"I do think Bitcoin is the first encrypted money that has the potential to do something like change the world." -Peter Thiel

The hype isn't too much, and the value isn't overinflated; Bitcoin really will change the way we use money in the 21st century. In a virtual world, where everything is done online, we need a modern currency that transcends all borders and countries and makes it easy to purchase things virtually.

Therefore, cryptocurrencies such as Bitcoin, Ether, and Cardano, to name a few, will help modernise the way we effectuate money transfers.

Nonetheless, even though most people slowly hear about cryptocurrency due to its rising popularity and usage, many persons do not know how cryptocurrencies work, how they can be invested, and what is included in mining them. Therefore, to educate all of our readers, we shall examine some fundamental aspects of cryptocurrency in today's article.

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How Does Cryptocurrency Work

cryptocurrency and how it works
Cryptocurrency is created using blockchain technology that miners and developers well understand. (Source: Unsplash)

Before knowing how to use cryptocurrency, it is essential to understand what it is exactly and why it was created in the first place. The cryptocurrency was established to create a digital currency that was decentralised and independent of government-run financial institutions. With a virtual currency, persons could more easily make online purchases and transfer money between the buyer and seller.

Cryptocurrency is created with cryptography which makes it secure and encrypted from one purchase to the other. For those computer geniuses, myself included, cryptography comes from the words "crypt" and "-graphy", which mean vault and has to do with writing.

Therefore, cryptocurrency is well-liked and received by many for the way that it is nearly impossible to "double-spend" and counterfeit. Also, governments cannot manipulate cryptocurrency makes it very attractive to those who use it.

Cryptocurrencies work off something known as "blockchain technology", which acts as a ledger that keeps information and transfers data successfully. The blocks are created by verifying crypto transactions and ensuring that there was no double spending of coins.

Some of the most commonly used and popular coins of cryptocurrency include Bitcoin (BTC), Ether (ETH), XRP Ripple, ZCash, Tether, and Cardano (ADA); these cryptocurrencies are the most traded and purchased of all others. However, it's important to state that there are more than 4,000 cryptocurrencies. Some last longer and are worth using, whereas others fade away after a few months or years leaving investors with no profits.

Bitcoin was the first cryptocurrency ever created in 2009 and remains the king of the industry. Most shops and online retailers usually accept Bitcoin the same way they purchase using a credit or debit card. But what are the most popular ways to use cryptocurrency? The following are the three most customary ways to use cryptocurrency:

  • Invest: rather than use cryptocurrency for a reason; it was invented as a digital form of money; many individuals follow the trends and invest in crypto to profit. An investment portfolio to purchase crypto is created using platforms such as Coinbase and Wealthsimple. Amateur investors add money in their local currency to their crypto account and then buy Bitcoin and Ether. Investing in cryptocurrency is a good idea remember that it is incredibly volatile.
  • Online Shopping: since its creation in 2009, cryptocurrency, especially Bitcoin, has risen in popularity as a means of payment. Therefore, more and more online stores and retailers are accepting cryptocurrency. To purchase items using crypto, make sure the online store has the icon for Bitcoin, Ether, or Litecoin, etc., and that you have enough in your virtual wallet. As time goes on, more companies will accept different types of cryptocurrency.
  • At Local Stores: many local shops that sell necessity items such as clothes or food now accept Bitcoin. So, as long as you have your cryptocurrency wallet, you can use it to purchase products the same way you would utilise a credit or debit card.

There you have it, readers, a brief description of how cryptocurrency works and how it can be used. Now, what about investing in cryptocurrency? Read the following subheading to learn more!

How to Invest in Cryptocurrency

buying stocks and value items
There are essential steps to take into consideration when investing in cryptocurrencies. (Source: Unsplash)

Investing is not easy, especially when you don't know what to invest in; however, it is essential to take an interest in investments if you want a prosperous future and comfortable retirement.

What about cryptocurrency? Is it worth investing in? If you don't mind its volatility and you're down for an exciting ride, investing in cryptocurrency is a worthwhile endeavour. The following are essential steps to take into consideration when investing in cryptocurrency:

  1. Set Aside an Amount of Money: before you start investing and creating your profile on an investment site, it's worth stating that you should have a specific amount of money set aside that you wouldn't mind investing in crypto. Most investors suggest dedicating a small amount to cryptocurrency investments.
  2. Choose a Cryptocurrency Platform: the next step includes selecting a cryptocurrency platform that allows you to buy and trade cryptocurrencies such as Bitcoin, Doige, and Ether. A cryptocurrency platform is essentially an app such as Coinbase or Wealthsimple that acts as a "wallet" to keep your cash.
  3. Buy Cryptocurrency: after the "wallet" has been set up, the next step is purchasing cryptocurrency. Since there are so many currently in circulation, that might seem like a daunting choice, but it entirely depends on you and the research that you've done.
  4. Keep the Cryptocurrency Safe: the cryptocurrency itself and the profits you've made need to be kept safe and far away from fraud; therefore, ensure that all of your cryptocurrency transactions are encrypted. Some new ones use unique VPNs and different passwords on their accounts to ensure no theft.

After the previously mentioned steps have been implemented, it is of the utmost importance that you keep watch of your investments and advise when to buy and sell to not lose all your money!

Also, since investing in cryptocurrency is a relatively new thing, people are constantly learning. However, the most professional and established crypto investors recommend heeding the following tips to ensure success:

  • Have a Diverse Portfolio of Investments, 
  • Use an Email that is Different from your One, 
  • Hope for the Best Yet Plan for the Worst. 

If you take all of the advice in this article close to heart, we guarantee that you'll have all the keys to success when investing in cryptocurrency!

What is Cryptocurrency Mining?

mining crypto with a rig
Bitcoin and other cryptocurrencies can be mined; this is essential to keep the dream of cryptocurrency alive. (Source: Unsplash)

Isn't mining just for natural resources? Not anymore! Since the rise of cryptocurrency, the term "mining" has taken on a whole new definition. To create new Bitcoins or other cryptocurrencies, mining is necessary. But, how does one mine cryptocurrency?

Since Bitcoin is the mother of all cryptocurrency and was the first one that was successfully mined, the way it was created and how it is mined was imitated by many other cryptocurrencies in the following years. Therefore, we shall use how Bitcoin is mined to understand how mining works for most other cryptos.

The creator of Bitcoin, Satoshi Nakamoto, established the mining rules to reward miners for their hard work verifying transactions processed using Bitcoin. Verifying cryptocurrency transactions is essential to ensure that there is no "double-spending" and that everything is well managed.

To mine a Bitcoin, miners must have completed a block of 1MB of transaction verifications; depending on the size of the transaction; it can be very many or very few; after the block of 1MB is successfully mined, miners move onto the next step, which is a guessing game that requires them to guess a numeric problem.

It's important to state that a person doesn't need to be an expert in maths to solve the 64 digit code; instead, a lot of patience and time is required. Once the 1MB of data was completed, and the code was guessed, a Bitcoin is mined and created!

How much do Bitcoin miners make? Is it worth the money? The answer is a resounding YES! Though the value of the BTC reward gets halved every four years since its creation, the BTC value multiplied by the market value of Bitcoin provides a massive payday.

For example, in 2021, the BTC mining value is worth 6.25 per Bitcoin. When that is multiplied by the market worth of Bitcoin on the stock market, which is $32,792, a total of $204,950 is awarded for mining a Bitcoin; not too bad!

Other common cryptocurrencies such as Ether are mined similarly as Bitcoin with a Proof of Work method (PoW); however, it is essential to state that Ether will soon change its mining strategies to proof of stake is very different from traditional mining techniques. A lot of people mining Ether use mining pools such as SparkPool, NanoPool, and others.

With such a good payday, and since we're in the age of computers, it might seem that it's sort of a no-brainer to mine cryptocurrency. However, it's important to mention that, like everything in life, there are pros and cons to mining cryptocurrencies. Such as?

For instance, some of the advantages may include the facts that you can make good money and contributeu to the growth of cryptocurrency. Nonetheless, on the other hand, some drawbacks of mining cryptocurrency, especially Bitcoin, are the insanely high electricity bills and the intense hardware costs.

One must look at the benefits and disadvantages of mining cryptocurrency before making an educated decision. 

In conclusion, learning more about cryptocurrency is essential in today's modern age since it might become the new way that we spend and use money; digital currency is the future!

 

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Daniel

A student by trade, Daniel spends most of his time working on that essay that's due in a couple of days' time. When he's not working, he can be found working on his salsa steps, or in bed.