Beginner Guide to Cryptocurrency

Complete Guideline to Cryptocurrency

You have probably heard about cryptocurrency or crypto, digital currency, coin market cap, crypto mining, bitcoin, and many more. In this article, I am going to explain to you all the important things you need to know about digital currency. If you feel confident after reading this article, then you can also make up your mind about investing in crypto coins.

When you think of cryptocurrency, your mind might be flooded with the below list of questions-

• What is cryptocurrency or crypto or digital currency?
• How does cryptocurrency works?
• What are the types of cryptocurrency?
• What is the list of cryptocurrencies in India?
• Is cryptocurrency legal in India?
• Which is the best cryptocurrency to invest in?
• Which is the best cryptocurrency trading platform?

What is cryptocurrency?

A cryptocurrency is a form of digital or virtual currency which uses encryption algorithms called cryptography to secure transactions. It uses a decentralized system to make transactions. In simple words, it is the way of creating virtual transactions directly to the other person without relying on banks. It evolved to make global transactions faster and cheaper.

How does cryptocurrency work?

Cryptocurrency works on blockchain technology which is a form of the distributed public ledger where all the records of transactions are kept. The transactions involve the transfer of units which can be either generated with the help of a process called crypto mining or can be brought from the brokers. You don’t hold anything tangible because you are provided with a key with the help of which you can transfer the crypto units to another person.

What are the types of cryptocurrency?

It can be categorized into four types based on their utility:-

Currency/Token:

Bitcoin, the world’s first crypto coin that evolved in 2009 was made for currency utility. Every crypto has its decentralized blockchain. Like Ethereum blockchain has ether as its token.

Asset:

When the value of the cryptocurrencies depends on the external asset. For example, the Gold GLC derives its value from gold. With the introduction of stablecoins, the investor who wants to leave any crypto coin can now do so by exchanging it for more stable crypto.

Object:

To finance the special projects which aim at solving the world’s problems, these digital currencies were introduced. For example- to make the expensive cloud storage affordable, Siacoin(SIA) was introduced. Similarly, Terra crypto or Luna crypto is working toward a stablecoin provider for e-commerce transactions.

Joke Coin/Meme Coin: 

These digital currencies were made just for fun and without any purpose. They work on the idea of community-based speculative trading. These are highly risky. You never know when their value reaches zero and when the value of meme crypto suddenly becomes zero, it is known as a crypto bubbles bust. The rise and fall of their value are unpredictable. For example, the Shiba Inu coin and Dogecoin started as meme coins but now their value is worth millions of dollars.

I hope you are developing an interest in learning more about crypto coins. If you are really excited to learn more, continue reading my next post.

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