Cryptocurrencies – what is it and how to start?
Most of us have a rather vague idea about cryptocurrencies. We still think that this is virtual money, with which we will soon be able to pay in most service points of the world. But in fact cryptocurrencies are something more. It is a breakthrough technology, which one of the applications is the means of payment. What they are, how they work and how we can earn on them?
How cryptocurrencies work?
The cryptocurrency system works on the basis of a peer to peer network. The essence of the operation of this network is the absence of any supervisory system, acting as an admin. It works similar to torrents – i.e. a network of computers between which data is exchanged (seed/peer).
The same situation exists in the cryptocurrency trading network. Individual users of the network make special transactions, which are settled by the system and affect the balance of the wallet, i.e. information about the funds accumulated on our account.
How to start making money?
There are many cryptocurrencies and practically on each in some way goes to make money. However, it is best to start your adventure with them with the one that was created first, as it still far outstrips the others in terms of value and earning potential. We are of course talking about bitcoin, although it is not the only possible choice.
Is it worth investing in them ?
Investing money in cryptocurrencies seems to be a fairly simple form of obtaining above-average income from interest. Unfortunately, the cryptocurrency market is not as stable as the currency market. On the one hand it gives great investment opportunities, but it is also burdened with considerable risk.
Is it therefore worth investing in cryptocurrency? If we are just beginning the adventure with these specific means of payment, it is worth paying attention to the less known cryptocurrencies. Why? For a simple reason – bitcoin is the most popular currency and generates maximum rates of return. This also means that its value is very high (in terms of dollars), and thus we maximize the investment risk.
The second issue is the stability of growth. Investing in cryptocurrency is a bit like investing in stocks. A one-time decrease or increase does not mean that this trend will continue for a long time. Therefore, trading with cryptocurrency is always worth being patient. Large profits are recorded only in large time intervals.
The market for cryptocurrencies is a very capricious market, and their price can fluctuate by up to several dozen percent in a single day. Currently, this market is booming, which means that on digging cryptocurrencies You can really make money.
Digging on PC
Anyone who has the right equipment can dig cryptocurrencies. It is not necessary to have special miners or equipment of any class. In this case the earnings are not very high and the price of electricity reduces them significantly. But let’s get down to business: you install a special program on your home computer, which using the computing power of your PC will dig cryptocurrency. This is the least cost-effective solution.
Digging with an excavator
Purchasing a special cryptocurrency digger is a much more profitable solution, but also requires a financial investment. Such a device costs from a few hundred to even a few thousand zlotys. On the side of the owner of the excavator is the need to check its technical condition. It is also worth checking the cryptocurrency market regularly to know which one is the most profitable at the moment.
Types of cryptocurrencies
To accurately define the basic and most common types of cryptocurrencies, it is necessary to define what exactly is a cryptocurrency. The term is considered by many to be synonymous with virtual currency. This division is unfortunately too general. Virtual currency is called the totality of means of payment that function exclusively in the digital world and are not supervised by national financial institutions. We can use virtual currency in online trading, but also in computer games.
Cryptocurrencies are a specific form of virtual means of payment. They function just like classic currencies and are subject to the same economic laws as any other „national” currency;. What’s more – it is possible to dig them out (bring new funds to the market). This process takes a very long time and often requires the use of modern and computationally efficient computers.
Cryptocurrencies are really many and more continue to be created. Apart from bitcoin, there are others that are worth paying attention to, e.g:
How to store them?
To store cryptocurrencies, there is a wallet, which is a kind of information about the state of the funds held within a specific cryptocurrency. It is created when a user first registers in the system. Access to the wallet is protected by a special authorization code, based on advanced cryptographic keys.
There are many cryptocurrency wallets available, both those that require internet access and those offline. Each of them has its own advantages, which should be taken into account when choosing one.
The wallet system covers not only the most popular bitcoin, but also any other cryptocurrency. Let’s recall that there are over 200 of them. Moreover, a significant number of them are recognized as official means of payment in most countries. At the same time, due to the fact that it is the only currency created without the agreement of global financial institutions, it generates a kind of threat to the prevailing financial order.
What is blockchain?
Transactions using cryptocurrencies are defined based on specific blocks of data. Each block stores specific information about all current transactions, and once the first block is saved, the data is saved in the next block. In this way a specific data chain is created blockchain).
Blockchain is therefore a kind of ledger, in which information on all transactions consecutive from the moment of creation of a particular cryptocurrency, up to the present day, is recorded. The data within the blocks is stored on a publicly accessible network peer to peer. This means that anyone can access them and anyone can authenticate them. Of course, access to blockchain data is strictly defined by access rights granted to a specific user.
A blockchain data storage system does not have to support only cryptocurrency payments. Work is underway to adapt it for other uses, including authenticating electronic signatures, storing ledger data, etc. Thus, authentication will be possible without supervision by public trust institutions, but only within the users of the system.
Whether this system is secure? At the moment, yes. Nevertheless, the introduction of computers of the future (the so-called quantum computers) will make it necessary to introduce completely new security systems.
Cryptocurrency market and Poland
Poland is one of the most active cryptocurrency markets. The Zloty is one of the top 10 most popular currencies to which we can exchange e.g. bitcoin. No wonder that also Poles have tried to create their own cryptocurrency, which is polcoin.
Polcoin project was initiated already at the beginning of 2014. It was worked on for about a year, resulting in the cryptocurrency’s launch on the virtual market back in mid-2015. The purchase of Polcoin is made in the form of blocks, and each block contains as many as 50 pieces of cryptocurrency. We can pay with the Polish cryptocurrency only in one stationary store in Szczecin.
Cryptocurrencies in themselves are very interesting technology, although unfortunately in the case of earning they can expose us to losses. Large fluctuations in exchange rates make investments sometimes very profitable, but they can just as easily make you lose most of the capital invested. The case is different for example. with the aforementioned taps, where you will only lose your time.
Do you have any experience with cryptocurrencies? Share your opinion in the comments.
11 comments to “Cryptocurrencies – what is it and how to start?”
Unfortunately, investing in cryptocurrencies can be very disastrous. You can make a quick profit as well as lose everything. All because they are very unstable. I myself tried my hand at investing in bitcoin. One day you are happy because you made a super profit and the next day you lose everything you earned. The final result was that I ended my adventure with investing in crypto with zero balance. That’s why you need to seriously think about your decision before you start.
Is it currently worth investing in cryptocurrencies?In my opinion, yes, but you have to keep in mind the risk of losing the entire budget that was invested. If you can’t come to terms with this then it’s better to let go of investing in virtual currencies.
Very interesting article, I completely learned what I wanted to know about cryptocurrencies, the whole system of operation, etc. We will see how their market will develop further, it seems to be quite an interesting topic, so I will try to keep track of it, greetings.
Cryptocurrencies are quite risky, it is not as safe as for example deposits or bonds. However, if someone can approach this with a cool head it is possible to earn a fortune. As for digging it’s profitability is decreasing day by day, so it’s hard to recommend it.
When it comes to cryptocurrencies, analysts predict that by May 2020 the prices of popular cryptocurrencies will increase. At this moment investing in crypto has become quite popular, but you have to remember that it is still a very young market and quite unstable. You need to have strong nerves to invest big money in crypto.
For me, cryptocurrencies are black magic, once I wanted to take an interest in them so seriously, but these price jumps scared me. Apparently, the profit can be in a short time large, but on the other hand in a short time you can also lose a lot.
In fact, I have some experience… since 2016 and I will honestly say that I am a little disappointed.. everything looked too candy. So, cryptocurrencies just pulled the wool over people’s eyes, read their imagination. In fact, some people are millionaires, but it’s 100% not from their imagination or ingenuity, just pure chance because it’s a bit like playing the lotto 🙂 But at the end of the day I continue to closely watch cryptocurrencies and we’ll see what will come of it 🙂 You need to have strong nerves to invest
Hello, I have been interested in cryptocurrencies for over a year now. Unfortunately I have not yet managed to make millions on them but I believe it is possible and I will keep trying.
Hello, I came into contact with cryptocurrencies. Probably like everyone I liked the most bitcoin because it is expensive. I even have an account on bitbay, but not much is flowing from the taps. I am ashamed to admit it but I gave up.
Cryptocurrencies are a tough piece of bread especially when you invest in them. Without investment you can collect from free taps for years, but still there is no guarantee that you will collect all the currency and that the tap will not die at the last moment and thus you will get everything you have collected for a long time.
When it comes to cryptocurrencies I may not have collected them myself except for a momentary stay on tap, but I had a person at home who was terribly excited about the vision of great earnings and then sitting for the rest of his life on the money earned. Unfortunately it did not look so beautiful when I started this form of earning coconuts. How it is now I do not know, but it seems to me that it was just a waste of time and money.
How did these beginnings look like…first a lot of watching videos on the internet what it is and how to eat it. A lot of time was put into it at the expense of other important family matters. But ok in the future after all you have to invest. Not to mention that the computer seems small, but during the month the power will take a little bit and in a year it can already be a large sum. On videos, of course, everyone praises that it pays off, everyone personally has earned a lot of money on it and so the person begins to believe that this is the best option for earning money without effort. After the theoretical learning began to buy equipment. First it was the graphics cards, then the antminers, plus accessories such as a cabinet for this equipment, wallet, etc. The cards are good enough that you can later resell them or assemble a desktop computer, as was done in our case. Antminers actually serve one purpose – digging cryptocurrencies. But not a copy of all. Some copy just one copy others copy several. Before buying, you need to know what you want to dig. And that cryptocurrencies are now a lot on the market and many of them do not know if they will have any value in the future, so you just have to be lucky in my opinion in making decisions. Once you have the equipment you need to start making money. And here it turned out that the equipment would be best if it was closed so that there is no dust on it and two, with the cats that we have at home it must be placed higher than on the floor and definitely out of their reach. We found such a place in a small cantina. After a short time it turned out that the temperature of the room went up quite a lot. You should have bought an air conditioner. Needless to say, the power consumption also went up quickly. Fees, additional costs and no earnings and no one knows when they will be. And one more aspect. Equipment was making noise. It’s nothing, but it was significant last night. There are other possibilities such as renting an excavator or a room outside the house etc. but all these, as you can guess, multiply the costs…