In the modern world, cryptocurrency has become one of the driving forces of innovation and has given financial freedom to many people across the globe. As the market progresses, getting by without basic knowledge of cryptocurrency is increasingly harder.
KvaPay, as a friendly and straightforward crypto platform, is striving to make your introduction to cryptocurrency as easy as possible. Please read the article to learn more about crypto and how to start using it.
More on this topic: A Short History of Cryptocurrencies
What Is Crypto?
First of all, cryptocurrency is money. It fulfills the same three purposes as traditional (fiat) funds. Crypto allows you to store your money, exchange it with others, and utilize it as a unit of account.
The technology underpinning cryptocurrencies is simple enough for the average consumer to comprehend. Cryptocurrency exists purely in digital form; there are no coins or banknotes. The transactions occur using blockchain technology, which runs on decentralized computer networks.
Definition and Key Features
Cryptocurrency, as a form of digital money, is usually described through its three features: decentralization, cryptography, and blockchain technology. The first one is clear: crypto is not controlled by central banks or governments, which makes it decentralized. Crypto operates on computer networks that work to minimize fraud risks or any other manipulation.
Cryptography, the second key feature, involves mathematic algorithms that protect data and operations of the network. It ensures that, for example, only the intended recipient gets their money. Cryptography makes the transactions tamper-proof.
The mentioned computer networks and simultaneously the backbone of cryptocurrency is blockchain. Essentially, it is a list of transactions, just like an accountant might have. In this list, or ledger, the transactions are stored in blocks linked to each other, and those blocks make a chain. Hence the name — blockchain. This structure is designed to maintain fraud resistance and immutability since retrospective alteration of any information would require changes in every following block. Such manipulations are practically impossible.
Altogether, these three features make crypto an attractive alternative to fiat money.
Mining and Transactions
You probably have heard about cryptocurrency miners. Let’s discover what they do and why blockchain is impossible without mining.
Any blockchain needs a computer network that verifies transactions and solves complex cryptographic tasks. Those computers are operated by miners who get compensated for their services with newly mined coins. For example, when a miner mines Bitcoin, the latter reproduces itself to reward the machine’s owner. The payment for processing one block is currently 3.125 Bitcoins.
Thus, mining is the creation of new coins in return for solving cryptographic puzzles with the sole mission of ensuring the integrity of the system and the correctness of transactions.
Transactions in the cryptocurrency market happen when a user initiates a transfer from their wallet to another wallet. The transaction request then goes to the network for miners to confirm. Miners collect the transactions, verify that the sender has enough funds in their wallet, and record the transfer to the destination wallet. After verification, the transaction is listed in the new block, and the miner gets rewarded for the block in newly issued Bitcoins.
Popular Cryptocurrencies
Traditionally, crypto is divided into two categories: Bitcoin and everything else — namely altcoins. Alt stands for alternative, and this category includes hundreds of different tokens. Some, like Polkadot and Ether, are parts of cutting-edge blockchains with features beyond just a payment system. Others are doomed to trade below one dollar forever and be forgotten.
Read: Top Altcoins With The Greatest Potential in 2024
This article will describe only several of the most popular currencies. All of them are available on KvaPay.
Bitcoin (BTC)
The first and most well-known crypto. A person created it, or some people claim, a group of individuals, known as Satoshi Nakamoto. Apart from being decentralized, as cryptocurrencies usually are, Bitcoin features scarcity. There will be no more than 21 million coins. Once all 21 million are mined, the mining will stop, and the computer network will earn only transaction fees.
Bitcoin is widely accepted for transactions and as an investment instrument, as it has shown significant growth during its 15-year history. As of June 2024, Bitcoin’s all-time high is USD 73,000.
Ether (ETH)
Ethereum, the blockchain network that hosts Ether (ETH), has brought significant innovation to the crypto market dominated by Bitcoin. Introduced in 2015 by Vitalik Buterin, this blockchain provides a platform for smart contracts and decentralized applications (dApps). This gave the basis for decentralized finance (DeFi), the NFT market, and many more innovative projects that shape the decentralized future and support Ethereum’s ecosystem.
Other coins worthy of notice include Litecoin (LTC), Tether (USDT), Dogecoin (DOGE), Ripple (XRP), and Cardano (ADA).
Litecoin was one of the first successful altcoins on the market. Created in 2011 by an ex-Google developer Charles Lee, it was based on Bitcoin's technology with some tweaks. Litecoin, like Bitcoin, is decentralized and open-source, and hence not controlled by central banks. The difference is that the block creation rate has been raised, and a new hashing method is used.
Ripple is about fast, low-cost international payments, and partnering with financial institutions. It also has a unique consensus mechanism that eliminates the need for traditional mining.
Tether falls into a bucket of stablecoins for its peg to USD. The price of USDT is the same as the US dollar, which makes it a safe option, protected from volatility through Tether’s algorithms.
How to Get Started with Cryptocurrency
First of all, do not be afraid of it. KvaPay is an easy-to-use and inclusive platform for cryptocurrency users. You can be a complete freshman or a seasoned crypto trader, and find what you need on KvaPay. We offer a flexible deposit and withdrawal system and many crypto solutions for individuals and businesses.
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