What is Cryptocurrency?
A cryptocurrency (or crypto-currency) is a digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of additional units, and to verify the transfer of assets.
Imagine a world where, instead of money, we used giant carved stones as our currency. Further, because these stones are so large, we kept them in a public place where everyone could see them and anyone could check who owned which stone.
When you wanted to buy something, you would simply tell everyone that you were transferring ownership of one of your rocks to someone else. Then, everyone would know that you no longer owned that rock, and you couldn’t spend it again.
Further, if anyone ever wanted to make a new stone, all they had to do is spend time carving it so that people recognized that is was the same kind of valuable stone as all of the other ones. The time spent carving the stone makes it valuable and worth something to other people in the rock-spending community.
A General Description of Cryptocurrency
Cryptocurrency is a lot like the theoretical rock currency described above:
- Every cryptocurrency has a public ledger that contains the past and present ownership of each coin.
- If you want to make transaction, you simply broadcast to the cryptocurrency’s network that you’re transferring ownership of some cryptocurrency of yours to someone else.
- The network then spends computational power on both verifying your transaction (that you do own the cryptocurrency your spending and that you haven’t spent it before), and adding it to the ledger.
- In the process, this computational time and effort creates new cryptocurrency as a reward to the community members who helped make the transaction possible.
Difference between Bitcoin (BTC) trading and Crytocurrency (Altcoins) trading
Bitcoin Trading: This is just an activity whereby you buy BTC from decentralized trading websites (Luno, LocalBitcoin, CoinMama, Changelly etc) and sell to other people online or in real life transfers for fiat currencies and the process is been maintained on this particular loop.
Cryptocurrency Trading: This is the act of trading both Bitcoin (BTC) and all other Cryptocurrencies (Altcoins) like Ethereum, Doge, Litcoin, Reddcoin etc. This is actually done by registering accounts with any of the world most rated Cryptocurrency exchange platform online to have wallets for storing crypto-coins for trading and saving profits made during the process.
Making it profitable is when you buy low and sell high, but it doesn’t jist follow that routing because there are more to the strategies to be followed for one to know when the trend is high or low.