LUCKY'S CRYPTO GUIDE FOR BEGINNERS
PART FIVE
WHAT IS CRYPTOCURRENCY?
Thank you for taking the time to check out this article which is the fifth installment of my beginner's guide to crypto trading. In the last article, we covered what Bitcoin is, down to the very finest detail, in plain English so anyone reading can comprehend. Though the article is based on the "Grandfather" of all cryptocurrency, I didn't really scratch the surface on what exactly cryptocurrency is. Though comparatively Bitcoin can shed a lot of light on what crypto is, I think it's best to give a full breakdown on one of the markets KEY terminologies. In the fifth part of Lucky's Crypto Guide For Beginners, I will define and explain to each reader what cryptocurrency is. I hope that this article lands in the sight of someone who truly will learn from it, as my goal is to easily educate every member of the Steemit community who is willing to take my lessons. As always, if you have any questions, please feel free to ask them in the comments portion or email me directly at cryptotradingforbeginners@gmail.com where I will answer them as soon as I receive them. Thanks again for reading this article and helping make my guide a "go to" for the crypto world. Let's get started!
SO WHAT IS CRYPTOCURRENCY?
Cryptocurrency is probably one of the most revolutionary, yet one of the most controversial things in existence today. It has swept through every major news and media outlet, it has made it's presence known in financial markets across the globe and has become one of the leading topics of discussion in 2018. Cryptocurrency has been in the midst of a hostile takeover in today's financial markets, figuratively speaking of course, making itself known to people from all walks of life, all over the planet. But, what exactly is cryptocurrency?
To summarize it easily, cryptocurrency is a digital (electronic) currency (money) that can be used in a variety of ways across the world wide web and even offline. Being a digital asset, cryptocurrency is not produced in physical form, therefor there is no need for a traditional wallet or safe to store it in. A holder simply acquires their currency and then transfers it to a digital storage program (application) called a "wallet". Cryptocurrency is digitally created and identified (on the blockchain) by a single string of encryption code (aka hash) per single unit of currency, making each unit unique and unable to be duplicated. This eliminates the ability to counterfeit digital currency and eliminates the existence of "double transactions", both used across the world to promote various forms of theft. Cryptocurrency is also free of government and financial system oversight, making it controlled only by the network upon which it exists. This means each currency's unique blockchain network controls the micro-economy of the currency, making it unable to be manipulated or restrained by other parties (such as the government, tax offices, etc.)
Cryptocurrency is not the same as traditional currency, such as the US Dollar, for several distinct reasons. Cryptocurrency is not printed when stock runs low, it is created through a process called "mining" in which a large group of computers combine their computer power together to create new units of crypto on the blockchain upon which it exist. Cryptocurrency is also not controlled by any single entity or central bank, meaning it is decentralized (PART TWO) and controlled ideally by it's own micro-economy and network. Cryptocurrency is also a fool proof way to send and receive money, with every single transaction down to the finest detail being forever preserved and recorded on the blockchain (PART ONE). Cryptocurrency provides a great platform for investment opportunities and a way for the average person to passively earn extra income by mining or trading. Now, here comes all the technical stuff.
By the book, cryptocurrency is defined as....
"A digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank."
Basically, the breakdown in the first portion of this article was to give you a basic understanding of cryptocurrency. Now we will touch down on a slightly more technical aspect of the term, making it understandable to the average person. Cryptocurrency is a digital currency (electronic money) in which encryption techniques (blockchain technology coding) are used to regulate the generation of units of currency (mining coins on the blockchain) and verify the transfer of funds (by solving mathematical equations on the blockchain), operating independently of a central bank (decentralized, as explained in PART TWO). This is the textbook definition of cryptocurrency, summarized for your understanding,
In this explanation, the only thing that could create confusion is the term mining, which is now going to be briefly explained. Mining is the process in which numerous individuals lend out their computational power across a large scale P2P Network (the blockchain network of the coin they are mining) to essentially combine power to create new units of currency and assist the blockchain in validating transactions (both go hand in hand). The process is based on the fact the blockchain contains very complicated mathematical equations which are solved by the combined power of these computers for a number of reasons. When they mathematical problems are solved, this adds new units of coins to the network, verifies transactions that have been made and adds a new permanent piece to the blockchain to continue growing. Mining is beyond a doubt the most important piece of the cryptocurrency puzzle. Without mining, a cryptocurrency will essentially die off in due time. It cannot create new units of currency to grow, it cannot verify transactions on the blockchain and ultimately the blockchain upon which it is built will go dormant without the power needed to make it operational.
Cryptocurrency was created with the idea of giving the people of this world a reliable, efficient and quick form of money that could be spent on a global scale all while not being hindered by having to exchange money into other asset classes, according to the area you are in. It all started with Bitcoin in 2008 and not long after, new coins based on similar codes and programming emerged left and right. From them came Ethereum, Ethereum Classic, Dogecoin, Ripple, Bitcoin Cash, Zcash, Monero and MANY more. Each currency has it's own unique application and reason for being introduced to the world. Some cryptocurrencies are released as the "faster, more efficient coin", which is similar to car production in the world in the sense that everyone has to have the fastest, most efficient model available. Some currencies are created to create a micro-economy with the company who created it, such as a token used to buy items specifically in a specific phone app or a crypto designed to be used as a casino token. Some coins are created to symbolize equity in the company that they were created by, almost in the sense of a stock holding. Then, some coins are created just to mock the cryptocurrency world or make a general statement, such as Dogecoin. There are numerous reasons why cryptocurrency is in existence and someone from each walk of life can locate one fit to their individual needs.
The reasons some of these currencies were created still intrigue me to this day. Most are designed for the betterment of the world as we know it, which is a thing of beauty. Some are created out of raw human greed and the burning desire to find a quick come up. Some are created just to pitch a great idea that could change the way we see or do things in our lives. Regardless of why they were made, I know one thing for sure, the idea of cryptocurrency has swept the world and taken over the internet by storm. The fact remains that it is very unlikely to find a single place on the world wide web where you will not see some form of advertising or information on cryptocurrency. Being it is digitally based, crypto has found it's niche and dominance on the internet, making it one of the widest spread topics in nearly any media platform, from Twitter to CNBC.
With continued growth, daily media reports and the guarantee to continue evolving in this ever changing world, cryptocurrency stands as an asset class many have utilized to build and store wealth. With cryptocurrency, our lives are able to be changed forever and the possibilities are truly endless. I myself am one of these people, but the biggest question right now is this, ARE YOU?
That concludes the fifth part of Lucky's Crypto Guide For Beginners", "What is Cryptocurrency?". In this article I did everything within my teaching power to break down some of the biggest key terms in the cryptocurrency world. My objective is to make this series of guides a valuable source of information for anyone new to crypto, teaching them effectively as possible, article by article. When I entered the crypto trading world, there were no guidelines, manuals or anything of the sort available to learn from. Anyone who had a manual, wanted you to pay $29.99 to "join" their awesome trading team. Not me, I'm no sucker and I'd be damned if I'd pay that kind of money for a complicated manual I wouldn't even understand. So what did I do? I just dove in and learned everything through countless hours of research along with the ever so excruciating trial and error, and it worked. This series is here to build the community stronger through means of knowledge, it is here for me to share my wealth of knowledge with all of you in hopes of helping you on your journey in crypto. Remember, knowledge is power and empowering our community, well it builds a stronger foundation. Resteem and Upvote this please, do your part in making this content available to the community as a whole. Thank you for reading, hope to see you next time!
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Please read and resteem the articles below from Lucky's Crypto Guide For Beginners!
PART ONE - WHAT IS BLOCKCHAIN TECHNOLOGY?
PART TWO - WHAT DOES DECENTRALIZED MEAN?
PART THREE - WHAT IS A PEER TO PEER (P2P) NETWORK?
PART FOUR - WHAT IS BITCOIN?
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