What is cryptocurrency and how it works How to Make money from cryptocurrency in 2023
What is Cryptocurrency and How it Works ?
So what is cryptocurrency after all? Today whoever you see is running after Cryptocurrencies. In a very short time, Cryptocurrency has shown its strong power in the financial market. Since Crypto currency can also be called digital money because it is available only online and we cannot physically transact it.
Other currencies such as Rupees in India, Dollar in USA, Euro in Europe, etc. are implemented and used by governments in the whole country, in the same way these currencies are also used in the whole world. But it is to be understood here that the Government does not have any hand over these Cryptocurrencies because they are Decentralized Currency, therefore no agency or government or any board has authority over them, due to which its value is not regulated. Can go
So I thought why not today you should be given complete information about what is Cryptocurrency. Since this topic is being discussed in full swing, then it is your right that you also know about this topic and educate others. Then without delay let us know what is this cryptocurrency and how many types are available.
Every country has its own currency, and the economy of the country runs through that currency. But nowadays some such currency has also come in the world, which are in digital form and are not visible to us. Today we are going to talk about one such currency whose name is cryptocurrency. In this article, we are going to give you all the information about what are cryptocurrencies, how they work, and which are cryptocurrencies, and their features etc.
What is cryptocurrency? (What is Cryptocurrency?)
Cryptocurrency is also called digital currency. It is a type of Digital Asset which is used for the purchase of goods or services. Cryptography is used in these currencies.
This is a Peer to Peer Electronic System which we can use through the Internet to purchase Goods and Services in place of regular currencies. In this system, the government can work without informing the banks, so some people believe that cryptocurrency can be used in a wrong way.
If we do Cryptocurrency first, then it will be Bitcoin which was first brought in the world for these works. If we see today, there are more than 1000 Cryptocurrency in the whole world, but only a few of them are more important, about which we will know later.
Cryptography is used to create cryptocurrency.
If we talk about all cryptocurrencies, the first one to become famous among them is Bitcoin. It was made first of all and it is also used the most. There were many controversies regarding Bitcoin, but today Bitcoin is at the top of Cryptocurrencies.
Here I am going to tell you about some other Cryptocurrencies about which you probably already know.
Cryptocurrency is a digital currency created by a technology like cryptography and using a distributed ledger system, in which work is done by blockchain. Through this technology, the developers aimed to create such a currency, which is secure, private, traceable and decentralized for a longer period of time. When we have to pay for buying something or availing any service on a large scale, then we can make payment in digital form through online money exchange. Therefore, the payment made in this is done in the form of some wallets using the internet. This currency appears new to us, so it is the most advanced version of cashless payment, which is in digital form.
Cryptocurrency is a word made up of two words. Crypto, which is a Latin word derived from cryptography, means hidden. Whereas Currency also comes from Latin currentia, which is used for money-money. So cryptocurrency means hidden money. or secret money. Or Digital Rupee. Kshitij Purohit, Head of International and Commodities Research at Capital Via Global Research Ltd., who has a keen eye on cryptocurrencies, explains that generally cryptocurrencies are a kind of digital money, which you cannot touch, but you can keep. That is, it is a digital form of currency. It is not in your pocket in solid form like a coin or a note. It is completely online.
Understand it in simple language that every country has its own currency. Like India has Rupee, America has Dollar, Saudi Arabia has Riyal, England has Euro. Every country has its own currency. That is, such a money system which is recognized by a country and the people there can buy essential things using it. Means, which has some value, it is called currency.
How does cryptocurrency work? (How Cryptocurrency Works?)
To know how cryptocurrencies work, you should consider some of the points given below –
The main function of cryptocurrency is to transfer money from one computer to another. And this work is done, through blockchain.
Blockchain acts like a bank. The complete record of all the transactions done in this is done in this blockchain, due to which the possibility of fraud is greatly reduced.
This technology is monitored and tested by some people through powerful computers. This process is the mining process of cryptocurrency.
By whom this monitoring and checking is done, they work in the same way as the work of a clerk in a bank, and they are called minors.
Now it comes to how these miners monitor and check this, then let us tell you that they receive a code to do this, and they receive this code only when a number is presented in front of them. They solve math problems correctly.
Here the mining process of cryptocurrency is completed and after that comes the exchange process, in which cryptocurrency is transferred from one account to another.
When buying, selling or trading through cryptocurrency, when it comes to where you have it, let us tell you that there are some wallets for this. In which this store resides.
Actually it is a program to store public and private keys in the computer. And it enables users to send, receive and monitor digital currency balances. And that's how cryptocurrencies work.
The popularity of cryptocurrency currencies has increased over the past few years. They are used through blockchain software. These digital currencies are encrypted ie coded. It is managed through a decentralized system. In this, every transaction is verified by digital signature. Its record is kept with the help of cryptography. Kshitij explains that the purchase through this is called Cryptocurrency Mininig because a database of every information has to be created digitally. Those by whom this mining is done are called miners. In simple language, cryptocurrency is a virtual currency based on blockchain technology which is secured by cryptography. All this work is done through powerful computers. Kshitij even says that copying its code is almost impossible.
The Origin of Cryptocurrency
When internet facility started in the world, then it was unknown to many people. Talking about the 1990s, in the beginning most people were struggling to understand the Internet. Although many people were so smart, that they had full knowledge about how the internet is such a powerful tool. Such people believed that the government and the corporation have got too much power over our lives. And they wanted the people of the world to get freedom by using the internet. So these cypherpunks wanted to allow Internet users to have more control over their money and information, using cryptography. To this end, Cypherpunks created a list of digital cash, with DigiCash and CyberCash both being attempts to create a digital money system. But due to some shortcoming both failed. Then after waiting for a long time, a digital cash system i.e. digital currency was invented in the year 2009, which was successful. And this is how cryptocurrency started.
How bitcoin originated (What is bitcoin?)
We have already told about bitcoin, what it is, but the word cryptocurrency has originated with this cryptocurrency. That's why bitcoin cryptocurrency has been placed at number one in the list of most famous cryptocurrencies. No one has any information about who is Satoshi Nakamoto who started it, even there is no information about whether he is a man, a woman or a group. They have talked only through email. In the year 2009, a coder named Hailey Finney was first transacted as 10 bitcoins. After this, Satoshi Nakamoto left in the year 2011, but started by him, it became very popular among bitcoin cryptocurrency users. During that time the price of one bitcoin was equal to one dollar, but only after 6 years its price became 20 thousand US dollars.
What is blockchain and how does it work?
Blockchain uses Distributed Ledger Technology (DLT) to remove third parties from the system. This means that the way when we do a transaction with someone, there are some third parties in between who help in completing this transaction but this does not happen. The technology used in cryptocurrency transactions is a shared database where transaction information is recorded. This technology is called blockchain technology. Actually, blockchain is a database of every transaction, the information about the transactions done in it is in the form of blocks and then these blocks are connected one by one with the database to form a long chain. This is what blockchain is. Once the information is entered in the blockchain, it cannot be removed or changed. Nor can everyone see it. The entire database is stored on a network of thousands of computers called nodes. Any new information is added to the blockchain when more than half of the nodes agree that it is completely valid and also correct.
Some Information Related to Cryptocurrency
Before understanding cryptocurrency, you should look at some of the points given below –
Digital: - We cannot see cryptocurrency, because it is on computer and not alive, so it is digital currency.
Decentralized:- Cryptocurrencies do not have a central computer or server, they are usually distributed over a network of thousands of computers. A network without a central server is called a decentralized network.
Peer-to-Peer: - Cryptocurrencies are passed from one person to another online. In this, users do not interact with each other through the medium of bank or paying system or Facebook. That is, there is no third party involved in it. Rather, it interacts directly with each other, and this is called peer-to-peer.
Pseudonymous :- This means that you are not given or given any personal information to use cryptocurrency. No rules have been set for its use.
Reliable :- No third party has to be trusted in this, in this the complete control of money and information remains in the hands of the users at all times.
Encrypted: - Each user has a special code so that their information cannot be accessed by other users. This is called cryptography. And hacking it is also almost impossible. When information is hidden with cryptography, it is encrypted.
Global :- All countries have their own currency which is called fiat currency, it is very difficult to use fiat currency all over the world. Therefore, if you use cryptocurrency instead of this, then this work will be done very easily.
How to invest in Cryptocurrencies?
To invest in Cryptocurrencies, you have to choose the right platform. Because if the right platform is not chosen then you may have to pay more fees while trading. Similarly, the most popular Cryptocurrency platform in India at present is "Wazirx".
Investing and trading in it is very easy and its founder is also an Indian. I have also invested in it and have done so for many years. If you want too, you can invest your money in it.
How to buy and sell crypto?
The answer to this question has also become easy now. Due to increasing popularity, now there are many crypto exchange platforms in the market. In such a situation, it is very easy to buy and sell cryptocurrencies like Bitcoin and Dogecoin in the country. Popular platforms include the names of WazirX, Zebpay, Coinswitch Kuber and CoinDCX GO. Investors can also buy other cryptocurrencies like Bitcoin, Dogecoin and Ethereum from international platforms like Coinbase and Binance.
The most important thing is that all these shopping platforms are open round the clock. The process of buying and selling cryptocurrencies is also very easy. All you need to do is sign up on these platforms. After this, after completing your KYC process, you will have to transfer money to the wallet. After this you will be able to shop.
How can cryptocurrency be bought? (How to Buy Cryptocurrency?)
We have told you that you can pay with all types of cryptocurrencies. But if you are planning to buy any type of cryptocurrency, then for that you will need a wallet, which is an online app that can hold your currency. Generally there are some cryptocurrency trading exchanges on which an account is created, in this account you can buy cryptocurrency by depositing some real money. There are some very famous cryptocurrency trading exchanges, one of them is Coinbase, here you can create a wallet and buy and sell any cryptocurrency. In addition, online broker Robinhood offers cryptocurrency trades for free. Robinhood crypto is available in most of the places but not all like it is not available in US states.
How is the transaction done?
Whenever there is a transaction in cryptocurrency, its information is recorded in the blockchain, that is, it is kept in a block. The security and encryption of this block is done by the miners. For this, they solve a cryptographic puzzle and find the appropriate Hash (a code) for the block.
Types of Cryptocurrencies
Types of Cryptocurrency
There are many types of cryptocurrencies, here we are discussing the names of some famous cryptocurrencies and some of them.
If seen, there are many Cryptocurrencies but only a few of them are performing well and which you can use apart from Bitcoin.
1. Bitcoin (BTC)
If we talk about Cryptocurrency and there is no talk of Bitcoin then it is not possible at all. Because bitcoin is the first cryptocurrency from the world. Which was created by Satoshi Nakamoto in 2009. This is a digital currency which is used only online to buy goods and services. It is a De-centralized currency which means that the Government or any institution has no hand over it. If we talk about today, then its value has increased a lot, which is now around 13 Lacks, the value of a coin. From this you can find out about its present importance.
2.Ethereum (ETH)
Like Bitcoin, Ethereum is also an open-source, decentralized blockchain-based computing platform. The name of its founder is Vitalik Buterin. Its Cryptocurrency token is also called 'Ether'. This platform helps its users to create a digital token, with the help of which it can be used as a currency. Recently, due to a Hard Fork, Ethereum has been divided into two parts, Ethereum (ETH) and Etherim Classic (ETC). It is the second most famous cryptocurrency after bitcoin.
3. Litecoin (LTC)
Litecoin is also a decentralized peer-to-peer cryptocurrency, which is an open source software released under the MIT/X11 license in October, 2011 by Charles Lee, who has previously been a Google Employee. Bitcoin has a big hand behind its creation and many of its features are similar to Bitcoin. Litecoin's block generation time is 4 times less than that of Bitcoin. That's why transactions are completed very quickly in this. Scrypt algorithm is used in this to do mining.
4. Dogecoin (Doge)
The story of the formation of Dogecoin is quite interesting. It was compared to a dog to make fun of Bitcoin, which later took the form of a Cryptocurrency. Its founder's name is Billy Markus. Like Litecoin, Scrypt Algorithm is also used in this. Today Dogecoin's market value is more than $197 million and it is accepted in more than 200 merchants all over the world. In this also mining is very quick as compared to others.
5. Tether (USDT)
According to Coinmarketcap.com, Tether is the largest stablecoin with a market cap of $78 billion as of January 17. It uses the blockchain technology of Bitcoin. Stablecoins have reduced volatility pegged to the US dollar and euro, and are one of the most popular options for those looking to invest in cryptocurrencies but reluctant to encounter volatility.
6. Binance Coin (BNB)
This cryptocurrency is the native cryptocurrency of the Binance crypto exchange, which is the world's largest exchange by volume. Binance was only launched in 2017 but has expanded very quickly by facilitating trading on its platform. The crypto has come a long way from its price in 2017 which was just $0.10 to 5200% on 3rd January 2022 to 5200%. According to Coinmarketcap.com on January 17th, Binance (BNB) ranks fourth with a market cap of around $80 billion.
7. Solana (SUN)
Recently, Solana has been facing a downtrend, but the crypto is on the third spot in this list because of its extremely successful 2021. SOL has proven itself to be one of the fastest growing cryptos in the market. Furthermore, there can be no disagreement that SOL is the biggest competitor to Ethereum. SOL token has reportedly gained 13,662% in 2021.
8. Ripple (XRP)
Ripple was released in 2012 and it is based on distributed open source protocol, Ripple is a real-time gross settlement system (RTGS) which runs its own cryptocurrency which is also called Ripples (XRP).
This is very much and famous Cryptocurrency and whose overall market cap is about $ 10 billion. According to their officials, Ripple provides users with “secure, instant and nearly free global financial transactions of any size and without any chargebacks”.
9. Polygon
This year's prospects can be considered quite good. And experts believe that the credit goes to Ethereum. Crypto is all set to transition to version ETH 2.0, which relies heavily on layer-2 solutions like Polygon. It could also indicate that Polygon has the edge to experience an increase in value, and is a good option to buy and hold.
10.Monero
Monero (XMR) :- This is the last type of cryptocurrency which was started in the year 2014. It works on all types of systems. And also like bitcoin. Consumer-level CPU's are used in this cryptocurrency.
Why is cryptocurrency popular? (Why is Cryptocurrency Popular?)
Cryptocurrencies are popular among their supporters for many reasons, we are giving information about some of them here –
People who use or have used bitcoin cryptocurrency see it as one of the main currencies of the future. And there is a race among their competitors to buy them so that they become more valuable before them.
Some proponents prefer this for the reason that cryptocurrencies can remove the management of the money supply. Because over time this bank will reduce the value of money through inflation.
So some other supporters are liking the technology of cryptocurrency i.e. blockchain. Because it is a decentralized processing and recording system, it can be more secure than the family payment system.
Cryptocurrencies are also being liked by some speculators. Because it is going up in value and they are not interested in long term acceptance of currency to transfer money.
Cryptocurrency Trading
Buying and selling cryptocurrencies has become huge business. The total value of all cryptocurrencies in the world is over US$350 billion. And so far 17 billion US dollars worth of cryptocurrencies have been bought and sold. You can trade online with crypto exchanges such as Binance, Bitstamp, and Coinbase. You can also arrange to trade cryptocurrencies as an individual with a peer-to-peer site such as LocalBitcoin.com.
A cryptocurrency market is a place where traders can make or lose millions. It can be made overnight and also vanishes quickly. It is important for any newbie trader to keep in mind that they only spend what they can afford to lose. So crypto trading should be used as a way to support this technology and not to get rich quick.
Is cryptocurrency legal? (Are Cryptocurrencies legal?)
The answer to this question can be different from country to country, because cryptocurrencies are being used in many countries in the world, such as the United States etc. But still it is completely banned in some countries which includes the name of China. Let us tell you that along with China, it is completely banned in our country India as well.
Advantages of CryptoCurrency
Cryptocurrency Benefits
Now let's know about the benefits of some CryptoCurrency :-
Whatever transactions are done in cryptocurrency, everything is done in online mode, as well as the security in it is very strong, because the technology used in it is a special type of security technology, so there is no possibility of fraud in it. The chances are very less. Nor can any person hack it.
There is a difference between the transaction done through cryptocurrency and the normal transaction you do, because the transaction done in cryptocurrency is done under very strict supervision and in a secure manner.
If you pay with a credit card, you have to pay additional charges on each payment, but cryptocurrency will be beneficial for this, because if you are paying someone in excess, then it will also happen. The transaction charges are also very less as compared to credit cards.
The chances of fraud in cryptocurrency are very less.
If we talk about cryptocurrency, then it is more secure than normal digital payment.
Transaction fees are also very less in this, if we talk about other payment options then.
Accounts are very secure in this because different types of Cryptography Algorithm are used in it.
Due to all these advantages, cryptocurrencies remain a very good option for people in today's time.
Disadvantages of Cryptocurrency
Cryptocurrency Drawbacks
Now let us know about the disadvantages of some CryptoCurrency :-
Where there is a specialty of anything, there must be some shortcomings in it as well, same is the case with cryptocurrencies. Yes, there are advantages of cryptocurrency, but it still has some drawbacks like –
Once the transaction is completed in cryptocurrency, it is impossible to reverse it because there are no options in it.
If your Wallet ID is lost then it is lost forever because it is not possible to get it again. In such a situation whatever money you have in your wallet is lost forever.
How to protect yourself from cryptocurrency losses? (How do I Protect Myself From Cryptocurrency's Drawbacks?)
To avoid losses from cryptocurrency, you need to take care of some things below –
First of all you see in whose name the company is? If the name of this company is a worthy and well-known organization or person, then it will be a positive sign for you.
Similarly, if the person or organization investing in it is also prominent, it will also be a good sign for you.
You also have to keep in mind what your stake is in. This means that your share is in the company or only in currency or in token. It is necessary to take care of it. If you are in partnership in the company, then you will get money according to your share, if you are in partnership in Mudra, then you can participate in its earnings. But if you buy tokens you will be entitled to use them, like chips in a casino.
In the end, you also have to take care whether the currency is already developed or the company is looking to raise money to develop it.
Today everyone is running after taking this currency. But it is not necessary that this currency will be successful. There are also some possibilities of theft risk in this, because hackers are always trying to hack your computer network in some way and take your property in their name. So success can be found in using this cryptocurrency, so you only pay attention to all things while using it.
People also ask
What is crypto currency and how does it work?
The main function of cryptocurrency is to transfer money from one computer to another. And this work is done, through blockchain. Blockchain acts like a bank. The complete record of all the transactions done in this is done in this blockchain, due to which the possibility of fraud is greatly reduced.
What is the meaning of cryptocurrency?
In simple language, cryptocurrency is a type of digital cash system, which is linked to a private computer chain and built on computer algorithms. No country or government has any control over it. Its popularity is increasing so much that many countries have legalized it.30-Nov-2021
Which cryptocurrency should I buy?
Solana - one of the most popular cryptocurrencies of the last year. Let us know what is Solana crypto currency? Solana is another best cryptocurrency to buy and invest in 2022 which was founded in 2020, yet in just a few years it has become one of the most popular and dominant blockchain in the market.
How is cryptocurrency made?
Cryptocurrencies actually work through Blockchain. That is, a record of transactions is kept in it. Also it is monitored by Powerful Computers, which is called Cryptocurrency Mining. And those by whom this mining is done are called Miners.
Which is the crypto currency of India?
1. CBDC (Central Bank Digital Currency) CBDC: Central Bank Digital Currency RBI is also preparing to bring its Digital Currency soon, yes like other crypto currency we will have our own crypto currency. RBI says that this crypto currency will change the way of your transactions.
How to trust cryptocurrencies?
Kshitij says that people predicted that bitcoin would end around $180-$200. But with mass adoption by the masses and it is gaining more trust. Nearly $700 million dollars were added to the market cap of Bitcoin in the last quarter. However, since September 2020 the price has almost more than doubled. Many countries are going to bring cryptocurrency although it has been debated that it is in the bubble space and it can burst at any time but it has become more valuable due to mass acceptance and entry of new investors. One has to trust because many countries are now considering bringing their own cryptocurrency. Earlier the government was considering banning it, but now it has seen a softening.
What is the future of crypto?
Two things are most important about Bitcoin – one, it is a digital currency used through the Internet and secondly, it is seen as an alternative to traditional currency. Cryptocurrencies are currently facing a crisis of trust. Governments view it with suspicion and consider it a threat to traditional currency. Governments also feel that cryptocurrencies are part of a virtual world that is trying to break free from government control and try to run parallel to the real world.
What is the stand of the government?
The important thing is that the central government can completely ban crypto currency in the new proposed bill. In this regard, a committee was constituted by the Center in the year 2017. This committee had proposed to ban crypto currency. In such a situation, crypto currency experts believe that in the coming days, the government may take a decision to ban all crypto currencies.
Can you really buy something like a car with cryptocurrency?
In response, Kshitij says that yes, crypto is like an Indian rupee which has its own value. Right now, crypto is not accepted by most of the governments around the world. When this happens, we will have access to crypto currency like any other currency. Because it would be part of a normal exchange between people.
what did you learn today
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