Cryptocurrency like any other currency can be used to purchase goods and services. However, cryptocurrencies are quite different from other kinds of currencies because they are digital and use cryptography in offering secure online transactions. So you ask:
What is Cryptocurrency?
Cryptocurrency acts as a form of payment that can be exchanged online for goods and services. Most companies have been known to issue their own currencies, known as tokens, which can be traded specifically for the good or service which the company provides. Cryptocurrencies work using a technology known as the blockchain, which is a decentralized technology spread across many computers that manages and records transactions.
Are Cryptocurrencies Legal?
Cryptocurrency is legal in the United States, even though China has essentially banned its use. Thus when it comes to the question of Cryptocurrency being legal, depends on each individual country.
Common Types of Cryptocurrencies
This happens to be the first-ever cryptocurrency that came on board the crypto market.
Ripple is a cryptocurrency that does not use a Blockchain in order to reach a network-wide consensus for transactions. Rather, it is an iterative consensus process that is implemented, and this makes it faster than Bitcoin but also makes it vulnerable to hacker attacks.
Bitcoin Cash –
Fourthly, Bitcoin Cash is a fork of Bitcoin that is supported by the biggest. Bitcoin mining company and a manufacturer of ASICs Bitcoin mining chips. Also, Bitcoin Cash has only been in existence for a. Couple of months but has already gotten a place at the top five cryptocurrencies in terms of market cap.
Ethereum Classic –
It is an original version of Ethereum.
This is a cryptocurrency that has private transactions. Capabilities and one of the more active communities, owing to its. pen and privacy-focused ideals.
Qtum is a merger of Bitcoin’s and Ethereum’s technologies. Which is targeted at business applications. This network boasts of Bitcoin’s reliability while allowing for the use. Of smart contracts and distributed applications.
Dash is a two-tier network. The first tier is miners, which. Secures the network and records transactions, while the second on the. Other hand consists of ‘masternodes’ which relay transactions. And enable InstantSend and PrivateSend type of transaction. While the former is significantly faster than. Bitcoin, the latter is completely anonymous.
NEO is a smart contract network that allows for all kinds of financial. Contracts and third-party distributed apps to be developed on it. It has similar goals with Ethereum’s, even though it is developed in. China, which can give it some advantages, because of the improved relationship with. Chinese regulators and local businesses.
This is ledger technology known as ‘Tangle’ which requires the sender in a transaction to do a Proof of Work, which approves two transactions.
NEM cryptocurrency uses Proof of Importance, which requires users to already possess certain amounts of coins in order to get new ones. It encourages users to spend their funds and then tracks the transactions in determining how important a particular user is to the overall NEM network.
This Litecoin is a cryptocurrency that was designed with the intention of it being the ‘digital silver’ as compared to Bitcoin’s ‘digital gold’. Also, Litecoin is also a fork of Bitcoin and can generate blocks four times faster and have four times the maximum number of coins at 84 mln.
How to Buy Cryptocurrency
There are some cryptocurrencies, including bitcoin, that are available for purchase with U.S. dollars, and others that require you to pay with bitcoin or another cryptocurrency.
To buy cryptocurrencies, you’ll need a ‘wallet’, which is an online app that can hold your currency. Generally, you have to create an account on an exchange, and then you can transfer real money to buy cryptocurrencies like bitcoin or ethereum
How to Store Cryptocurrency
Since cryptocurrency is digital, this means that it requires a completely different approach, when it comes to storing it. Technically, you do not store your units of Cryptocurrency, rather you need to store securely the private key that you use in signing for transactions.
There are numerous different types of cryptocurrency wallets which can come in handy for different needs. If you need privacy, you can decide on a paper or a hardware wallet. These happen to be the most secure mediums for storing your crypto funds. You also have the ‘cold’ (offline) wallets which are stored on your hard drive and online wallets, which can either be affiliated with exchanges or with independent platforms.