Crypto-currencies are a relatively new form of currency that, unlike standard money, is not governed or regulated by a central bank. This means that there are no limits to the number of crypto-currencies that can be created and who can create them. Crypto-currencies have been in the news recently because of their skyrocketing value, but also because they are being used for criminal activities like money laundering. Learn more about this interesting topic with our beginner’s guide that should help you get a handle on it!
What is a crypto currency?
A crypto-currency is a currency that is created and managed using encryption techniques to regulate the generation of monetary units and verify fund transfers.
What are they used for?
Crypto-currencies can be used as a means of transaction, but also as an investment tool. In fact, some people have made millions by investing in crypto-currencies early on!
What is a trading platform for?
A trading platform is a website where you can buy, sell or exchange crypto-currencies for standard money. Visit Hi.com to learn more
How are they made?
Crypto-currency mining refers to the process by which new crypto-currencies are created and the transactions that have taken place are verified. This verification system is called blockchain technology. It uses complex mathematical algorithms to verify and record all transactions that take place.
What is their value?
Crypto-currencies are valued based on their usefulness, security features and market demand. The more people who want to use a particular crypto-currency for its intended purpose, the more its value increases! In fact, what drives up the price of individual tokens is the demand for them as a means of transaction.
What are the different types of crypto-currencies?
There are currently hundreds and hundreds of unique tokens and coins, each with its own purpose and characteristics. They can be divided into three main categories :
- Currencies – they have their own blockchain system, independent of other blockchains.Bitcoin is the most famous example.
- Platforms – their main purpose is to provide a software platform for other companies or individuals to build applications on top of, in the same way that our iPhones are built on Apple’s iOS system. Ethereum and Lisk are examples of platforms.
- Applications – they also have their own blockchain but are built on top of another blockchain. For example, the Golem network is built on top of Ethereum’s decentralized platform and allows users to rent or buy computer processing power from others using GNT tokens as payment.
How to invest in crypto-currencies?
Investing in crypto-currencies requires specific knowledge about how they work. Also, because crypto-currencies are so new, their market is very volatile and there is no guarantee that their value will increase. That said, if you have confidence in the security features of a particular token or coin and believe in its usefulness as a means of transaction for everyday goods and services, then investing can be an interesting opportunity! But you need to be warned of the risks beforehand.
We hope to have answered your questions about crypto-currencies in this beginner’s guide.