CRYPTO Currencies & BLOCKCHAIN Technology

What is a Cryptocurrency?

Cryptocurrencies are basically the money on software platforms

It’s important to keep in mind that the teams/companies that are behind these cryptocurrencies are not only creating a new form of currency, but a new software platform. To demonstrate how this works, let’s take a look at other software platforms that you are probably already familiar with.

The goal of cryptocurrencies is usually to improve on some type of existing software system or network. When you send money via PayPal, Fedwire or Western Union, you are basically sending fiat money electronically, similar to Bitcoin.

However, that’s where the similarity ends.

Platforms like PayPal have severe limitations on what you can and cannot do. For example, you cannot send/receive money from certain countries (like Nigeria).

Cryptocurrencies like Bitcoin want to make financial transactions more open and accessible to everyone around the world.

What is a Blockchain?

Simply put, a blockchain is a database.

However, there is one huge difference between how you probably currently think of a database and how a blockchain database works. In most cases, a traditional database sits on one computer or in one location.

Even if a company has redundant servers around the world, the data might only be backed up between 3 to 5 locations. On top of that, these companies collectively spend billions of dollars a year on cyber security.

Storing Cryptocurrencies?

With fiat currency like British Pounds, you can store them at the bank or in your wallet. It’s pretty straightforward.

But with digital currencies, there are a few wrinkles that you need to get your head around, but the idea is similar. Let’s take a look at how cryptocurrency storage works.

Each wallet has a public address and a private address. The public address is the address that people send funds to. The private address is the “password” that you use to access and send your funds.

Different Wallets

Let’s look at the different wallet options. Here are the different ways that you can store your currencies.

Online Wallet

This is probably the easiest way to store your money. But it is also the least secure. So it’s not a good long term storage solution, but it is fine for buying things and funding your trading accounts. Exchanges like Coinbase also have their own wallets built in.

Mobile Wallet

You can download a mobile app like Mycelium to store your spending money. It is more secure than an online wallet, but if your phone ever breaks or it gets hacked, everything in your wallet will be gone.

Desktop Wallet

Similar to a mobile app but just for desktop computers.

Hardware Device Wallet

These are hardware devices that are built especially for storing cryptocurrency keys. They are safer than the options above, but they are still susceptible to the things that can damage all electronic devices.

Paper Wallet

You can also store your private key on paper, like in the picture above. This is the most hacker proof, but it is also the least convenient. If you are going to go this route, be sure to store them in a safe place (like a safety deposit box) and don’t actually use paper. Use something like this to make sure that your money isn’t lost to something as simple as a spilled beer.

Cryptocurrency Tracking Apps

You will probably need an app to track cryptocurrency prices on your phone. So here are a couple of apps that might work for you.

Blockfolio

A simple app that allows you to add a watchlist and add trades so you can track your portfolio, ala stock trading apps. The most useful thing about this app is that it displays all currencies on your watchlist in the currency of your choice. Some apps insist on displaying the value in Bitcoin, which is annoying.

Coincap

This app allows you to display currencies by market capitalization, volume and other ranking factors. They also have cool charts. Very useful for seeing what is being actively traded. Also displays prices in your currency of choice.

Less than 12 months after the 2008 market crash, The world was introduced to a new revolutionary Digital currency known as BITCOIN.

The developers of Bitcoin remain anonymous to this day and go under the alias of Satoshi Nakamoto. Since the release of Bitcoin, we have seen an influx of other alternative Digital currencies such as Ethereum, DASH and many more, All of which come under the category of ALTCOIN (Alternative Bitcoin). The one thing they have in common is that they are all produced using a technology known as BLOCKCHAIN which solves mathematical problems to generate more coins and approve transactions.

Bitcoin is a Digital Currency, created and held electronically which can be used to purchase almost anything, with almost instantaneous transactions and very low fees. Unlike todays currencies around the world, Bitcoin is not printed, and is decentralised, meaning it is not controlled by any single institution (Bank or Government). They’re produced by people and businesses running computers all around the globe, in a process known as MINING. Using software that solves mathematical problems, this is a community of people which can be joined by anyone, and uses computing power in a distributed network. This network also processes ALL transactions made with the virtual currency, effectively making bitcoin its own payment network.

The bitcoin protocol – the rules that make bitcoin work – say that only 21 million bitcoins can ever be created by miners. However, these coins can be divided into smaller parts of which the smallest divisible amount is one hundred millionth of a bitcoin and is called a ‘Satoshi’, after the founder of bitcoin. Once 21 Million Bitcoin have been mined, which is said will happen around 2040, No more Bitcoin will be produced. This does not mean that you will no longer be able to buy or use Bitcoin, it should in theory see the currency’s value increase and decrease like any other currency due to supply and demand. Think of it like Oil, when there is excess oil in stockpiles, the price falls because it is over supplied, when those stocks fall, the price will rise because there is a higher demand for what oil is left. The same principles will apply to Bitcoin.

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