Basically, cryptocurrency is a digital asset that uses cryptography in order to secure and verify transactions, as well as the creation of additional units.. It is medium of exchange that was designed as an alternative to already existing assets like traditional cash currencies and virtual currencies. Even though cryptocurrencies really got into the mainstream in 2017, there have been many previous attempts at creating such an asset. What distinguishes present forms of cryptocurrency (Bitcoing being the most popular among those) is that the whole system is entirely decentralised. The effect is that since there is no one organisation or entity overwatching the development and exchange of crypocurrency, the so called “notion of trust” can be eliminated.
Another important feature of modern day cryptocurrencies was created by Bitcoin creator, the elusive Satoshi Nakamoto. It is the so called blockchain system, which records every transaction ever made, thus preventing double-spending and other speculations with the currencies to be made.
Speed, privacy and price are the main concerns when one assesses the value of certain cryptocurrency. As of January 2018 there are 1384 types of cryptocurrencies in existence and their number is growing constantly. Monero, New Economy Movement, Litecoin, and Ethereum are some of the other popular types in addition to Bitcoin. Some of them are used for general transactions, others to serve specific purposes and exchanges.
What can one use a cryptocurrency for?
Cryptocurrencies are a relatively new technology, and as such, their purposes are not very well known by the general population, nor is their full potential. Still, the most common uses of cryptocurrencies even today are quite varied – from payment for goods and services, to private transactions and gambling to conversion of traditional currencies that are losing their value. The main benefit of working with cryptocurrencies was and remains, anonymity and autonomy that they offer from third party entities.
What’s an exchange and why you need it?
Any platform that allows a certain trader to buy and cryptocurrencies is an exchange. The question that concerns most people is whether it is safe to use a certain exchange. Since the technology and the whole market are relatively new, there is only one certain way to know that – to check if the exchange you are looking at puts forward transparent data about the coins that they have in “cold storage”. This actually enables you to know whether or not the currencies you purchase from this particular exchange are liquid, e.g. you can cash out easily at any time.
Bitcoin vs Ethereum
Bitcoin is the crowned king of cryptocurrencies at the present moment. Last year however (2017) a new coin started catching the attention of people interested in the matter – Ethereum. Its exponential growth and ever-increasing market share gets even newcomers in the field of trading cryptocurrencies interested. Now, basically, every coin is designed with a specific purpose in mind, and in this respect Ethereum is pretty different from Bitcoin. Some even say that it is better.
Availability is among the main advantages of Ethereum. Today it is much easier to buy those than Bitcoin, with two thirds of the latter already been mined. One of the main reasons for the creation of Ethereum was actually to address common issues raised with Bitcoin – security, speed of transactions, liquidity. Due to the fact that block transactions with Ethereum are much shorter than they are with Bitcoin, the confirmation time is shorter too. These are the main reasons Ethereums are considered a serious competitor and even a treat to Bitcoin’s market cap.
The benefits of cryptocurrency transactions
When compared to traditional currencies, the trading of cryptocurrencies has a number of positive sides that are actually responsible for their continuous growth and popularity. First and foremost, all transactions are irreversible. Once a transaction is done, no one, not you, not a bank or a government body can actually reverse it. Now, this is a bit tricky, because you have no safety net and should be cautious of scammers of any kind, but it adds up to the freedom of the whole concept. That does not mean that transactions are not secure. Thanks to the public key cryptography system a cryptocurrency like Bitcoin or Ethereum is more secure than any physical bank vault. If you keep an eye on your security details, no one can rob you of your coins unless you let them. Another main benefit of cryptocurrency transactions is the fact that they are fully anonymous. No account is connected to a real-life identity in any way. Since cryptocurrencies are basically a free-ware software, you do not have to ask permissions or pay anyone in order to use them, and they are very fast and have global reach, which is another reason people love them so much.
Finding a broker
There are several factors to consider when picking up your broker and exchange for coins. Now, since brokers and exchange platforms are basically companies, they will be registered on a certain territory that has its own regulation bodies. It is important that you check the firm’s credentials in advance in order to avoid scams. The platform offered by the broker is another major concern that you must have. The platform should be easy to operate with and provide you with access to all the data you might need right away.
The types of accounts that your broker will be able to provide you with is another very important factor. A good broker will not be limited to just one type of account. The client support is also important – cryptocurrency exchange is not like the traditional commodity and stock market – it takes place 24/7 all over the world, which means that the broker you rely on should be available at all times as well.
Last but not least, before you sign up for a certain broker’s services, you need to know what types of coin pairs they offer – there might be countless options for you to choose from, but if the basic ones that interest you are lacking, you will be having very little use of that particular service.