If you are newly entering the cryptocurrency market, you have reached the right place to guide you in the digital world. Engaging in a cryptocurrency exchange is not everyone’s cup of tea.
This article is for beginners who are interested in buying their first $50 or more worth of cryptocurrencies.
What are Cryptocurrencies?
Cryptocurrencies are digital money that can be used on blockchains. Each blockchain has its cryptocurrency. According to reports, around 18.4 percent of people own cryptocurrency in Australia.
Bitcoins are the most popular and mainstream of these cryptocurrencies. Hence, its price is extremely high compared to other cryptos).
These currencies derive their value from cryptography and require a lot of computing power and time to create more. This way, they can’t just be created out of thin air like fiat currencies.
Read on to understand some basic concepts about cryptocurrencies.
What are Blockchains?
Blockchains are public ledgers that contain transactions about cryptocurrency exchanges that anyone can access.
They are decentralized. It means there is no leading company managing the data on the blockchain; instead, everyone can access and read all activity to verify whether or not it is valid.
Here’s an example of basic bitcoin information recorded on a blockchain: 1MBGzmS4uVxPAMo8NXTsnoTP6yAjKpn3r
Ever since the creation of Bitcoin back in 2009, people have been sending bitcoins to one another through the network. This record is known as a transaction and can be accessed by anyone on any bitcoin node. Nodes are computers that are connected to and verified by other nodes.
When someone wants to send their bitcoin to you, they broadcast this change to everyone else in the network so that every node knows about it. That’s why it is said that transactions are broadcast across the network.
If your online transaction makes it into a block, it will be recorded into that block (added to all previous blocks that form the chain).
All bitcoin nodes check to ensure that nobody is trying to spend their bitcoins twice before adding the transaction to the blockchain. They also check to see if you have enough bitcoins available in your account.
Nodes make sure that only unspent bitcoins are sent between accounts. This way, it can be verified whether or not someone has access to previous transactions.
Why Should You Care About Blockchains?
Blockchains allow online users to send money instantly anywhere globally, no matter where we are located geographically.
It makes no difference whether you’re sending $1,000 or $0.01 to someone else because the transaction fee will always be roughly US $0.005 (or a few cents depending on your cryptocurrency of choice).
And since everyone can access and verify the blockchain, all users agree that the transaction is valid. It makes blockchains great because it means you don’t have to rely on a bank or third-party service provider to send money for you.
As there is no central authority managing this data for each person using it as a currency, anyone can use it as a secure store of value by simply holding onto their keys or as an easy way to send money around the world with lower fees.