Cryptocurrency is a new and innovative technology that has captured the imagination of many people. The market is expanding as more people are beginning to invest in cryptocurrency. But it has also created a few new concepts that may be unfamiliar to some. If you are curious to know what some concepts mean in the crypto space, keep reading this post, you might come across a couple of them. Do you know what a cryptocurrency broker is? What about crypto mining, blockchain, crypto wallet, etc.?
Here is an overview of some of the most important cryptocurrency concepts you should know before investing in the cryptocurrency market.
Top 5 Cryptocurrency Concepts You Should Know
#1: Blockchain Technology
Blockchain technology is a decentralized ledger that stores information about transactions across a peer-to-peer network of participants who validate each transaction and add them to the ledger in chronological order, forming a chain of blocks that are secured by cryptography.
Each block contains cryptographic hash of the previous block, timestamp, and transaction data of the present block. All these features make it secure and immutable.
#2: Cryptocurrency Exchange
A cryptocurrency exchange is a website that allows you to easily sell, buy, and trade cryptocurrencies. There, you can exchange your crypto for other crypto assets or for fiat currency such as the U.S dollar or Euro. Most crypto exchanges are designed to cater to advanced traders and so are often equipped with advanced trading tools. Therefore, such a platform may require you to verify your ID and open an account before you can use it.
However, there are also some exchanges out there that won’t require you to verify your identity. They are much easier and straightforward to use. But you should know that that also comes with a level of risk. So, when choosing a crypto exchange, make sure you first do your due diligence and be sure it has what it takes to support your venture as a crypto trader. If you are confused with the complexity most crypto exchanges offer, you can consider using a crypto broker for buying and selling your cryptocurrencies.
If you want to trade cryptocurrencies but still haven’t decided what exchange to use as of yet, dutchcryptotalk will help you choose the best to use according to your situation.
Crypto brokers are more tailored to beginners and offer much faster transactions. However, the speed and ease you enjoy on their platforms come with a price. Crypto brokers charge more for transactions compared to crypto exchanges.
#3: Cryptocurrency Wallet
A cryptocurrency wallet is a software program that contains both your private and public keys. These keys are what allow you to have access to your digital assets. Before you think of buying Bitcoin or any other cryptocurrency, you should first get a crypto wallet to safely store the cryptocurrency.
There are different crypto wallets, but they are basically categorized into two categories; hot wallets and cold wallets. Hot wallets are online wallets that require an internet connection to use. Whereas cold wallets are physical, offline wallets you can always operate with an internet connection. However, because it could work off the internet, it is less prone to hackers and thieves.
Common examples of crypto wallets are Ledger Nano S, Exodus, Atomic Wallet, Trezor, Coinbase, Electrum, etc.
#4: Bitcoin
Bitcoin is the first and the largest cryptocurrency. It was created in 2008 by a group of unknown developers. It is a currency that only exists digitally. It is not backed by any government or financial institutions like the central bank, so no one body or organization has full authority over it. Because of that, it is referred to as a decentralized currency. Bitcoin can be transferred from one person to another and can be exchanged for goods or services with vendors that accept it as a payment method in their stores.
#5: Cryptocurrency Mining
Cryptocurrency mining is a process that helps maintain the decentralization of a blockchain. The process helps transactions for different types of cryptocurrencies be verified and updated on the public ledger. Every time you make a cryptocurrency transaction, a crypto miner is somewhere, making sure the transaction is authentic before adding it to the blockchain. Invalid transactions can harm the integrity of the blockchain. That is why the works of miners are important to ensuring the security of a blockchain. For their hard work, miners are, however, rewarded with new coins or part of the transaction fees associated with the transaction.
Final Note
There you have it! The top five cryptocurrency concepts to know. We hope that with this article, you now have a better understanding of each of these concepts because they will be used throughout the rest of the cryptocurrency world. There are tons of other concepts that could have been included here, but we wanted to give you only the top 5 so that you could get a good grasp on the others as you delve deeper into them.
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