You have probably wondered how cryptocurrency works; you are not alone and that is what this article is for; to provide insight on the workings of cryptocurrency.
To understand how Cryptocurrency works, let us consider these;
- Public Ledgers: All confirmed transactions are stored in a public ledger, to monitor that the person with the encrypted address is no spending beyond the coins available.
Because it can be viewed by all, it reduces the risk of theft.
- Transactions: The transfer of funds between two digital wallets is called a transaction. The transaction is published in a public ledger and the Miners approve it and get their reward after confirming that the transaction can from the owner of the wallet.
It may take some time, about 10 minutes in Bitcoins to get confirmed and added to the public ledger.
- Mining: Mining is the process of confirming transactions and putting it in a public ledger after solving some complex mathematical puzzle.
The transaction is open such that anyone can do the mining duty and confirm and after it, they show their proof of work and get some cryptocurrency to their wallets as a reward for the job done.
Cryptocurrency exchanges are websites where you can buy, sell or exchange cryptocurrencies for other digital currency or traditional currency like US dollars or Euro.
You would at some point want to convert the digital money to the legal tender where you are since not everybody uses the digital money, this will help you spend in the real world.
You should, however, note that there are different exchange rates and the prices keep fluctuating, so you need to understand what it is you are getting before you try to do business with some trading platforms, trading platforms are websites that connect buyers and sellers and take a fee from each transaction.
Types of Trading Platform for Exchanges
Direct Trading: They offer direct person to person trading where individuals from different countries can exchange currency.
Direct trading exchanges don't have a fixed market price, instead, each seller sets their own exchange rate, this seems convenient but the fluctuating rates can make some not to want this and not just that, the credibility may be low so they will prefer the second type, which is the Brokers.
Brokers: These are websites that anyone can visit to buy cryptocurrencies at a price set by the broker. Cryptocurrency brokers are similar to foreign exchange dealers. You can see that as it is in the actual currency market so is it with digital money, note that there are little fees to be paid for their services.
Most Important Things to Look Out For Before Joining an Exchange
It's important to do a little homework before you start trading so that you are not duped and disappointed at the end of the day. Here are a few things you should check before making your first trade.
Credible Reputation: The best way to find out about an exchange is to search through reviews from individual users and well-known industry websites. You can ask any questions you might have on forums like BitcoinTalk or Reddit. You would need to know the pros and cons and the terms and conditions.
Find out how many times those individuals chose them again and again. This is credible information that will give you the confidence to trade.
Payment of Fees: Most exchanges should have fee-related information on their websites. Before joining, make sure you understand deposit, transaction and withdrawal fees.
Fees can differ greatly depending on the exchange you use. Do not just fall for catchy adverts and enter blindly, those people are in the business for profits, all businesses are profit-oriented but then which would seem fair enough for the services you want.
Payment Methods: What are the payment methods available on the exchange?
Credit & Debit Card, Wire Transfer or PayPal? There are some exchange platforms with limited payment options which may not be convenient for you to use. You should, however, note that where you intend to purchase cryptocurrency with your credit card, there will be a need for identification to avoid any form of fraud.
So get verified for your own good and then you also should know if the transaction fee they are asking is way too much. You may like to reconsider..
Verification Requirements: The vast majority of the bitcoins trading platforms both in the US and the UK require some sort of ID verification in order to make deposits & withdrawals.
Some exchanges will allow you to remain anonymous. Although verification may be long and stressful, this is a way of curbing fraud and money laundering so be patient and go through it carefully.
Geographical Restrictions: Some specific user functions offered by some exchange platforms are only accessible from certain countries.
This is a limiting factor, so make sure the exchange platform you want to join allows full access to all platform tools and functions in the country you currently live in. it is not about making the exchange to just any hard currency, it will make no sense if you can't spend the money in your current location.
Cryptocurrency electrum ltc wallet
There is so much talk about cryptocurrency in recent times, even though it has been in existence for a few years now.
You have probably heard about it – even if you haven't in details. As expected, there a number of terminologies used with cryptocurrency and cryptocurrency wallet is one of them. So, what is cryptocurrency wallet?
A cryptocurrency wallet is a software program that stores private and public keys and interacts with various blockchain to enable users to send and receive digital currency and monitor their balance.
If you want to use bitcoins or any other cryptocurrency, you will need to have a digital electrum ltc wallet because that is where you get to control all transactions. When someone sends you Bitcoins or any type of digital currency, the transaction cannot be reversed because they have signed off ownership, there are no real or physical coins but there are published ledgers to show the balance of how the transaction went.
The transaction is signified merely by a transaction record on the blockchain and a change in balance in your cryptocurrency wallet. There are two forms of wallets, which are the hot and cold wallet. A hot wallet is connected to the internet and used to hold cryptocurrency for everyday transactions.
Because of the increased security risk over a cold wallet, a hot wallet should not store large amounts of currency and cold wallets.
Types of Cryptocurrency Wallets
There are several types of Crypto wallet that provides different ways to store and access your digital money; it can be categorized into three phases, software, hardware and paper wallet.
The software can be online, desktop or mobile
Online: Wallets run on the cloud and are accessible from any computing device in any location. They are more convenient to access and they store your private keys online and are controlled by a third party those ones may steal from you.
Desktop: This wallet is downloaded and installed on a PC or laptop. They are only accessible from the single computer in which they are downloaded. Though the security is high, it is risky if the computer is hacked or gets a virus, you may lose all your funds.
Mobile: Wallets run on an app on your phone and are useful because they can be used anywhere. They are usually much smaller and simpler than desktop wallets because of the limited space available on mobile.
Hardware: These wallets differ from software wallets in that they store a user's private keys on a hardware device like a USB.
Although hardware wallets make transactions online, they are stored offline which delivers increased security. This makes it possible to easily transact while also keeping your money offline and away from danger.
Paper: Paper wallets are easy to use and provide a very high level of security.
While the term paper wallet can simply refer to a physical copy or printout of your public and private keys. Using a paper wallet is relatively straightforward. If you want to withdraw or spend currency, all you need to do is transfer funds from your paper Electrum Litecoin wallet to your software wallet.
This process, called 'sweeping,' can either be done manually by entering your private keys or by scanning the QR code on the paper wallet.
There you have it. A beginner's introduction to the inner working of cryptocurrency. If you want to learn more, you can check out this ultimate guide to getting started with cryptocurrencies .