocurrencies and buy them instantly.
5 Interesting Cryptocurrency Facts:
Now that you know what cryptocurrencies are and how to get hold of them, let us take a quick look at 5 interesting cryptocurrency related facts!
No one knows who created Bitcoins!
Despite intriguing the interest of millions of people across the world – no one really knows who the creator of Bitcoins is. The only thing we know about the creator (or creators) of Bitcoin is the fact that he (or they) go by the name of ‘Satoshi Nakamoto’. The real identity of the person or team behind this pseudonym remains anonymous.
There have been multiple speculations and many names have been assumed to be Satoshi Nakamoto – but there has been no confirmation as to who he really is. As a tribute to the creator of Bitcoins, the smallest divisible unit of a Bitcoin has been named a Satoshi. 1 Satoshi = 0.00000001 Bitcoins.
10,000 Bitcoins were once paid for 2 Pizzas
As absurd as it may sound today, someone paid for 2 Pizzas using 10,000 Bitcoins in 2010! At the time when this purchase was made, the collective value of 10,000 Bitcoins was $41 – which was paid to Papa John’s Pizza by a developer for two pizzas! If you compare the price growth since then, 10,000 bitcoins today would $92 Million. If you look at the all-time high, 10,000 Bitcoins would be worth almost $200 Million in December 2017. Those pizzas better have tasted good!
Cryptocurrencies are illegal in some countries
While practically everyone around the world is thrilled about cryptocurrencies and the insane price growth that they are witnessing – some governments have banned cryptocurrencies. These include the likes of Iran, Morocco, Bolivia, Ecuador, Nepal and China among others. In China, cryptocurrencies per say, are not banned but any platform that deals with cryptocurrencies has been banned – effectively choking out the entire crypto-ecosystem. Some theocratic nations which practice Islam have also banned cryptocurrencies calling them ‘haram’ or illegal according to Islamic Sharia law.
Cryptocurrencies play a major role in Illegal Activities
While there doesn’t seem to be much you can buy legally – there’s a massive illegal marketplace on the dark net which sells everything from weapons to organs to exotic pets – as well as drugs and other banned substances. These marketplaces usually accept payments only in cryptocurrencies. In addition to this, money laundering has been another major illegal activity which has been associated with cryptocurrencies. Extortionists and kidnappers too – now accept crypto payments.
The last Bitcoin would be mined in the year 2140
The crypto-craze is not going to end in our lifetime! While 17 Million out of 21 Million Bitcoins have been mined – the last Bitcoin would be mined in the year 2140. This is because the algorithm is such that the mining difficulty keeps increasing constantly – and so does the price of cryptocurrencies – basically balancing it out for the miners. Going by this calculation, the last Bitcoin is expected to be mined in October 2140!