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What is Cryptocurrency? Explained In Simple Words For Beginners

If you’re unfamiliar with cryptocurrencies, they are a form of virtual currency that has become increasingly popular over the last few years. In some circles they have been hailed as the future of money and as an investment opportunity. Bitcoin is currently the world’s most prominent cryptocurrency, but there are hundreds to choose from. You can trade them online or hold onto them, with no real protection and a significant amount of risk.

In this article I will give you some basic information about cryptocurrencies, how they are structured and what their history is. I’ll also go over the advantages and disadvantages of investing in them.

What is Cryptocurrency?

Cryptocurrency is virtual money created to act as a medium of exchange that uses cryptography for security – the same thing that protects you when you log into your bank account and authorises transactions. Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution control. Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Cryptocurrencies are often traded on decentralized exchanges and can also be used to purchase goods and services.

Cryptocurrency is a bit like the gold standard, but instead of controlling how much money is circulating in the market, it’s about how secure the system is and how it’s structured. Cryptography gives cryptocurrencies a security layer that keeps them from being stolen and prevents cheating.

The History of Cryptocurrency

Well before cryptocurrency existed, virtual currencies had already been invented – they were just called ‘cryptocurrencies’ in the 1990’s. One of the most well known cryptocurrencies of all time is probably Bit Gold. It was developed by a group of programmers who wanted to create a currency that would have some backing, but wasn’t controlled by any central authority. They aimed to make their coins secure, anonymous and free from manipulation. They called them Bitcoin in reference to this.

Bitcoin was the first cryptocurrency to work using the Blockchain – a technology that allows information about all transactions to be shared across several computers. This means that anyone in the system can verify a transaction without any commissions or bank fees. It also makes it harder for people to cheat, because everyone can view the transaction history at any time.

How Are Cryptocurrencies Made?

Cryptocurrencies are made by mining. This is the process where transactions are recorded on the blockchain and new coins are created. Since there is no central bank, new coins can only be obtained by solving cryptographic puzzles – these solutions need to be verified by other users of the system. The person who provides this verification is rewarded for their work by being given a pre-determined amount of cryptocurrency in return. This amount varies from one cryptocurrency to another, but certain cryptocurrencies have a finite number that can ever be mined, which means that eventually no more coins will be created.

How to Buy Cryptocurrency

To buy cryptocurrencies, you will first need to find an exchange where you can buy them. There are dozens of exchanges available, many of which offer a wide range of cryptocurrencies. Once you have found an exchange, you will need to create an account and fund it with either fiat currency (e.g. USD) or crypto currency (e.g. Bitcoin). Once your account is funded, you can start trading cryptocurrencies.

How to Use Cryptocurrency

There is no one-size-fits-all answer to this question, as the best way to use cryptocurrency depends on your personal preferences and experience level. However, here are some general tips for using cryptocurrency:

1) Start by reading up on what cryptocurrency is and how it works. This will give you a basic understanding of how the technology works and help you decide if it’s right for you.

2) Once you understand how cryptocurrency works, get yourself a digital wallet where you can store your coins. This will allow you to easily access your coins and make transactions.

3) Learn about the different types of cryptocurrencies available and pick one that suits your needs and interests. There are a variety of different cryptocurrencies available, so it’s important to choose one that is suitable for your investment strategy and goals.

4) Make sure to stay up to date with news and announcements related to cryptocurrency, as this will help you make informed decisions about your investments. You can find all the latest news and updates by following major cryptocurrency platforms or blogs.

5) Don’t forget to have fun with cryptocurrency too! It’s a technology that can be used for a variety of purposes, including buying goods and services, making payments, and even investing in other cryptocurrencies. So don’t be afraid to experiment and see what works best for you.

There are a variety of ways to use cryptocurrency, so it’s important to experiment and find what works best for you. By following these general tips, you can start using cryptocurrency to your advantage and make some lucrative investments!

Advantages and Disadvantages

Bitcoin is the most well known cryptocurrency, but there are hundreds of others to choose from. Some of them have been around for a long time, while others have just become popular recently. In this article I will go over the advantages and disadvantages associated with investing in cryptocurrencies.


Cryptocurrency has a lot of potential in the future – maybe even more potential than Bitcoin itself. Because of their decentralized nature, cryptocurrencies are not controlled by central banks. Since they are not tied to a government, they can be traded internationally and do not have to follow economic policies. This makes them a safe haven in times of economic uncertainty.

Cryptocurrencies can also be used to transfer money much more quickly than through traditional banking methods. Since there are no intermediaries or commissions involved, this makes cryptocurrency much cheaper than regular money.

Another benefit of cryptocurrency is the ability to protect your anonymity. Since you don’t have to provide a name or bank account number, you are in control of who has access to your information and how it is used.


Since there is no central authority controlling cryptocurrency, security can be a major concern. If someone hacks into your wallet from the Internet, they could steal every single one of your coins. Because each one has a finite number, you won’t be able to get them back and every single coin will be worth less.

Since cryptocurrency is so volatile, there is a high risk of investing in it without knowing all the risks. Cryptocurrency can be much more volatile than regular money so you are more likely to lose money by investing in it than in anything else.

Another disadvantage of using cryptocurrency is the fact that it’s not backed by any central entity. If a bank or a government collapses or decides that they don’t like cryptocurrency, the money will be worthless. This is why I suggest only investing what you can afford to lose.


Cryptocurrencies are the future of money and they have huge potential in the future. Now is therefore a great time to learn more about them so you can start investing today. Remember that it’s not a good idea to invest with money you can’t afford to lose. Make sure you are aware of all the risks before you get started.

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