What is Cryptocurrency, Bitcoin and Blockchain? - Education For Dummies

What is Cryptocurrency?

You may have heard of fiat currencies, stocks and commodities trading, but cryptocurrencies may be new to you. To help you understand everything about cryptocurrencies, we’ve highlighted some important crypto facts and hypes in the crypto world. We, By Bit, analyze the differences between the latest projects and Bitcoin, altcoins and blockchain technologies, including decentralized finance (DeFi), to help you get a clear idea of ​​cryptocurrencies. First of all, let’s start by understanding what cryptocurrency is.

Cryptocurrency refers to digital or virtual currency. In general, cryptocurrencies operate using decentralized blockchain technology, are created through mining, and use cryptography to store transactions. Crypto is commonly used for a variety of functions, from everyday transactions to money transfers.

What is Bitcoin? Crypto, virtual money, or electronic money?

How does Cryptocurrency work?

Bitcoin accounts for the top market cap and is by far the most popular cryptocurrency. However, there are also over 5,000 altcoins, including ETH, XRP, LINK, and more. However, these cryptocurrencies serve different purposes, and certain factors distinguish them.

1. Blockchain technology

Blockchain technology underpins most cryptocurrencies. In 2009, this technology was used to create the first and still famous cryptocurrency, ‘Bitcoin’.

Essentially, a blockchain is a public ledger that records transactions on a decentralized peer-to-peer (P2P or Peer-to-Peer) network. Blocks are added to the blockchain after nodes are verified and recorded through transactions, without the decentralized nature and central authority.

What is Crypto Blockchain? Byzantine, BFT, and SPOF?

2. Mining

Most cryptocurrencies are created through a mining process as well as utilizing blockchain technology. Also, most cryptocurrencies have a limited supply. The supply of Bitcoin is 21 million, with the last being mined in 2140.

In order for a transaction to be validated, there must be consensus or consensus on the network. And the most used consensus mechanisms for consensus are Proof of Work (PoW) and Proof of Stake (PoS).

Working Proof (POW: Proof of Work,) : proof-of-work (PoW) is used in other currencies such as Bitcoin password and light coin. Miners compete for verification of transactions to obtain rewards in exchange for creating blocks and providing services (in the form of a new unit of cryptocurrency). And the rewards for miners vary from cryptocurrency to cryptocurrency. For example, for each successful validation of a block, a Bitcoin miner earns 6.25 BTC.

Equity prove (PoS: Proof of stake) : proof of ownership (PoS) is used in cryptocurrency Solarium, such as Ethernet (Ether). Initially, the Ethereum blockchain used Proof of Work (PoW), which was replaced by Proof of Stake (PoS) for the Ethereum 2.0 hard fork. With Proof of Stake, blocks are randomly rewarded. However, this consensus depends on the coins the miners have. The more tokens a miner holds, the more likely they are to be rewarded for validating new blocks. For example, if miners own 2% of usable Bitcoin, they could theoretically receive 2% of usable blocks.

However, not all cryptocurrencies utilize blockchain technology and mining. Let’s take XRP as an example. XRP is created by its parent company, Ripple. The initially issued 100 billion coins will be released gradually. At this stage, about 38 billion coins are in circulation.

How does Bitcoin Mining work on StormGain?

What are cryptocurrencies used for?

Cryptocurrencies were created out of demand for their decentralized nature. Moreover, the acceptance of a huge pool beyond the cryptocurrency community makes many things accessible to cryptocurrency. Let’s look at their uses.

1. For Transactions

While volatility is still an important factor that more traders do not accept as a payment method, cryptocurrencies are becoming the standard for day-to-day trading. However, in 2020 there were significant advances in this area. For example, Visa and Mastercard have softened their attitude towards cryptocurrencies, and PayPal, with its 300 million user base, will announce plans to start selling cryptocurrencies.

As such major payment service providers enter the cryptocurrency market, this could potentially open the floodgates to merchants accepting large-scale cryptocurrencies. Check out our guide on where to spend Bitcoin. Provides an overview of Bitcoin currently being used as a payment method in online and offline stores.

How people are using Bitcoin?

2. DeFi (Decentralized Finance)

DeFi, which stands for Decentralized Finance, has recently been an important term in the cryptocurrency world. DeFi is a movement to reinvent existing centralized financial services such as loans and insurance through the use of decentralized blockchain technology, smart contracts, and DApps (Decentralized Distributed Applications).

What is DeFi (Decentralized Finance)?

3. Remittance

You can send money in some cryptocurrencies. XRP, which uses the Ripple network, is one such currency. Many central banks, such as Barclays and HSBC, currently allow you to send money in XRP. This approach replaces high remittance fees with ultra-low transaction fees and fast processing times for a more efficient remittance system.

What is Ripple (XRP)

4. To store value

The question of cryptocurrencies (especially Bitcoin) becoming a store of value or ‘digital gold’ has been debated for several years. While volatility remains a barrier in this regard, many industry analysts believe that the continued rise in popularity of Bitcoin and cryptocurrencies is a good sign for the future.

Why is Bitcoin a safe haven asset?

5. Trading

Cryptocurrencies have also opened up many opportunities to diversify their trades for beginners or experienced traders. Trading in stocks, foreign exchange, and commodities will normally be in your investment portfolio, but cryptocurrency trading will help you broaden this portfolio. Among them, ByBit is an ideal cryptocurrency derivatives exchange that offers perpetual contract trading right from the start. Similar to futures contracts, the only difference is that cryptocurrency trading has no expiration date.

One of the advantages of perpetual contract trading is that it provides leverage of up to 100x. Leverage of 3-5x is common in normal margin trading markets and is often expensive to sell. Typical leverage on cryptocurrency exchanges is only 5 to 20 times for regular futures contracts.

How to invest in cryptocurrency on eToro’s Copy trading Platform?

6. Eradication of corruption and poverty

Cryptocurrencies give a financial identity to some of the 40% of adults worldwide who do not have a bank account, most of them in developing countries. In some countries, such as Myanmar, this figure is as high as 95%. There are several reasons, such as having a bank too far from where you live, not having enough assets, or lacking the necessary documents.

What cryptocurrencies and blockchain technology can do for these people is to give them financial receptivity. This will allow people to save, build credit, get loans, pay for goods and services online, and make investments that they could not before. Such financial activities could eventually help reduce poverty.

Individuals without a bank account can finally have a digital identity. There are several Ethereum-based projects that are already putting this into practice. OmiseGo is one such example. Although still in its infancy, this ambitious network aims to foster financial acceptance by creating a secure, easy-to-use, and scalable platform for fast and secure cross-eWallet transactions.

How to spend Cryptocurrencies?

To send and receive cryptocurrency, you need a cryptocurrency wallet.

On Bybit, you can send and receive BTC, ETH, XRP, EOS, and USDT.

Please check the deposit/withdrawal method in Bybit Help.

Additionally, you can use the asset exchange function on Bybit to exchange BTC, ETH, EOS, XRP and USDT for only 0.1 fee.

How to buy, sell and exchange Cryptocurrency on StormGain?

How to buy Cryptocurrencies?

You can buy cryptocurrencies on Bybit with just a few clicks, and you can have cryptocurrencies in your wallet in just minutes.

You can buy BTC, ETH and USDT in more than 40 fiat currencies on Bybit. All transaction fees are super low. You can purchase cryptocurrencies using a variety of major payment service providers, as well as Visa and Mastercard.

Buy Cryptocurrencies with Credit Card on StormGain

How to start trading Cryptocurrencies?

Before you can start trading on Bybit, you need to create a Bybit account.

You can create an account quickly and easily without KYC. All you need is a valid email address or mobile phone number. Don’t have an account yet? What are you hesitating about? Start trading cryptocurrencies on Bybit today!

List of Cryptocurrency brokers

Are cryptocurrencies safe?

In the past few years, cryptocurrencies have been severely threatened by their safety. These are mainly volatility, price fluctuations, and disappearing altcoins. However, when volatility occurs, opportunities arise. And the soaring prices of BTC, ETH, XRP, and LINK prove that the cryptocurrency ecosystem is safe. However, prevention is better than cure. That’s why it’s so important to find a way for you to keep your cryptocurrency safe.

How Bitcoin is considered Digital Gold safe-haven

Is Cryptocurrency safe?

While it is a decentralized nature of giving users control over their money, it also places users accountable for maintaining security. You can lose or hack your security key. Hacking and phishing have been a problem since the advent of cryptocurrencies.

An attack on the blockchain can occur, such as a ‘51% attack ‘, where hackers control 51% of the network’s mining power. In this case, the hackers will reverse the transaction or even force you to pay double cryptocurrency. Thankfully, the sheer hashing power needed to attack like this means that such events will not happen, especially on the Bitcoin network.

Let’s take a look at some of the biggest security incidents in the cryptocurrency world.

• Perhaps the most infamous crypto security incident in history was the Mt Gox hack. At the time, Mt Gox was the leading Bitcoin exchange in the world, and over 70% of all Bitcoin transactions were made on this platform. In February 2014, operations were halted after allegations of theft of 850,000 Bitcoins. Of these, 750,000 were identified as customers, with the remaining 100,000 belonging to Mt Gox. In April 2014, Mt Gox filed for bankruptcy. Later, 200,000 BTC were discovered, but 650,000 BTC were still not found. The aftermath of the hack has had a major impact on the cryptocurrency industry and raised the issue of increased security.
• In May 2018, the Bitcoin Gold network was under a 51% attack. This has led to an overspending of $18 million in cryptocurrency. The Bittrex exchange was then delisted from Bitcoin Gold. In January 2020, the 51% attack happened again, costing us approximately $70,000.
• In May 2019, hackers stole $40 million worth of Bitcoin from Binance. This was the result of a phishing scam using malware. Binance has stepped up security measures in response to the hacking.

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How to keep cryptocurrency safe?

Keeping your funds safe on Bybit is of paramount importance. Bybit’s industry-leading HD cold wallet system keeps your funds safe.

In addition, Bybit uses two-factor authentication. So only legitimate users can access your account.

All wallet addresses must be kept secure and should never be passed on to anyone else.

List of major cryptocurrencies

Let’s take a look at the major cryptocurrencies and new ones.

1. Bitcoin (BTC)

It was the first cryptocurrency to appear on the market in 2009. It is also the largest cryptocurrency by market cap. Bitcoin remains the most likely virtual currency to replace the fiat-based centralized monetary system we use today. You can trade Bitcoin (BTC)/Dollar (USD) and Bitcoin (BTC)/Tether (USDT) perpetual contracts on Bybit.

Start Investing in Bitcoin

2. Ethereum (ETH)

Ether is the second-largest cryptocurrency by market cap. It is also the best known and one of the best altcoins in existence. It runs on an open-source blockchain using smart contracts that support DApps. As demand for Ethereum grows and the hard fork launches, the price of Ethereum is expected to skyrocket in the coming months. You can trade Ethereum (ETH)/Dollar (USD) and Ethereum (ETH)/Tether (USDT) perpetual contracts on Bybit.

Start Investing in Ethereum

3. Ripple (XRP)

Ripple can be used for transactions, but it is primarily used to make payments through the centralized Ripple network. It is the third-largest cryptocurrency by market cap. You can trade Ripple (XRP)/Dollar (USD) perpetual contracts on Bybit.

Start Investing in Ripple

4. Tether (USDT)

USDT, also known as its parent company Tether, is the most well-known stablecoin. Tether’s value is pegged to the U.S. dollar and is unaffected by the volatility that other cryptocurrencies may experience. With Tether’s 2019 trading volume, Tether was the most prominent cryptocurrency, occupying Bitcoin’s reputation. On ByBit, Bitcoin (BTC)/Tether (USDT), Ethereum (ETH)/Tether (USDT), Linkcoin ( LINK)/Tether (USDT), Litecoin (LTC)/Tether (USDT), and Tezos (XTZ)/Tether (USDT) perpetual contracts.

Start Investing in Tether

5. EOS

EOS is another cryptocurrency that runs on a smart contract platform. And it supports Dapps. These dapps provide various functions such as games, social, and dFi. You can trade EOS (EOS)/dollar (USD) perpetual contracts on Bybit.

Start Investing in EOS

6. Litecoin (LTC)

Litecoin was part of the first cryptocurrency group launched in 2011. Strictly speaking, Litecoin is effectively equivalent to Bitcoin. However, the Lightning Network can process transactions much faster than Bitcoin originally did.

Start Investing in Litecoin

7. Bitcoin Cash (BCH)

In 2017, a derivative of Bitcoin, namely Bitcoin Cash, a ‘hard fork’ of Bitcoin was created. Then, in 2018, it was split into two other cryptocurrencies: Bitcoin Cash and Bitcoin SV.

Start Investing in Bitcoin Cash

8. Chainlink (LINK)

Chainlink rode the wave of the DeFi boom and quickly emerged as one of the top 5 cryptocurrencies by market cap in 2020. Chainlink acts as a decentralized oracle network that connects external data with blockchain smart contracts.

Start Investing in Chainlink

9. Binance Coin (BNB)

Binance Coin is used to trade cryptocurrencies and pay transaction fees on the Binance Exchange. Launched in 2017, Binance Coin runs on the Ethereum blockchain and is the 10th largest cryptocurrency by market cap.

Start Investing in Binance Coin

10. Libra

The most talked-about cryptocurrency in history (with the exception of Bitcoin) is likely Facebook’s Libra coin. However, Libra is not even a coin yet. In fact, there is some debate as to whether this will actually go into circulation. This has been the subject of much debate due to regulatory and data privacy concerns, with important early backers such as Mastercard and Visa withdrawing from the project. Libra’s second white paper was released in April 2020 to address some of these issues.

Start Investing in Libra

Conclusion

The concept of cryptocurrency may seem difficult and complex at first, but the basic premise of cryptocurrency is simple. Cryptocurrencies are revolutionizing the way we think about money. Your money no longer has to be controlled by a central authority. Cryptocurrency is not a physical asset and can be sent around the world quickly and at a low cost. From remittance to poverty alleviation, cryptocurrency can be used in a variety of ways. This shows the infinite possibilities of cryptocurrency Cryptocurrency will continue to be with us.

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