The cryptocurrency also known as krypto is the digital asset created to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets. 1
Cryptocurrencies use decentralized control as opposed to centralized digital currency and central banking systems.
The decentralized control of each cryptocurrency works through distributed ledger technology, typically a blockchain, that serves as a public financial transaction database.
The first cryptocurrency coin named Bitcoin was created in 2009 by developer with the pseudonym Satoshi Nakamoto. The Bitcoin used SHA-256 as a cryptographic hash function. In 2011 was created another well-known cryptocurrency coin named Litecoin. It used the
Each cryptocurrency has provided validity from the blockchain. The blockchain is continually growing list of the blocks. Every block contains information like a hash pointer, link to a previous block, timestamp and transaction data. The blockchain database is public, and for each transaction can be traced the transaction information just with the hash pointer. All of these information are secured by cryptography.
Mining is the process of the validation transactions created on the blockchain. Each transaction needs more than three validation from the blockchain network. The miner obtains a new cryptocurrency as a reward for his work, for the validation of the transactions. This reward also decreases the transaction fees by creating a complementary incentive to contribute to the processing power of the network. The transactions fees are included in each transaction, so now you can see where the transaction fees go.
How to get the cryptocurrency
Generally, there are two ways to get the cryptocurrency. You can start mining cryptocurrency and mine few coins – but it is a long-distance run today, because the mining complexity increasing day by day. In 2010 was possible to mine a few bitcoins per day on the portable computer, but today, in 2019 it is not so easy.
The second way to get cryptocurrencies like Bitcoin or Litecoin is to purchase them on some of the crypto exchanges.
On these exchanges, you can change the money to the cryptocurrency and back. You can also change the Bitcoin to Litecoin, Litecoin to Bitcoin, etc..
Where to spend the cryptocurrency
The ways to spend most the Bitcoin but also the Litecoin, Ethereum, etc.. is increasing every day. You can exchange the crypto coins back to the money on the crypto exchanges or you can use them in the shops and pay for the goods you ordered.
The most accepted crypto coin is Bitcoin. You can pay with it in many shops, restaurants, and cafes. In my opinion, every type of goods can be purchased with the Bitcoin today. You just need to choose the right shop which accepts the Bitcoin payments.
The other coins like Litecoin, Ethereum, Ripple are not accepted widely as a Bitcoin is. But the list of the shops which accepts alternative coins also named as altcoins are increasing rapidly.
Where to store the cryptocurrency
After you purchase the cryptocurrency, you need to decide, where you want to store it. Please pay attention when you are choosing the way how you will store your crypto coins.
In short, you have two options.
- The first option is the online wallet. In this case, for any manipulation with your coins, you have to be connected to the internet. It means that all the information are stored online and in case of the hacker’s attack to the online wallet service, your coins and your private information can be stolen.
- The second, more secure option is the offline wallet, also called as a hardware wallet. In this case, all coins are stored on your hardware and you can secure it as you wish. The problem should arise when you need access your coins from the offline wallet but you haven’t it with you.
So the decision about where to store your cryptocurrency depends on many factors. The way how you planning to use your crypto coins or the number of coins you are planning to purchase are the most important ones.