Many of you have probably heard of cryptocurrencies. In the following article you will learn first of all what are cryptocurrencies and how they work. In addition, you will learn the types of cryptocurrency, how to “eat” it, how to start in cryptocurrency step by step and whether and how much you can earn on them. First of all, how to start investing in cryptocurrency. We also encourage you to contact us if something is still unclear to you.
Cryptocurrencies – what is it?
Cryptocurrency is an online medium of exchange that uses cryptographic functions to carry out financial transactions. They use blocking technology to achieve decentralization, transparency and immutability. The most important feature of cryptocurrency is that it is not controlled by any central authority: the decentralized nature of blockchain makes digital currencies theoretically immune to old ways of government control and intervention.
Cryptocurrencies can be sent directly between two parties using private and public keys. These transfers can be made with minimal handling fees, which allows users to avoid the high fees charged by traditional financial institutions.
How cryptocurrencies works? How to start investing in cryptocurrency?
Few people know, but cryptocurrencies appeared as a byproduct of another invention. Satoshi Nakamoto,the unknown inventor of Bitcoin, the first and so far the most important cryptocurrency, never intended to invent a currency.
In an announcement about Bitcoin in late 2008, Satoshi said he had developed a peer-to-peer electronic cash system. His goal was to invent something; Many people were not able to create before the advent of digital money. The announcement of the first Release of Bitcoin of a new e-cash system that uses a peer-to-peer network to prevent double spending. It is completely decentralized without a server or central authority.
The most important part of Satoshi’s invention was that he found a way to build a decentralized digital monetary system. In the nineties, there were many attempts to create digital money, but they all failed.
After more than ten years of failed systems based on the trust of third parties (Digicash, etc.) I hope they will be able to make a distinction that, for the first time, I know that we are trying out a system based on confidentiality. After all centralized attempts failed, Satoshi tried to build a digital monetary system without a central entity. As a peer-to-peer network for file sharing. This decision was the birth of the question – how to start in cryptocurrency. The missing part that Satoshi found to realize digital money. The reason for this is a bit technical and complicated, but if you get it you will know more about cryptocurrencies than most people. So let’s try to make it as simple as possible.
To redeem digital cash, you need a payment network with bills, balances, and transactions. It’s easy to understand. One of the main problems that any payment network must solve is the prevention of so-called double spending: preventing the same amount from being spent twice by one organization. This is usually done by a central server that keeps a record of balances. There is no such server in a decentralized network. Therefore, every single network object is needed to do this work. Each node in the network should have a list of all transactions to see if future transactions are important or if there is no attempt to double the expenses.
But how can these beings maintain a consensus on these posts?
If the peers of the network differ in their views only on one, small balance sheet, everything is broken. They need absolute consensus. You usually take again, the central authority to declare the correct state of the balances. But how can a consensus be reached without a central authority? No one knew until Satoshi appeared out of nowhere. In fact, no one believed that this was even possible. Satoshi proved that this is the case. His main innovation was to reach a consensus without a central authority. Cryptocurrencies are part of this solution.
Types of Cryptocurrencies
The only and unique, the first and most famous. Bitcoin serves as the digital gold standard throughout the cryptocurrency industry is used as a global means of payment and is the de facto currency of cybercrime such as darknet markets or ransomware. After seven years of existence, the price of bitcoin has risen from zero to over $650, and the volume of transactions has reached over 200,000 daily transactions. We wrote about Bitcoin in the guide “Bitcoin how to start“, which will give you more information about this currency.
The idea of the young cryptographic genius Vitalik Buterin has climbed to the second place in the hierarchy of cryptocurrencies. In addition to Bitcoin, its blockchain checks not only a set of accounts and balances, but also the so-called States. This means that Ethereum can handle not only transactions, but also complex contracts and programs.
This flexibility makes Ethereum an ideal tool for blockchain applications. But you have to pay for it. After breaking the Dao-smart contract based on Ethereum, the developers decided to make a hardfork without consensus, which led to the creation of Ethereum Classic. In addition, there are several Clones of Ethereum, and Ethereum itself hosts several tokens such as DigixDAO and Augur. This makes Ethereum more of a family of cryptocurrencies than a single currency.
Although Ripple has its own cryptocurrency-XRP is more of a network to support IOUs than the cryptocurrency itself. XRP currency serves not as a means to store and exchange value, but rather as a token to protect the network from spam.
Ripple, unlike Bitcoin and Ethereum, does not have mining because all coins are already mined beforehand. Ripple has gained tremendous value in the financial space as many banks have joined the Ripple network.
Lightcoin was one of the first cryptocurrencies after Bitcoin and marked as silver to digital gold Bitcoin. Faster than Bitcoin with more tokens and a new mining algorithm, Litecoin was a real innovation. Ideally suited to being the smaller brother of Bitcoin. This facilitated the emergence of several other cryptocurrencies that used its codebase but made it even easier. Examples would be Dogecoin or Feathercoin.
Although Litecoin has not been able to find its true use and has lost second place after bitcoin, it is still actively developed and traded and stored as a backup if Bitcoin fails.
Monero is the most striking example of the CryptoNight algorithm. This algorithm was invented to add privacy features that Bitcoin lacks. If you use Bitcoin, every transaction is documented on the blockchain and can be tracked. With the introduction of a concept called ring signatures, the CryptoNight algorithm was able to cut this trace.
The first implementation of CryptoNight, Bytecoin, was heavily foreewed and thus rejected by the community. Monero was the first bytecoin clone without prior preparation and raised many disasters. There are several other incarnations of cryptonote with their own small improvements, but none of them have ever achieved such popularity as Monero. Monero’s popularity peaked in the summer of 2016 when some darknet markets decided to adopt it as a currency. This has led to a steady increase in prices, and the actual use of Monero seems to be disappointingly small.
How to start in cryptocurrency?
Despite the fact that everything seems so very complicated, it is not really. Do you want to learn how to start earning? Nothing could be simpler. Here are some steps to buy cryptocurrencies and earn your first money.
Binance – registration and deposit
- Create an account, for example, Binance. Here is the link to register: https://accounts.binance.com/en/register
- We recommend downloading the app on Google Play or the iOS Store.
- In the application we enter the Wallet,then
- In the next step, we choose
- We choose EURO.
- Then click on Bank Transfer or Bank We recommend the second option.
- Enter the data to the card and the amount we want to deposit. We do not have to have an account in a given currency, the bank will convert itself at its own rate.
- We confirm the transaction at the bank.
- That’s it! The money will go to our wallet after a few minutes.
- Now, in the application, select markets and enter the cryptocurrency that we want to buy in the CRYPTO/EURO option (CRYPTOmeans cryptocurrency abbreviation).
- Going further, enter the amount we have in the wallet or mark 100% and click
- We already have our first cryptocurrencies. Now, we are waiting for growth and we hope to be rich.
In addition, there are hundreds of cryptocurrencies of several families. Most of them are nothing more than attempts to reach investors and make money quickly, but many of them promise platforms to test innovations in cryptocurrency technology. We would like to remind you that in our database of recommended investments we have such articles as:
- Profit Maximizer review
- Crypto Revolt
We recommend that you only obtain reliable information, which you will find on our website! If you are interested in other sources of income than cryptocurrency exchanges, but want to continue earning money online, then we refer you to our guide how to make money online. Greetings and we wish you high earnings!
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