What is Cryptocurrency?
In simple words, cryptocurrency is a digital and decentralized form of money. It exists only in digital form and is a very secure form of money due to its blockchain technology.
What is Blockchain technology?
Blockchain is a decentralized and shared database with records of all transactions and is secured by cryptography. Each transaction record in the blockchain is called a block. In a block, we have the previous block hash its payment data, and the transaction timestamp. All these blocks are connected to each other like a chain structure.
When a transaction occurs, the transaction is verified by multiple computers called miners and they verify the transaction is legitimate and not counterfeit. This makes blockchain technology a very secure medium and all cryptocurrencies work on blockchain technology which is why they are so secure.
Due to their blockchain nature, a person cannot fake a transaction in it and also any previous transaction cannot be changed because when one block's data is changed the next block which includes the previous block hash data, its data will automatically be changed and going on all linked blocks data will be changed which will alert the system of a fraud attempt declining that fraud transaction.
What are Crypto coins and tokens?
Crypto coins are digital assets that have their own blockchain. The most popular crypto coin is Bitcoin made by an anonymous person Satoshi Nakamoto in 2009. Going further there are many famous crypto coins like Ethereum, Solana, Bnb, Xrp, etc.
A Crypto token is also a form of digital currency but the difference is they don't have their own blockchain and they use another network blockchain for their security and transactions
How to Get Started in Cryptocurrency?
If you wanna dive into the crypto world, you first need to have a platform where you can buy or sell cryptocurrency. Like in stock markets we have brokers, in the crypto world we have exchanges. These exchanges provide you with the convenience of buying or selling cryptocurrency. There are two types of exchanges:
- Centralized Exchanges(CEX)
- Decentralized Exchanges (DEX)
1. Centralized Exchanges:
Centralized exchanges have a central controlling authority and every operation is managed by that authority. If you are a beginner, then we suggest you to start with CEX because of their user-friendly experience and easy-to-understand platform.
Some popular CEXs are:
- Binance
- Kucoin
- Bitget
- Bybit
- Mexc
2. Decentralized Exchanges:
Decentralized exchanges do not have a central controlling authority enabling users to trade directly with one another. They do not require KYC or personal information and work on smart contracts.
Some popular DEXs are:
- Uniswap
- Pancake swap
- Raydium
After choosing an exchange, you need to deposit money on the exchange by which you can buy or sell coins. In these exchanges, we do not have fiat currencies like USD, EURO, etc and we first have to buy a stablecoin using P2P or debit card.
What are Stable Coins?
As we do not have a fiat currency option in exchanges, they provide us with a facility of stablecoins. A stablecoin doesn't increase or decrease in value like other cryptocurrencies and remains the same as the value of dollar. Some stable coins are USDT(most popular), and USDC. One USDT or USDC equals one dollar.
What is P2P?
A peer-to-peer system or p2p system is a service where a buyer and seller directly interact with each other and the buyer pays fiat currency and gets an equal amount of USDT from the seller. If you are wondering if it is safe, then don't worry exchanges act as an agent in between these transactions therefore people use centralized exchanges more because of their more secure features. Exchanges have complete data of both buyer and seller because they require KYC when you are creating an account on them and in case of scam, they immediately take action and block the fraud person's account .
Now after getting some stable coins in your account, choose wisely where you want to invest, which coin will give you a good return, understand that coin tokenomics, do proper analysis and then trade it and after buying just be patient because crypto requires that a lot.
What is Tokenomics?
Tokenomics is like the economics of a token. In this, we analyze everything about the token, its use case, total supply, total marketcap of the coin, history of coin, see their team 's future plans and base on that we make our trading strategy.
What is Marketcap of a coin?
Marketcap of a coin means the total amount of money the world has invested into that coin. Lets take and example and you will understand it better:
Suppose we have a coin named ABC having a price of one dollar and its total supply is 100 mean there are only 100 ABC generated and cannot be generated more than that. Now lets say the team has decided to unlock 50% supply of ABC and remaining 50% will be unlocked in future. So, the total market cap of ABC will be
Marketcap=Circulating Supply * Current Price
In this case:
Marketcap=50*1= 50$.
Now you know all the basics of crypto which is enough to get started, as we said choose your investment strategy properly and do proper risk management. Don't just buy a coin if someone else is buying, do your research, and your analysis, make a proper trading strategy and when you are sure about your investment buy that coin and most important be patient
