What is Cryptocurrency? Beginner's Intro to Cryptocurrency Mining, Trading & Investment

what is Cryptocurrency

Having seen how Cryptocurrency is trending as a result of the rise in the price of Bitcoin since the beginning of this year (2021), from its 2020 Low of $3,782 to over $60,000; its new All Time High (at the time of writing this), it raises a few questions from NOOBS (Novice to Cryptocurrency), such as what is Cryptocurrency? How can i benefit? I believe one should know or at least have an idea of what Cryptocurrency is before thinking of investing or trading and Cryptocurrency coin or token.

So, What is Cryptocurrency?

Cryptocurrency is a digital currency, either coins or tokens, which can be exchanged or traded for physical Fiat (Fiat is the fancy word for the traditional money you carry around), invested in as a digital asset and can be used for payments online safely, quickly, efficiently, by anyone anywhere in the world with just an internet enabled Smartphone or Computer.

In 2008, an anonymous person, by the name Satoshi Nakamoto (could be a man, a woman, or a group of people), invented the first cryptocurrency known as Bitcoin (BTC). To this day,  Bitcoin has grown a lot since its invention and remains the most popular cryptocurrency.

After Bitcoin’s invention, Altcoins (Alternative to Bitcoin or all other Cryptocurrencies) were created such as Ethereum (ETH), Cardano (ADA), Ripple (XRP), and so on which lead to over 4,000 Altcoins in existence today.

It’s important to know that some cryptocurrencies are more trustworthy than others, but before we dive into that, lets quickly get comfortable with some of the crytocurrency terminologies.

What is mining cryptocurrency?

mining cryptocurrency

Crypto Mining is a painstaking, costly, and only sporadically rewarding process of adding new token to a cryptocurrency blockchain. Mining has a magnetic appeal for many investors interested in cryptocurrency because of the fact that miners are rewarded for their work with crypto tokens. This may be because entrepreneurial types see mining as pennies from heaven, like California gold prospectors in 1849. And if you are technologically inclined, why not do it?

  • By mining, you can earn cryptocurrency without having to put down money for it.
  • Bitcoin miners receive Bitcoin as a reward for completing "blocks" of verified transactions which are added to the blockchain.
  • Mining rewards are paid to the miner who discovers a solution to a complex hashing puzzle first, and the probability that a participant will be the one to discover the solution is related to the portion of the total mining power on the network.
  • You need either a GPU (graphics processing unit) or an application-specific integrated circuit (ASIC) in order to set up a mining rig.

The primary draw for many mining is the prospect of being rewarded with a token of the crytocurrency they are mining. That said, you certainly don't have to be a miner to own cryptocurrency tokens. You can also buy cryptocurrencies using fiat currency; you can trade it on an exchange like Binance using another crypto (as an example, using Ethereum or NEO to buy Bitcoin); you even can earn it by shopping, publishing blog posts on platforms that pay users in cryptocurrency, or even set up interest-earning crypto accounts. An example of a crypto blog platform is Steemit, which is kind of like Medium except that users can reward bloggers by paying them in a proprietary cryptocurrency called STEEM. STEEM can then be traded elsewhere for other cryptocurrencies.