What even is cryptocurrency?!

A beginners guide….

I’ve recently found there are three sets of people when it comes to cryptocurrency, the enthusiasts, the completely closed minded and the people who would like to get involved but don’t understand the basics or where to start. This is for the latter! 


Firstly, Cryptocurrencies are not regulated by any central government authorities, central agencies like banks, states, or companies this makes them immune to any interventions. Cryptocurrencies are mostly decentralized networks based on blockchain technology. 

Blockchain technology is a distributed ledger system that enables the secure and transparent recording of transactions. It consists of a chain of blocks, where each block contains a set of transactions. These blocks are linked together using cryptographic hashes, ensuring the immutability and integrity of the data stored on the blockchain.

Cryptocurrency is a digital currency operating on a vast network of computers, offering a decentralized system that enables swift and cost-effective money transfers.

The blockchain itself is a virtual chain composed of blocks, each containing a collection of transactions and pertinent information. Once a block is added to the chain, its contents become unalterable and impervious to removal or replacement.

Within this network, nodes play a vital role in managing cryptocurrencies. These nodes, comprised of various contributors, have a range of functions, including the storage and validation of transactional data. They collectively oversee the database and ensure the accuracy of new transaction entries. Remarkably, the blockchain's resilience lies in the absence of a single point of failure. Even if a node were to malfunction or break down, it would have no adverse impact on the integrity of the blockchain ledger.

What are the advantages of cryptocurrencies?

• Cost Effective Transactions
• Transactional Speed
• Inflation Protection
• Decentralization
• Diversity
• Safe And Secure
• Transparent
• Private
• Easy currency Exchanges

Bitcoin, the first and most well-known application of blockchain technology, operates on a decentralized network of nodes. These nodes work together to validate and record transactions, eliminating the need for a central authority like a bank.

 As mentioned in the list of advantages above, one of the key features of blockchain technology is its decentralized nature. Unlike traditional centralized systems, where a single authority controls the data, blockchain operates on a peer-to-peer network. This means that no single entity has complete control over the blockchain, making it more resistant to censorship and manipulation.

Transparency, another important aspect of blockchain technology is its transparency. All transactions recorded on the blockchain are visible to all participants, ensuring accountability and trust. This transparency also helps in reducing fraud and corruption, as any attempt to tamper with the data can be easily detected.

Example: Supply chain management can greatly benefit from blockchain technology. By recording every step of a product's journey on the blockchain, consumers can easily verify the authenticity and origin of the product. This transparency helps in combating counterfeit goods and ensuring fair trade practices.

A question many ‘newbies’ like to have an answer to is, how secure is cryptocurrency? 

Blockchain technology provides a high level of security through the use of cryptographic algorithms. Each block in the chain contains a unique hash, which is generated based on the data stored in the block. Any change in the data will result in a different hash, making it nearly impossible to alter the information stored on the blockchain without the consensus of the network.

Example: Smart contracts, which are self-executing contracts with the terms of the agreement directly written into code, rely on blockchain technology for their security. Once a smart contract is deployed on the blockchain, it cannot be modified or tampered with, ensuring that the terms of the contract are enforced without the need for intermediaries.


How is your cryptocurrency private?

You are issued with two keys when you buy cryptocurrency. One is a public key which you can use to send or receive funds, this one you can safely share with others. The other key is private and is not to be shared with anyone else.

Cryptocurrency transactions from private wallet to private wallet are not regulated which means you are responsible for your own funds.

If you decide cryptocurrency is for you, what should you do next?

Research, research, research: Before investing, it's essential to conduct thorough research on different cryptocurrencies. Consider factors such as their technology, use case, team behind the project, market demand, and potential for growth. Websites like CoinMarketCap or CoinGecko can provide valuable insights. 

 Diversify your portfolio: Cryptocurrency investments can be volatile, so it's wise to diversify your holdings. Instead of putting all your eggs in one basket, consider investing in multiple cryptocurrencies to spread the risk. 

 Choose a reputable exchange: To buy cryptocurrencies, you'll need to use a reputable cryptocurrency exchange. Look for exchanges that have a solid reputation, robust security measures, and a wide range of available cryptocurrencies. Some popular exchanges include Coinbase, Binance and Kraken. 

 Create an account: Sign up for an account on your chosen exchange. This typically involves providing personal information, completing identity verification, and setting up two-factor authentication for enhanced security. 

 Fund your account: Once your account is set up, you'll need to deposit funds into it. Most exchanges support various payment methods, including bank transfers, credit/debit cards, or even other cryptocurrencies. Choose the method that suits you best. 

 Place your order: After depositing funds, you can now place an order to buy your desired cryptocurrency. Decide whether you want to buy at the current market price or set a specific price at which you'd like to purchase. Keep in mind that market orders execute immediately, while limit orders may take longer. 

 Secure your investment: Once you've purchased your cryptocurrencies, it's crucial to store them securely. Consider using a hardware wallet, such as Exodus, Metamask or coinbase wallet, which provides an offline storage solution and enhances the security of your holdings. Alternatively, you can also use software wallets or even leave them on the exchange (though this is generally less secure). 


Remember, investing in cryptocurrencies carries risks, so only invest what you can afford to lose. Stay updated with the latest news, market trends, and always be cautious of potential scams or fraudulent projects. Happy investing and may your crypto journey be filled with success! 
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