“Virtual money” and “cryptocurrency” might be very misleading to people who are new to the cryptocurrency realm.
Jayz will explain what cryptocurrency is and how to use it. and its functions, as well as how it varies from virtual currency.
What is cryptocurrency? Is it different from virtual currency?
Online purchases of products and services can be made with “virtual currency.” Many businesses create their own tokens, also referred to as their own currency, which may only be exchanged for their own products or services. Linepoints, shrimp coins, street coins, and other examples are some
Blockchain technology is used to operate “cryptocurrency.” Blockchain is a decentralized technology that manages and records transactions across numerous computers. This technology’s security makes it appealing. Bitcoin, Ether, Dogecoin, and other examples.
Simply put, cryptocurrency is a type of virtual money, but not all virtual money is cryptocurrency.
4 Characteristics of cryptocurrency
Why do we need a cryptocurrency when there is already a fiat currency? In actuality, it is due to its four main traits listed below!
Decentralized
Unlike traditional fiat currencies, which demand third-party identification for transactions, cryptocurrencies do not.
In a “decentralized” manner, cryptocurrency transactions are directly recorded on the blockchain.
This saves a ton of time and handling costs, and since cryptocurrencies are exchanged online, they are accessible every day of the year, 24 hours a day.
Transparency
Because cryptocurrencies are decentralized, every transaction is tracked and made available to the public on the blockchain.
So, whenever you choose, you can view as much or as little info as you like.
Cannot be tampered with
Blockchains are decentralized databases that enable data to be dispersed among numerous network nodes in numerous places.
Therefore, if a hacker were to gain access, he would have to gain access to every node of this data, which is virtually impossible.
Anti-inflation
Since the government creates money like crazy, making it thinner and thinner, inflation is a surefire way to cure the symptoms but not the underlying cause.
However, cryptocurrency differs from fiat money in that it is not subject to governmental regulation and has a finite supply, preventing the phenomena of endlessly producing money.
What are the cryptocurrencies
Since the launch of Bitcoin and Ethereum, new cryptocurrencies have been launching one after the other, and there are already approximately 10,000 different cryptocurrencies in existence.
Every cryptocurrency has a unique set of uses and values. The following 4 categories of cryptocurrencies are differentiated since there are so many different types of them.
- Mainstream coins: BTC, ETH….
- Stable coins: USDT, USDC….
- Platform coins: BNB….
- Cryptocurrency: DOGE….
It is advised to start with coins that have been around for a while and are pretty stable, such as mainstream coins or stable coins, if you are new to the world of coins.
After you have a basic understanding of cryptocurrencies, you can start interacting with platform coins and cottage coins, which are considerably riskier and more complicated.
The following is a compilation of the top 5 cryptocurrencies by market capitalization (data as of 2022/12/1 → refer to CoinMarketCap for information)
| Code name | Market value (TWD) | Top reasons |
| BTC | NT$10,104,876,230,154 | The original cryptocurrency was proposed in 2009 by a person or group of people going by the name Satoshi Nakamoto. |
| ETH | NT$4,831,831,764,488 | It was developed in 2015 and is a cryptocurrency that can be used to create decentralized applications outside of the blockchain using smart contracts. |
| USDT | NT$2,004,151,616,928 | Tether introduced a USD fiat stable coin with a 1:1 USDT:USD exchange rate, allowing users to trade USD at any time. |
| BNB | NT$1,459,100,583,196 | A platform coin released by Coinan, the biggest cryptocurrency exchange in the world. It cannot be acquired by mining because it is minted with smart contracts. |
| USDC | NT$1,324,157,326,723 | It is identical to TED; both stable coins are pegged 1:1 to the US dollar. It is “more transparent and less dangerous to own” than USDT in terms of regulation, nevertheless. |
How to buy cryptocurrency
According to their operational methods, there are two different types of “cryptocurrency exchanges” you can use to buy and sell cryptocurrency. If you want to buy cryptocurrency, you must do so through one of these exchanges.
Centralized exchange
Today, the majority of people manage cryptocurrency for their investors using this exchange.
Knife regulators oversee some of the major trading platforms, and the security of the transactions is generally high.
Typically, rather than on the blockchain, transactions are made on the exchange’s database.
Because of this, centralized exchanges are susceptible to attack or hacking by the government.
Advantage
- High Mobility
- Safe and regulated
- Faster and easier to use
- Customer service available to help solve problems
Shortcoming
- KYC certification required
- Similar to traditional finance
- Exchange has full control
- Risk of hacker attacks
Decentralized Exchanges
Direct transactions between buyers and sellers occur on the blockchain.Information is open and extremely secure.
However, liquidity and trading volume are low because the mechanism enables the exchange to function decentralized supervision.
Advantage
- More suitable for decentralized cryptocurrency
- No KYC certification
- Substantial control and custody
- Transparent transactions
- More cryptocurrencies to choose from
Shortcoming
- Slower speed
- Poor mobility
- Low volume of users
- High processing fee
- You are responsible for the consequences of the transaction
Uses of cryptocurrency
Cryptocurrencies are still developing and have a wide range of applications.
- Daily Shopping
- National legal tender
- Anti-counterfeiting, such as: luxury goods, certificates… etc.
- Online Gaming
- NFT, artwork, music, video… etc.
Risks of Cryptocurrencies
Once you are aware of the potential applications for bitcoin, you must also be aware of the hazards associated with it.
Keep your risks within reasonable bounds to avoid being instantly booted out of this promising emerging industry.
- High volatility: Much more volatile than traditional finance, no company behind it, all depends on the faith of the people in the coin world.
- Unregulated: Not regulated by the government or central bank. Although it is decentralized, it also means that it is not protected.
- Fraud: With the increasing number of participants in the cryptocurrency and NFT market, there are many frauds. Common techniques include: fake exchanges, phishing, scam software, fake websites, etc.
- Energy consumption: Mining requires a large amount of energy and power to perform calculations. This energy consumption also contributes to global environmental pollution.
Cryptocurrency FAQ
Conclusion
Cryptocurrency is constantly evolving, and I think it will add new features in the future. According to Jayz, this market has a lot of potential.
However, there are a lot of risks as well, therefore it’s crucial to comprehend and manage the risks!
Author Profile – Jayz
Graduated from the Institute of Finance and Economics, because he has loved basketball since he was a child, and is deeply influenced by the idol Kobe’s belief in never giving up and pursuing perfection, he has a dual identity after graduation. He is currently working as a media worker and a virtual currency lecturer. With my professionalism and passion for cryptocurrencies, I hope more people can get a small fortune from it. Likes to read all kinds of sports news and is also very interested in cryptocurrencies.