What is Cryptocurrency – Mining, How to Buy & Invest – Everything You Need To Know!
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In 2009, when Satoshi Nakamoto invented Bitcoin, little did he know that his brainchild will create waves in global economics. Minds in deep slumber were conjured up to unleash their potential in the form of a whole new virtual decentralized exchange system- termed as Cryptocurrency. A giant leap from regular digital cash operations, using cryptography or secret codes to secure transactions and track purchases is a major milestone achieved by the strategists. Anonymity happens to be an integral factor behind that indomitable craving of risk takers to take a plunge into the whirlwind.
A cryptocurrency or, crypto currency is a digital or virtual asset/currency that uses cryptography for security or, designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of additional units, and to verify the transfer of assets. If we say about “A cryptocurrency is difficult to counterfeit because of this security feature” that won’t be wrong at all. Cryptocurrencies are a type of digital currencies, alternative currencies and virtual currencies. One more thing about Cryptocurrencies, they use decentralized control as opposed to centralized electronic money and central banking systems. The decentralized control of each cryptocurrency works through a blockchain, which is a public transaction database, functioning as a distributed ledger. [Source; Wikipedia]
Blockchain and Mining- Decoding the Jargons
Unlike centralized banking systems, Cryptocurrency functions through a public transaction database or a distributed public ledger also termed as a blockchain. It neither has affiliations to a bank, nor requires use of identity in case of disbursing payments or maintaining savings.
In the absence of a centralized server, the transactions involving Cryptocurrency have to be tracked, accumulated and recorded to form a new block. The network nodes facilitating the function are termed as miners. A set of transactions get collected in a block and is added to the blockchain. One who is responsible for the assemblage is rewarded with the units of the currency.
Cryptocurrency Mining – Best Cryptocurrency to Mine
How to mine cryptocurrency:In cryptocurrency networks, mining is a validation of transactions. Miners are the single most important part of any cryptocurrency network. It is similar like trading, mining is an investment. For this effort, successful miners obtain new cryptocurrency as a reward. The reward decreases transaction fees by creating a complementary incentive to contribute to the processing power of the network. According to Wikipedia, The rate of generating hashes, which validate any transaction, has been increased by the use of specialized machines such as FPGAs and ASICs running complex hashing algorithms like SHA-256 and Scrypt.
Essentially, miners are providing a bookkeeping service for their respective communities. They contribute their computing power to solving complicated cryptographic puzzles, which is necessary to confirm a transaction and record it in a distributed public ledger called the Blockchain.
This arms race for cheaper-yet-efficient machines has been on since the day the first cryptocurrency, bitcoin, was introduced in 2009.
However, with more people venturing into the world of virtual currency, generating hashes for this validation has become far more complex over the years, with miners having to invest large sums of money on employing multiple high performance ASICs.
Thus the value of the currency obtained for finding a hash often does not justify the amount of money spent on setting up the machines, the cooling facilities to overcome the enormous amount of heat they produce, and the electricity required to run them.
Best Cryptocurrency to mine right now: Ethereum (ETH), Ethereum Classic (ETC), ZenCash (ZEN), ZCash (ZEC), Bitcoin Gold (BTG), Monero (XMR), Bitcoin Cash (BCH), Electroneum (ETN), DASH, Ripple (XRP)
Cryptocurrency Mining Rig: A mining rig is a computer system used for mining bitcoins or different altcoins. The rig might be a dedicated miner where it was procured, built and operated specifically for mining or it could otherwise be a computer that fills other needs, such as performing as a gaming system, and is used to mine only on a part-time basis.
Cryptocurrency Market Capitalization – Competition in cryptocurrency markets
Cryptocurrency Market Cap: According to stats from Wikipedia, As of January 2018, there were over 1384 and growing digital currencies in existence. And, As of December 2017 total market capitalization of cryptocurrencies is bigger than 600 billion USD and record high daily volume is larger than 500 billion USD.
Top 10 Cryptocurrency List with Cryptocurrency Market Cap
(stats retrieved on March. 12, 2018)
39,091,956,706 XRP *
65,000,000 NEO *
25,927,070,538 ADA *
18,498,427,932 XLM *
722,609,688 EOS *
2,779,530,283 MIOTA *
Most common Cryptocurrencies
Among the list of top Cryptocurrencies out there, the following seem have created an upsurge in the industry:
As the forerunner in the sphere of cryptocurrency, it is ranked as the most commonly traded one till date.
Being a bearer ecash, it can be used as physical cash.
Transfers are irreversible once the payment is completed.
It Divisible upto 8 decimal places.
Processing fees are extremely low.
With the market capitalization of around $230 billion in December 2017, it seems to consolidate its position further in the industry.
Years later in 2015, ether- another currency token in the ethereum blockchain was introduced that uses smart contracts. With the capital presence of $67 billion, it ranks as the second most popular Cryptocurrency, that has served as a launchpad for other currencies using the same blockchain code. After suffering a hack, back in 2016 its value fell to 10 cents, splitting into two currencies. It recovered and soon reached the $840 mark in recent months thus hinting at the volatility of crytocurrency, resting upon the unpredictability of capital market.
Founded in 2012, this reserves the ability to maintain records of transactions besides tracking just Cryptocurrency. It happens to be a real time settlement network that offers instant and low cost international payments.
Owing to its dynamic nature, banks like Santander as well as UBS have been empowered to repay cross border payments in real time. Its market capitalization stands at $10 billion. It does not require mining, reducing computation and network latency. Backed by many banks and financial institutions, Ripple boasts of a powerful existence in the form of currencies available at selective exchanges.
Making use of Scrypt encryption algorithm, this currency has strengthened its foothold by introducing a network that makes the block generation 4x faster and sharper than Bitcoin.
The amount available for mining and circulation is exactly four times more than Bitcoin. In one of the recent developments, through a smart contract Litecoin allowed users to swap cryptocurrencies directly without third party exchange. Its current value stands at $5 billion.
How does Cryptocurrency work?
As we all know that, Cryptocurrency is a type of Digital currency or asset. Some of the most popular cryptocurrencies today are Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP). The currencies are transferred directly from peer to peer without any intervention of banks, financial institutions or government. The transactions are validated by “miners” who record transactions in the blockchain and prevent double spending of cryptocurrency.
Where is Cryptocurrency stored?
Cryptocurrency is typically stored in digital wallets also known as Cryptocurrency Wallets that exist on the blockchain.
These wallets can be accessed from anywhere in the world as long as you have an internet connection.
Cryptocurrency and E-money: How does the transaction work?
Transactional Characteristics for Cryptocurrencies
1. Transaction begins
User goes to an online exchange to convert fiat currency for bitcoins and stores them in a bitcoin wallet.
User exchanges e-money for an equal amount of e-value stored, for example in a mobile wallet.
Instant and global
No permission required
2. Submitting Payments
A request is sent to Bitcoin network in order to make a purchase. Currently, there are many online merchants accepting bitcoin.
The value of money to be transferred and the recipient’s phone number are entered. The money transfer is sent.
3. Verifying Transactions
Bitcoin’s decentralized peer-to-peer network of “miners” maintains a master ledger- a blockchain, to verify every transaction. It takes an average of 10 minutes to 30 minutes to verify. Upon verification, data is broadcast to all users and the ledger is updated.
User receives an SMS to verify the mobile transaction. The e-money issuer maintains records of all transactions and customer balances.
How to Buy, Where to Buy and Invest – Best Cryptocurrency to buy now
How to invest in Cryptocurrency: If you’re ready to buy some of the cryptocurrencies, then Maybe you’ve been convinced with the reading of Blockchain technology as well as future scopes of it. Now, If you are looking to buy Bitcoins or Ethereum or any other Cryptocurrency then you must remember that you’ll not a million dollars overnight here. This field requires patience as well as trust. You must have the knowledge of HODL and FUD before going to trade and invest in the Cryptocurrency World. So, give it a second though before investing your money here. Make sure just invest with the money that you can live without. So, It requires your own account with some of valid ID proofs on the top most exchanges for buying cryptocurrency such as Coinbase,Binance (I personally prefer), Kraken, Gemini & more on.
So, I think now it’s clear for you that where to buy cryptocurrency or can say safest places to store your cryptocurrency coins that can’t be hacked for sure.
Best Cryptocurrency to buy now
Here, we’re presenting you some of the most popular but undervalued cryptocurrencies, which you should surely buy. These all currencies have the great future in the upcoming months and years. They are as:
1. Ripple (XRP)
2. NEO (NEO)
3. Stellar (XLM)
4. Monero (XMR)
5. EOS (EOS)
6. IOTA (MIOTA)
7. DASH (DASH)
8. Ethereum (ETH)
9. Bitcoin (BTC)
10. Verge (XVG)
11. Cardano (ADA)
Cryptocurrency Tutorials and Conceptual Videos
1. Ever wonder how Bitcoin (and other cryptocurrencies) actually work?
Although, seemingly lucrative, Cryptocurrency is a hard nut to crack for any lay man owing to the intricate jargons that overshadows the real essence. But, it is no more a secret (thanks to the extensive coverage and religious follow ups by the media), that an instrument which has created such hue and cry is bound to affect the future of currency market, owing to its already existing and continually increasing stakes in the current capital market.
The first regulation free virtual currency network seems to have casted a spell on the minds of financial analysts and bankers with its revolutionary instinct of concealing identities, yet yielding windfall gains, beyond cognizance of the real world.
The total outstanding value or the market capitalization of all cryptocurrency tokens approximately stands at $423.7 billion as of January 2018, challenging the conventional notions people bear about money. The figures alone often draw the commoners’ interests to invest in Cryptocuirrencies. Absolutely invincible cryptographic tokens promise to manifest its worth as a non-manipulative monetary instrument across the globe, scrupulously taking over Euro, Dollar, etc. In spite of being called scams or ponzi schemes, the gripping returns have established its productivity.
Credible market controllers like the Wall Street has claimed that the Crypto market is hyped, without actually bearing any intrinsic value, thus, is completely beyond evaluation. Yet, investors continue to play the unsafe bet in the most secure platforms. Launching Bitcoin futures on Nasdaq and CBOE has been considered to be the first introduction of cryptocurrency to the mainstream. This will supposedly encourage investors to use traditional monetary instruments to bet on Bitcoin. With the already whooping local cryptocurrency markets in Japan and South Korea, the emergence of large scale exchanges will definitely add to substantial growth.
Beyond the hunki dori there exists a world full of uncertainties. In the absence of a structured business model the crypto market is faced with a lack of vision and unpredictable oscillations, often making its transiency evident. In case of Bitcoin, as the price continues to rise, any transactions done using it becomes more expensive, thus reducing it to the value of an unreliable asset.
On the contrary, by some, it is often considered as digital gold considering the the fact that it can be used to purchase other cryptocurrencies using wallets and exchanges affiliated to like Coinbase or Binance.
Future of cryptocurrency
The market of cryptocurrencies is fast and wild. Nearly every day new cryptocurrencies emerge, old die, early adopters get wealthy and investors lose money. Every cryptocurrency comes with a promise, mostly a big story to turn the world around. Few survive the first months, and most are pumped and dumped by speculators and live on as zombie coins until the last bag holder loses hope ever to see a return on his investment.
Bill Gates, co-founder of Microsoft, investor and philanthropist:
“Bitcoin is exciting because it shows how cheap it can be. Bitcoin is better than currency in that you don’t have to be physically in the same place and, of course, for large transactions, currency can get pretty inconvenient.” [SOURCE]
Richard Branson, founder of Virgin Galactic and more than 400 other businesses:
“Well, I think it is working. There may be other currencies like it that may be even better. But in the meantime, there’s a big industry around Bitcoin. — People have made fortunes off Bitcoin, some have lost money. It is volatile, but people make money off of volatility too.” [SOURCE]
Al Gore, former Vice President of the United States:
“When Bitcoin currency is converted from currency into cash, that interface has to remain under some regulatory safeguards. I think the fact that within the Bitcoin universe an algorithm replaces the function of the government …[that] is actually pretty cool.” [SOURCE]
Eric Schmidt, executive chairman of Google:
“[Bitcoin] is a remarkable cryptographic achievement… The ability to create something which is not duplicable in the digital world has enormous value…Lot’s of people will build businesses on top of that.” [SOURCE]
Peter Thiel, co-founder of PayPal:
“PayPal had these goals of creating a new currency. We failed at that, and we just created a new payment system. I think Bitcoin has succeeded on the level of a new currency, but the payment system is somewhat lacking. It’s very hard to use, and that’s the big challenge on the Bitcoin side.” [SOURCE]
Evolution of New Players
With the evolution of crypto market, newer entities are making their way through, in a way increasing competitiveness owing to the new prospects they are introducing, validated by credible communities like in the case of Cardano. Although a smaller presence, its value proposition promises to deliver smart contracts offering priority to scientific research and development. Being distantly related to ether, Cardano seems to even overtake it owing to the proof it bears of stake algorithm. Its stake in the capital market has experienced a surge of 400% last year, with its fair possibility of doubling this year.
In fact platforms like Dash and NEO have evolved into an outrightly advanced beacon, wherein NEO has challenged the scalability of Ethereum’s smart contracts, guaranteeing outstanding security. For reasons obvious, NEO experienced record growth of about 9000% last year.
As far as the purchase of token is concerned, the first step leads you to buy Bitcoins. On owning it, you are free to trade in Altcoins. Exchanges like xCoins, KuCoin, CEX, Bittrex is in function besides the well known ones like Coinbase and Binance.
The Cryptocurrency bubble– if we are at the liberty to call it so, has created a hullabaloo worldwide. To everyone’s surprise it continued to flood the headlines of all financial dailies for quite a while owing to its spontaneity and speculative nature that tacitly pledged to serve as a hedge against the dollar turbulence as predicted by strategists.
Undoubtedly, the intriguing and intimidating concept of cryptographic transactions allures us to delve into daily trading. But, one has to be wary about the fact that this is comparatively a new sphere of investment and is subject to the pits and falls of the capital market. So, the ultimate mantra is to
Think before you leap!
measure your stakes well
never use your emergency funds or planned savings
sit back and read well before venturing out
Never let the ‘fear of missing out’ over-take your rationality, while you watch the game being played from the gallery of maturity, ideating when and how to capitalize on the myriad aspects of cryptic mystiques!