What is Crypto?

According to dictionary, crypto means something which is hidden or secret (not publically admitted). As this FAQ is all about blockchain, and related concepts, thus here we will be talking about cryptocurrency which literally means a secret or hidden currency.

What is cryptocurrency?

A cryptocurrency, also known as crypto-currency or simply crypto, is a virtual / digital currency created by using cryptography algorithms and stored in distributed and de-centralized databases known as blockchain.

At its core, a cryptocurrency can be a decentralized digital money designed to be used over the internet.

Bitcoin was the first cryptocurrency and was launched in 2008 under a pseudonym called Satoshi Nakamoto, and it remains by far the biggest, most influential, and best-known cryptocurrencies along with the second best crypto currency, Ether.

Since the launch of Bitcoin and other cryptocurrencies like Ethereum, they have grown as digital alternatives to money issued by governments.

$7 trillion worth of bitcoin has been transferred since its launch in 2008

What is the best use or feature of cryptocurrency?

As crypto or crypto-currency is powered by a Blockchain underneath it thus being de-centralized and autonomous in nature Crypto makes it possible to transfer value online without the need for a middleman like a bank or payment processor, allowing value to transfer globally, near-instantly, 24/7, for low fees.

Why cryptocurrency can be an alternative to hardcash or hardcurrency issued by a Bank?

How Does Cryptocurrency Work?

It involves a long and very expensive process known as “Mining” to generate and maintain a cryptocurrency.

1. Mining

Cryptocurrencies (which are completely digital) are generated through a process called “mining”.

This is a complex process. Basically, miners are required to solve certain mathematical puzzles over specially equipped computer systems to be rewarded with bitcoins in exchange.

In an ideal world, it would take a person just 10 minutes to mine one bitcoin, but in reality, the process takes an estimated 30 days.

2. Buying, selling, and storing

Users today can buy cryptocurrencies from central exchanges, brokers, and individual currency owners or sell it to them. Exchanges or platforms like Coinbase are the easiest ways to buy or sell cryptocurrencies.

Once bought, cryptocurrencies can be stored in digital wallets. Digital wallets can be “hot” or “cold”. Hot means the wallet is connected to the internet, which makes it easy to transact, but vulnerable to thefts and frauds. Cold storage, on the other hand, is safer but makes it harder to transact.

3. Transacting or investing

Cryptocurrencies like Bitcoins can be easily transferred from one digital wallet to another, using only a smartphone. Once you own them, your choices are to:

If you are using Bitcoin for purchases, the easiest way to do that is through debit-card-type transactions. You can also use these debit cards to withdraw cash, just like at an ATM. Converting cryptocurrency to cash is also possible using banking accounts or peer-to-peer transactions.

What are the key concepts of using a crypto-currency?