Cracking the Cryptocurrency Code: A Beginners Guide to Digital Money
To get the most out of what we offer at Best Bitcoin Exchange, you really need to know the basics of cryptocurrencies and what they are. Before you to check out our recommended brokers and start exchanging your money for digital money, it’s important to understand the technology.
Fortunately, just as you don’t have to be an expert to use Best Bitcoin Exchange, you don’t need to be a computer geek to get a handle on the world of virtual currencies. Of course, if you want to jump into the action without delay, go to our comparison table, follow our secure links and join a cryptocurrency exchange right now. If, however, you want a bit more of an insight into the industry before you do that, stay right here for the next few minutes.
What is Cryptocurrency
A cryptocurrency is a monetary system that’s created, stored and traded online. The movement was started in 2009 when Satoshi Nakamoto released the white paper for Bitcoin. In simple terms, every cryptocurrency is powered by a network of computers using cryptography to process and record information such as transactions.
To explain this further, here’s a crypto transaction in action:
- Simon sends 1 BTC to John.
- Simon’s transaction is signed (marked) with his private key (a code unique to Simon) and a public key.
- The request is broadcast to a network of computers known as miners.
- The miners work to validate the transaction.
- Once validated, the transaction is combined with other transactions to create a block.
- This block of information is then timestamped and added to a public database known as the Blockchain.
- The Blockchain is then updated and viewable by every miner in the network.
Although that’s a very simplified version of how Bitcoin and other cryptocurrency transactions are processed, it does reveal a few things. For example, because a whole network of computers are working to validate a transaction, there is no single point of authority or failure. In real terms, this means no one controls a cryptocurrency. Moreover, a fault on one computer (node) won’t affect the entire system.
It’s all in the Blockchain
The biggest thing you should take from this, however, is the Blockchain part. Basically, this digital database (ledger) ensures that no information can be tampered with. When a transaction is validated, the private and public keys have to sync up. From this, the transaction is processed and put into a block. The block is then tagged with something known as a hash.
This hash links to the previous block and, in turn, the next block will be linked to the current block. This creates an unbreakable chain whereby a single fault would destroy the continuity. Therefore, when you combine all of this in a single system, you get a monetary system that can operate autonomously and securely.
Cryptos vs. Fiats
So, what makes cryptocurrencies so different from Pounds, Dollars and Euros? Well, the devil is in the details. Traditional currencies, otherwise known as fiat currencies, are controlled by a central authority (governments). These controlling bodies help to set the rates for their currency, give it a physical form (i.e. minting coins/notes you can spend) and regulate its usage.
With a cryptocurrency, you don’t have any of this. Although the network does regulate how the transactions are processed, that’s about as far as the control goes. When you exchange a cryptocurrency using one of our partners, the rate will be set by the network. In other words, the total number of available units and the demand will determine the value of a coin. Additionally, the cryptocurrency you choose won’t have a physical form. Everything is done online. This means you only need an internet enabled device to send or receive a payment.
The Leading Cryptocurrencies Are…
Bitcoin is the original cryptocurrency and, in many respects, it’s still the best. The easiest way to get some BTC is to visit our partners eToro and CryptoGo. They’ll make it easy for you to buy Bitcoins using a range of payment methods.
If, however, you’re in the market for a different type of cryptocurrency, we’ve got you covered. When you use one of our suggested exchanges, you’ll get access to hundreds of different currencies. Although we don’t have time to delve into how each one is different in this guide, we can list some of the best cryptocurrencies currently on the market. You can read more about each one of them by browsing our site’s pages.
Why It Makes Sense to Invest in Cryptocurrency
We’ve already outlined why cryptocurrencies are useful. Because their systems are decentralised, you are never beholden to a single point of authority. This, in essence, means everything is fair and protected from manipulation by a single power source.
However, the main reason most people invest in cryptocurrencies is how secure they are. Because the Blockchain is basically an unalterable database, the risk of fraud is extremely low. What’s more, because transactions are anonymous (i.e. you don’t include any personal details), the risks to you as an individual are low.
Finally, if you’re in the market to make some money, cryptocurrency trading is perfect. Because the technology is still developing and new things are happening all the time, cryptocurrency prices tend to change more dramatically than traditional commodities. Therefore, if you use one of our trusted exchanges, you could potentially turn a quicker profit trading Bitcoin than you would with something like gold. Of course, nothing is ever guaranteed, but the opportunities are certainly there.
Get Started Today
To invest in a cryptocurrency today, you only have to do three simple things:
- Read our exchange reviews and follow the sign-up link to the one you like the look of.
- Join said exchange and make a deposit using your preferred payment method.
- Find the cryptocurrency you want and make the purchase.
Once you’ve got some coins, you’re good to go. If you want to hold them and try to make a profit, you can. If you want to send them to someone, go for it. If you want to spend them, that’s also possible. Basically, when you use our recommend exchanges, the cryptocurrency community is your oyster.