What is a coin?

Thinking “payment method” probably? Yes, it is. Only if ancient Babylonians have ever imagined, that the means of exchange can become all digital. Nevertheless, gold and silver are still used and have the desired value for all of us. The journey of the currency as we know it today, had adopted various shapes and values. Constant improvements led from the coinage electrum (a natural alloy of gold and silver back then) to online banking and even cryptocurrency.

Crypto differs from its predecessors. Its invention was actually not intended. Interesting, right? The person responsible is known as Satoshi Nakamoto. His idea in 2008 was the creation of a peer-to-peer (P2P – meaning PC to PC) electronic cash system. Fortunately, that was the birth of Bitcoin. The main purpose of that pioneer invention was to prevent double spending. This type of scams has been a burden for a lot of people and corporations. In addition, the core fragment of Satoshi’s gizmo, is actually engineering a decentralized digital cash system.

In the 90’s, many attempts of creating algorithmic money had failed. All those centralized efforts had crashed. Satoshi then decided to give it a shot and develop a digital money system, not using any central units by practically developing his first idea. It worked out. That was the creation of the first cryptocurrency, the Bitcoin.

We are well aware, that the sphere of digital money might be a bit too technical and complexed for some of you. Don’t give up! Be part of the future. The information you seek is one click away.

What is cryptocurrency?

Peeling off every layer of this term, till we reach its simple explanation, is an amazing experience. At the center we realized this simple and full of meaning piece of information - crypto is basically several entries, done in a database. They are unforgeable. What is more, this data is unchangeable and fulfilling specific conditions, which are implemented in the code.

It is basically a solution for the double-spending bug in the online transactions system. Back in the days, a central server (also known as a third party) was responsible for preventing one amount of money to be spend twice. This trusted middle institution controlled all the funds. It kept record of every transaction and approved each one. Many people were against it. It had a lot of flaws as well. That is why, the decentralized idea of a network (like Bitcoin) was embraced in no time.

In a network like that, each of the members need to do the verification of a transaction. No, it is not that complicated. There is this invention created, called Blockchain. It acts like a public register. Everybody can access it and check every transaction ever occurred in the network.

What is a transaction actually? It is like a file, which contains the online addresses of both the sender and the receiver. In the crypto-sphere they are called wallet addresses. The blockchain also has information about the amount you send or collect. Another major puzzle piece is the transaction conformation. When we talk decentralized, it is done by the miners. They verify each one and act like a distribution plant, so that every part of the network gets the message.

There is this amazing thing about cryptocurrency. Once a transaction is approved, it is practically mission impossible to forge any of it. This is not just some random statement. It is backed up by a strictly followed set consensus rules. Each user in the crypto network is a node. All nodes obey a consensus, in order to avoid any malfunctions and breakdowns. Well, it is all mathematically connected and boned by codes. Just like dominoes, if one peace breaks (or not match), the whole process suffers.

Even when sounds shakable, the network has numerous pre-built rules, that are programmed to keep it up and running pretty much 24/7. All this is wisely implemented into the name itself – cryptocurrency, from cryptography. It monitors if the consensus is followed. And if you think this is a bit too much to acknowledge, continue reading and learning and you’ll get there. Let’s move on.

How to get cryptocurrency?

Why not earning it, for starters? Of course, you can just buy it as well. How about trading it too?

Mining coins on your own might seem like an adventure. It is and it for sure doesn’t just sound epic, but it really is. Let us throw some insights there. This process requires deeper knowledge, resources, hardware, time, money and constant updates on what is going on.

solo mining
mining in a pool
cloud mining (here you just pay to a middle man to do all the hard work and simply send your share of the rewards)

Trading is another interesting approach. Here you have exchanges at your disposal. You can use them when there is uncertainty how the whole trading process is done. Exchanges do it all for you, but they are their own bosses. Agreements are not always possible. They too have terms and conditions. In many cases exchanges are not very profitable, but sometimes they are a great way to cash out. If possible, avoid dealing with such organizations.

Basically, there are several things you can do, to get coins in your wallet:

buy cryptocurrency
somebody can send it to you
mine coins

Purchasing crypto coins is happening through exchanges, using gift cards, even from special BTC (Bitcoin) ATMs. Right? Whoever thought of a cash machine for crypto coins? The interest is definitely not playing for your team. Have in mind, that not so popular coins are not very advisable buying strategy. You can also get coins with face-to-face trades. Just like good old times.

In order somebody to send you cryptocurrency, you require a software called “wallet”. It makes the coin deals easier and faster. They come with guides, so with few lines more to read, you can do it all on your own.

Some of the most mined and traded coins nowadays are:

Bitcoin
Ethereum
Ripple
Litecoin
Dash
Monero
Bitcoin-Cash

Hash? What is that?

You will hear hash a lot. Let’s tell you what it actually stands for. Imagine it as a message. It is converted to a value, through a cryptographic function. In crypto world, this is coded to be an irreversible function. Mining hardware use that to find the missing hash from each block. When you find it, don’t try to avoid informing the network. If it denies your block, you don’t get anything out of it. That is a waste of time and money, which is not preferable. Play it safe.

Hash is very often allied with rate. Hash rate stands for the power, which your hardware produces. We explain a bit more on mining itself in the next sections. So, gear up, kick that speed in and find those blocks.

Benefits and Drawbacks

Like everything in life, cryptocurrency has positive and negative aspects. Let’s start with some negative points:

Cons:

some new coins have short life
there is a kind of blind gambling aspect
risk of being hacked and manipulated
irreversible transactions (many people and investors find that as a negative aspect)

Pros:

fast and worldwide coverage
secure transactions in the network
transaction fees are lower, than most banks
liquidity (think of it as a wise investment)

We can add more to both lists, but we leave that to you. We find it stimulating for people to discover some parts of a topic on their own. The feeling is amazing. Try it. You will be stunned!

What do I need so I can mine?

Mining is a process, which requires a lot of hash power, generated by properly picked hardware. Just like every electric unit in your house, more electricity means faster working process. Yes, but there is one major detail – can your electric system actually handle the pressure? We strongly advise you to measure that very carefully, before investing chunks of money into mining gear (mainly ASIC machines and GPU rigs). This is crucial, if you don’t want to mess up your house.

Now, think of mining on your own or with others. When doing it alone is like playing the lottery – you can get some reward today, or in years. Plus, your earnings are most likely not covering the costs. Another annoying addition are the noise and heat produced by the machines. Make your life easier and mining fun, by joining a mining pool. There you speed up the process, thanks to the combined hash power of all users. Incomes are split, but frequent. You get what you deserve – it is usually proportional to your help finding each new block.

Don’t worry, there is a way to mine, without the need of buying hardware, dealing with configurations and so on. It is called “cloud mining”. Here you pay a middle man to mine for you. You just sign a contract, pay your fee and provide a wallet address. There you will receive your rewards. Hooked up on mining yet?

Do I cash my coins out or?

Why not starting with buying goods with it? There are many places nowadays, where you can purchase things with cryptocurrency. You are right, it sounds strange, but it is really happening. If you don’t want to apart from your coins, use the proper wallet and keep them in stock. There are some consensus rules, that pay you a reward proportional to your coins in stock. They are called Proof-of-Stake (PoS). There is another one called PoW or Proof-of-Work. It looks out for the rewards gained through mining.

In case all the above isn’t part of your plans, you would want to sell, or even trade your cryptocurrency. Here you can use exchanges. They help you cash out with high level of security and lack of scams. Here are some of the top ones out there:

Binance
Bitmex
Yobit
Huobi

They all have fast and user-friendly interface. Don’t worry, you’ll manage.

Regulations

Just like everything in life, cryptocurrency is not allowed everywhere in the world. To be able to exist in a country, the government and regulations must allow it. Some parts of the world stimulate the whole thing, others permit only mining, there are places where just trading is authorized. Have a look:

mining is illegal in Algeria, Bolivia, Ecuador, Bangladesh, Nepal and Macedonia
trading is legal in Vietnam, Indonesia and Thailand
you can’t pay with crypto in Thailand, Indonesia and Vietnam

Don’t get us wrong, there are many countries, that give it a try to understand the idea of digital money. They even do some adjustments to their legal regulations and tax departments. But all that is a paradox. Centralized systems are trying to get along with decentralized, existing only online self-sustained crypto coins. The lack of centralized controlling institution rises a lot of questions and disapproval. To top that, this digital currency is pretty anonymous. Hey, that is a kind of gift to the grey economies and illegal deals, don’t you think? China and Russia are fighting for banning Bitcoin and the other coins since 2017. We will see what will happen there.

There are websites, where you can keep yourselves informed on what is going at every moment. Nevertheless, there is information on every crypto related topic. Here are some of them:

Conclusion

Some people are sceptic, other believe in cryptocurrency and mining. It can be the future of trades. We believe, that this topic has potential and is worth exploring. Who knows, maybe in the years to come, there will be no paper money at all. Wouldn’t that be a relief?