What is cryptocurrency?
Cryptocurrency is an application created by using blockchain technology. The blockchain is maintaining the distributed ledger which is immutable. One meaning for crypto is “hidden” and the other meaning is “computing”. Crypto is a term used in computer science for encrypting and decrypting the data to maintain the secrecy and security of the data. When we share or transfer the data, data must be safe from fraudulent people, virus and attacks.
During the transmission even if the data is missed or attacked by the people, the attackers should not get the data for further mischievous things. The computing algorithm is used to construct the data in such a way, so the data is ready for transferring from place to another place in a secure way.
Thus the cryptography is used to safeguard the data during the transmission. Using this concept the virtual currency is created and used for trading.
The history of cryptographically encrypted electronic currency system begin in the year 1983, in the year 2009 it came to the light by the developer Satoshi Nakamoto. It used SHA-256, a cryptographic hash function, in its proof-of-work scheme. In April 2011, Namecoin was created as an attempt at forming a decentralized DNS, which would make internet censorship very difficult. Soon after, in October 2011, Litecoin was released.
cryptocurrency is a form of digital asset used in the peer(P2P) or decentralised to peer network as a virtual currency or digital currency. In this technique, digital representation of currency value is in electronic form.
Cryptocurrencies are generated by mining. For example, Bitcoin is generated using Bitcoin mining. The process involves downloading software that contains a partial or full history of transactions that have occurred in its network. While anyone with a computer and an internet connection can mine cryptocurrency, the energy- and resource-intensive nature of mining means that the industry is dominated by large firms. Cryptocurrencies can be mined or purchased from cryptocurrency exchanges.
Some examples of Cryptocurrency or Virtual Currencies are
Bitcoin Cash (BCH)
These currencies are used during the trading, without exhibiting the real data. When people want to convert it to real money they can sell the coin inside the peer to peer network and get the real currency by giving the digital currency.
Blocks are connected and register the related online transactions of that particular block in the online distributed ledger. Each block contains a set of transactions that have been independently verified by each member of the distributed peer-to-peer network. Every new block generated must be verified by each node before being confirmed, making it almost impossible to forge transaction histories. The contents of the online ledger must be agreed upon by the entire network of an individual node, or computer maintaining a copy of the ledger.
Some of the crypto currency exchanges
Decentralized exchanges (DEX) are a type of cryptocurrency exchange which allows for direct peer-to-peer cryptocurrency transactions to take place online securely and without the need for an intermediary.
Binance is a cryptocurrency exchange which is the largest exchange in the world in terms of daily trading volume of cryptocurrencies. It was founded in 2017 and is registered in the Cayman Islands.
Binance was founded by Changpeng Zhao, a developer who had previously created high frequency trading software. Binance was initially based in China, but later moved its headquarters out of China following the Chinese government’s increasing regulation of cryptocurrency.
In 2021 Binance was put under investigation by both the United States Department of Justice and Internal Revenue Service on allegations of money laundering and tax offenses. The UK’s Financial Conduct Authority ordered Binance to stop all regulated activity in the United Kingdom in June 2021
Uniswap is a decentralized finance protocol that is used to exchange cryptocurrencies. Uniswap is also the name of the company that initially built the Uniswap protocol. The protocol facilitates automated transactions between cryptocurrency tokens on the Ethereum blockchain through the use of smart contracts. As of October 2020, Uniswap was estimated to be the largest decentralized exchange and the fourth-largest cryptocurrency exchange overall by daily trading volume. In March 2021, Uniswap was generating fees of approximately US$2–3 million daily for the liquidity providers who facilitate liquid markets for the cryptocurrencies being exchanged.
QuickSwap (QUICK) is a permissionless decentralized exchange (DEX) based on Ethereum, powered by Polygon‘s Layer 2 scalability infrastructure. By utilizing Layer 2 for transactions, QuickSwap users are able to trade any ERC20 asset at lightning-fast speeds with a near-zero gas fee.
Awareness for crypto
We have to create the wallet and keys (Public, Private) in the particular coin based company’s website or through Apps. Each coin is providing an user friendly apps through that we can join the network, perform trading and maintain our currency. We can buy, sell and stake the cryptocurrency through exchanges. Checkout the value of coins and calculate value of your currency value. Market analysis will help you to understand the fluctuations of cryptocoins. The cryptocurrency platforms will help you to create your crypto account and trade. Gather the knowledge about crypto coins regularly to take good decisions in trading.
One should have a deep research on crypto trading before they enter into the crypto world, they should go with high security to maintain their account and trustworthy wallets.
One has to create the wallet, you can have address in the wallet, then public and private keys will be generated using algorithms. Private key is for your personal use, you should not share with others
Tokens are created at the beginning, the tokens will be distributed to different stake holders and promoted then it will take the form of coins. The tokens will be distributed by Initial coin offering(ICO) method, Initial Exchange offering(IEO), Initial Dex Offering(IDO) methods to the stake holders. These are the different promoting methods of Crypto Coins.
An airdrop is a distribution of a cryptocurrency token or coin, usually for free, to numerous wallet addresses. Airdrops are primarily implemented as a way of gaining attention and new followers, resulting in a larger user-base and a wider disbursement of coins.
An airdrop stands basically for free crypto tokens. Airdrops commonly occur before their token generation event. Projects use airdrops as a viral marketing method. They want to create awareness and want to attract new potential investors for their upcoming token. Mostly it’s about sharing and liking posts on their social media channels. This will raise awareness and create a user base, which should positively impact the token value.
There are different types of airdrops. First, we have holder airdrops. Crypto projects distribute tokens to their token holders. To benefit from it, you need to have a specific token at a specific time (a so-called snapshot). Examples of this type are Stellar, BitTorrent (still ongoing), and Flare.
Another type of airdrop is a hard fork. This type requires holding tokens on the Original Chain, which will get duplicated, and you will receive an equivalent amount of tokens. The most famous examples of that type are Bitcoin Cash and Ethereum Classic.
Let us see the pneumonic phrase, seed phrase in the next article.