What Do You Need to Know About Cryptocurrency?

Everyone has heard of bitcoin. It is the first cryptocurrency to capture the public imagination. Now, the second wave of cryptocurrency known as ‘altcoins’ has quickly emerged to challenge it.

Websites like https://swyftx.com/nz/ are emerging on the scene to help interested investors to involve profitably in the online trading of cryptocurrencies.

The so-called altcoins are alternatives to bitcoin that bring their twist to the table and give digital currency fans something new to consider.

What is a Cryptocurrency?

Cryptocurrencies are a form of decentralised, peer-to-peer virtual currencies secured through cryptography (AKA encryption). They run on a distributed public ledger known as the blockchain.

According to reports, the first cryptocurrency was bitcoin, created in 2009 as an alternative to government-issued fiat currencies. Bitcoins can be used as regular currency for buying and selling goods and services (provided someone is willing to accept them).

What’s a Blockchain? 

Think of a public ledger that records every transaction done on the entire network and saves it onto a large file. These transactions are then sorted into blocks of data using cryptography, hence the name blockchain.

Some cryptocurrencies have blockchains, while others run on top of an existing blockchain, such as Ethereum’s Ethereum blockchain or Ripple.

These cryptocurrencies also provide programming functionality through so-called smart contracts, forming the basis for the peer-to-peer exchange of goods and services.

What are Altcoins?

An alternative coin, or altcoin, is every other cryptocurrency that isn’t bitcoin. Many websites are joining the online trading platform and offer various different altcoins for prospective investors to choose from.

How Do You Buy Cryptocurrencies?

There are many ways to acquire cryptocurrencies. One way is to exchange traditional currency for a cryptocurrency on an online exchange. There are some workarounds for this, but the simplest is to go through one of these sites for exchanging government-issued fiat currencies into digital coins: Coinbase, Kraken, and BitFinex. 

The exchanges charge transaction fees whenever you trade on their platform – they also set prices slightly differently, depending on where in the world you are located. Hence, it is best to check around for the best rates before making an exchange.

Another way is to mine them with specially designed mining hardware. Mining bitcoin and other cryptocurrencies are possible but very difficult these days without an application-specific integrated circuit (ASIC) or a graphics processing unit (GPU). 

You can check out a guide on starting mining cryptocurrency for more information on what equipment you need and how it all works.

Do You Need Special Technology?

Cryptocurrencies function by exchanging data over the internet, so any device that can connect to the internet should handle transactions. It means desktop computers, laptops, and even mobile devices like smartphones and tablets are suitable for use with cryptocurrencies.

However, if you want to open a wallet specifically to store your coins, you might want to consider a device specially designed for this purpose.

What Are The Other Risks?

Just as with any form of traditional currency, it’s essential to consider when using cryptocurrencies that governments or central banks do not recognise them as a currency. It means that if you suddenly decide to stop using them, there is no ‘guarantor’ who will make sure you get all your money back.

Because of this reason, it’s advisable not to store large amounts of money on wallets connected to the internet unless used in specific circumstances where it doesn’t pose an issue.