Basic knowledge on cryptocurrency
Today I will be writing about some basic idea about cryptocurrencies and some basic things about it especially for beginners that will help one truly understand how cryptocurrency truly works.
They operate not on some centralized or single entity but cryptocurrency validates all transactions through decentralized computer network.
In cryptocurrency all transactions made are on the blockchain and the blockchain is a transparent system and that makes every transaction to be easily acessed ensuring trust.
Just like banks is used for keeping fiat we have digital wallets here which is used for safe keeping or storing your cryptocurrency asset.
Every user is responsible for account safety and as such must keep their private keys safe which is used for the wallet security.
Bitcoin (BTC): This is the first ranked cryptocurrency according to coin market cap and often depended on by other cryptocurrency for any significant moves it was made around 2009 by man or entity known as Satoshi Nakamoto
Ethereum (ETH): The second most popular cryptocurrency and second to be created after Bitcoin by Vitalik and his team of developers famous for its ability to allow decentralized application.
Ripple (XRP): This is one of the popular cryptocurrency there is especially due to the fact they have specifically designed to be used for payment and it makes cross border payment to be fast and seemless and despite their issue with the SEC they came out on the bright side.
Litecoin (LTC): This is one of the oldest cryptocurrency we have and it's design in a very similar manner to the first cryptocurrency Bitcoin just that unlike Bitcoin with slower transaction throughput it's actually faster and also has a different hashing algorithm to that of Bitcoin.
We also have other popular cryptocurrencies like Polkadot, Solano, Tron, Cardano, BnB, Avalanche, steem amongst others.
1). Cryptocurrencies could be utilitize in making purchases online
2). Cryptocurrencies also could serve for investment purpose
3). Used in remittance
4). Used as a store of value and hedge against inflation like Bitcoin
5). Supports smart contract like Ethereum and Cardano
6). Could be used in charity donations
This is one of the risk that comes with cryptocurrency investment it's important prospective investors weigh this risk before deciding to invest, the market has periods of extreme volatility that may be too much for some who are risk aversive which it would be best they avoid.
So volatility and rapid movement of price most times especially low capped coins are the risk associated with cryptocurrency and this could be too much for some so it's important that newbies understand that this risk is here so they would be able to make decisions after the fact.
This is another risk and consideration that we need to consider before coming into this space, the cryptocurrency space is still growing and has yet to hit full muturation especially when compared with other traditional asset class and for this reason many government of the world has really bad regulations on cryptocurrency use and some do not allow it and sometimes the regulation guiding it changes so suddenly almost as easily as price change direction that's how regulatory framework guiding cryptocurrency use could change and this could affect investors drastically if it takes a bad turn.
For this reason its important we understand this prospective risk associated with cryptocurrency investment, not just understand it but ensure that we understand regulatory framework in our country for proper knowledge to make informed decision.
We also have security concerns, not all blockchain are secured as some blockchain in part of the blockchain trilemma priotize decentralization and scalability over security which may expose it to be more susceptible to hacking attempts by malicious individuals.
Not to mention anything online is always a target of hackers be it data or finance and often we have heard of popular exchanges being hacked and all which is one of the risk here and if one is not extremely cautious enough may lose all your funds to hackers.
It's really hard for one to excel here with lack of knowledge of cryptocurrency atleast a background foundation information on how cryptocurrency works is important that is why I have provide this article in a simple and easy to understand manner for any who is looking to get the right basic information on cryptocurrency, how it works and a few useful information on it.
https://x.com/frank_anayo/status/1848105741485277239?t=CT60MIgKjJ9OxrtfH-W1Ag&s=19
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Basic knowledge on cryptocurrency is a great post you Have shared.
This is really wonderful article about crypto. Nice discussion
It is imperative that everyone who is part of the crypto space should have these basic points knowledge because it helps them to plan their journey better in crypto and also there should be a way to educate more people about the basics of crypto and blockchain technology and how it works.