A Beginner’s Guide to Cryptocurrencies

There are many advantages and disadvantages associated with crypto. In this article, I’ll provide an overview of some of the major types of crypto, including Bitcoin, Ethereum, Stablecoins, and Centralized exchanges. Ultimately, you’ll know whether this new form of currency is a good fit for you and your business. Then, I’ll go into the risks and rewards associated with using it. So, what exactly is crypto, and how is it different from traditional currencies?

Bitcoin

The popularity of cryptos has soared over the past year. Some of them confer voting and ownership rights. Crypto-funded organizations include voting rights within software code, and some are even physical assets. Despite their popularity, few people use them as payment. Criminal activity and pornography are notable exceptions. While the cryptocurrency world is a thriving one, many regulations are looming. Even the biggest financial institution, Fidelity Investments, has allowed employees to allocate some of their retirement funds to the cryptocurrency.

Ethereum

Ethereum is a blockchain-based digital currency that supports smart contracts. These contracts are self-executing code that transforms the blockchain from a ledger to a programmable network. Ether is the basis for thousands of decentralized applications, including games and social networks. Unlike Bitcoin, Ethereum does not have hard caps or limits, and a maximum of 18 million Ether are created each year. The Ethereum network has been a popular choice for cryptocurrencies for many years.

Stablecoins

Stablecoins are digital currencies that maintain a fixed price against a benchmark. For example, a currency pegged to the Euro would have 1 coin for every Euro in circulation. However, there is always the risk of excessive supply and demand. Hence, there are many competitors and varying degrees of stability for any stablecoin. For example, private bank notes were used for money in the US during the Free Banking Era (1837-1863).

Centralized exchanges

A centralized exchange facilitates cryptocurrency trading by clearing trades and matching buyers and sellers. These exchanges typically maintain digital order books that list open buy and sell orders, their volumes, and prices. Moreover, they announce current market prices based on the last price. Other supplementary services offered by exchanges include a marketplace, a list of trusted third-party escrow services, and a marketplace for users to store their crypto assets.

Self-custody

Wallets that offer self-custody provide several advantages over traditional centralized services. First, you can keep your funds safe without a third-party storing your private key. Secondly, you can maintain your funds’ security by following common security measures such as locking your phone and setting up a separate passcode for the wallet. This way, you can protect your funds even if your phone is stolen or lost.