You have probably wondered how cryptocurrency works; you are not alone and that is what this article is for; to provide insight on the workings of cryptocurrency. To understand how Cryptocurrency works, let us consider these;
- Public Ledgers: All confirmed transactions are stored in a public ledger, to monitor that the person with the encrypted address is no spending beyond the coins available. Because it can be viewed by all, it reduces the risk of theft.
- Transactions: The transfer of funds between two digital wallets is called a transaction. The transaction is published in a public ledger and the Miners approve it and get their reward after confirming that the transaction can from the owner of the wallet. It may take some time, about 10 minutes in Bitcoins to get confirmed and added to the public ledger.
- Mining: Mining is the process of confirming transactions and putting it in a public ledger after solving some complex mathematical puzzle. The transaction is open such that anyone can do the mining duty and confirm and after it, they show their proof of work and get some cryptocurrency to their wallets as a reward for the job done.
Cryptocurrency exchanges are websites where you can buy, sell or exchange cryptocurrencies for other digital currency or traditional currency like US dollars or Euro. You would at some point want to convert the digital money to the legal tender where you are since not everybody uses the digital money, this will help you spend in the real world. You should, however, note that there are different exchange rates and the prices keep fluctuating, so you need to understand what it is you are getting before you try to do business with some trading platforms, trading platforms are websites that connect buyers and sellers and take a fee from each transaction.
Types of Trading Platform for Exchanges
Direct Trading: They offer direct person to person trading where individuals from different countries can exchange currency. Direct trading exchanges don’t have a fixed market price, instead, each seller sets their own exchange rate, this seems convenient but the fluctuating rates can make some not to want this and not just that, the credibility may be low so they will prefer the second type, which is the Brokers.
Brokers: These are websites that anyone can visit to buy cryptocurrencies at a price set by the broker. Cryptocurrency brokers are similar to foreign exchange dealers. You can see that as it is in the actual currency market so is it with digital money, note that there are little fees to be paid for their services.
Things to Look Out For Before Joining an Exchange
It’s important to do a little homework before you start trading so that you are not duped and disappointed at the end of the day. Here are a few things you should check before making your first trade.
Credible Reputation: The best way to find out about an exchange is to search through reviews from individual users and well-known industry websites. You can ask any questions you might have on forums like BitcoinTalk or Reddit. You would need to know the pros and cons and the terms and conditions. Find out how many times those individuals chose them again and again. This is credible information that will give you the confidence to trade.
Payment of Fees: Most exchanges should have fee-related information on their websites. Before joining, make sure you understand deposit, transaction and withdrawal fees. Fees can differ greatly depending on the exchange you use. Do not just fall for catchy adverts and enter blindly, those people are in the business for profits, all businesses are profit-oriented but then which would seem fair enough for the services you want.
Payment Methods: What are the payment methods available on the exchange? Credit & Debit Card, Wire Transfer or PayPal? There are some exchange platforms with limited payment options which may not be convenient for you to use. You should, however, note that where you intend to purchase cryptocurrency with your credit card, there will be a need for identification to avoid any form of fraud. So get verified for your own good and then you also should know if the transaction fee they are asking is way too much. You may like to reconsider..
Verification Requirements: The vast majority of the bitcoins trading platforms both in the US and the UK require some sort of ID verification in order to make deposits & withdrawals. Some exchanges will allow you to remain anonymous. Although verification may be long and stressful, this is a way of curbing fraud and money laundering so be patient and go through it carefully.
Geographical Restrictions: Some specific user functions offered by some exchange platforms are only accessible from certain countries. This is a limiting factor, so make sure the exchange platform you want to join allows full access to all platform tools and functions in the country you currently live in. it is not about making the exchange to just any hard currency, it will make no sense if you can’t spend the money in your current location.
Cryptocurrency Forum/Blogs to Read
These are some forums you can follow, they talk extensively on cryptocurrencies, educate you on how the market is going per time.
- CryptoInTalk/ Largest Cryptocurrency Forum:
- CryptocurrencyTALK/Cryptpocurrency Discussions.
- com/ Bitcoin Forum
- The Cryptocurrency Forums
- Dash Forum
- Bitforum|Bitcoin|Crypto Business Forum
- Bitcoin Garden Forum/ Crypto Discussion
- Hashgains|Mining Forum|Talk on Bitcoin Forums|Bitcoin Mining Questions.
- Bitcoin Forum/ Cryptocurrency, Tokens and Altcoins
Cryptocurrency Experts to Follow
Like any industry, the cryptocurrency sector is led by a small group of visionaries and pioneers. They're the people who work on the blockchain every day and they're the people with the greatest insight into the latest Bitcoin movement or the effect of some new regulation. Unlike other industries, however, these cryptocurrency leaders are also on social media where they explain what's happening behind the scenes. For anyone investing in cryptocurrencies, they're people to follow.
- Vitalik Buterin (@vitalikbuterin)
Vitalik Buterin is the creator of Ethereum, the technology that opened the blockchain to any business that wants to create their own cryptocurrency.
- Charlie Lee (@SatoshiLite)
Charlie Lee is the creator of Litecoin, one of the first alternatives to Bitcoin. While Satoshi Nakamoto's cryptocurrency focused on large payments sent across international borders, Litecoin was always meant to be for smaller payments.
- Jed McCaleb (@JedMcCaleb)
Jed McCaleb was one of the founders of Mt. Gox. More happily, he was also one of the founders of Ripple, a blockchain technology built to help banks make international transfers cheaply and quickly.
- Roger Ver (@rogerkver)
Roger Ver is an acquired taste. His tweets focus largely on Bitcoin's block size limits, a useful reminder that Bitcoin might not be the best currency available on the digital market.
- Rhett Creighton (@HeyRhett)
Whalecoin doesn't sound like the light alternative to fiat currencies that cryptocurrencies claim to be... and it isn't quite. It's a combination of social network and cryptocurrency that enables the active member to reward their followers.