Cryptocurrency. It seems that everyone is talking about it, or “crypto”, specifically. While it’s been in vogue for a couple of years now, it’d be pretty fair to say that crypto is a relatively niche market that people seem to think is composed only of tech bros.
However, crypto doesn’t have to be exclusive. Here’s a guide to what is cryptocurrency, how it works, and the most popular ones.
What is cryptocurrency?
Short answer: A digital currency designed to work as a medium of exchange. However, its transactions are verified – and encrypted – algortihmically on a decentralized blockchain instead of by a central bank.
A cryptocurrency or digital asset is designed to work as a medium of exchange. It uses cryptography to secure and verify transactions as well as to control the creation of new units of a particular cryptocurrency.
Essentially, cryptocurrencies are limited entries in a database that no one can change unless specific conditions are fulfilled. Cryptocurrency can be bought, sold, traded, or stored. Cryptocurrency represents value for a service built on blockchain technology.
What is a blockchain?
Short answer: An open-source public ledger containing records of the transactions that have occurred on the network.
Blockchain, sometimes referred to as Distributed Ledger Technology (DLT), makes the transactions of any digital asset unalterable and transparent through the use of decentralization and cryptographic hashing. Most blockchain-based cryptocurrencies use the public blockchain, however, there is a different type of blockchain which is the private blockchain.
What are digital assets?
A digital asset, in general, is any content that is stored digitally. This content you are reading, images on Facebook, and all Google content you see are digital assets.
In the financial sector, though, digital assets are usually referred to as tradeable assets such as gold tokens for online gold trading or cryptocurrency.
How does crypto work?
Now that we got some background info and important terminology out of the way, let’s dive into how crypto actually works and the different uses.
1. Trade or invest in crypto
Just like foreign currency (forex) trading, you can invest and trade in cryptocurrencies.
Again, just like in trading traditional stocks, you’d need to open a portfolio at an exchange. In the cryptoverse, your portfolio is usually referred to as a wallet. Your wallet has a unique address so assets can be sent to you, known as the public key, and can only be accessed by you using your private key – akin to a PIN code.
You can actually start trading right here on Zipmex. Zipmex is a highly secure digital assets exchange that’s regulated by the Security and Exchange Commission (SEC) and prioritizes its users’ security. We also offer assets like Bitcoin (BTC), Ethereum (ETH), Tether (USDT), and over 80 others at the best rates and the lowest spread.
2. Financial transactions
Many cryptocurrencies brand themselves as “digital money”. This means that just like how you can pay for something with Thai Baht, you can also buy or sell things with crypto. That is, if it’s legal in the country, of course.
3. Mining
Mining crypto is another popular use for these digital assets.
The mining process involves solving extremely complex equations, known as hashes, to validate transactions on a network. In exchange for solving the hash the fastest, the miner is rewarded in crypto.
Read more: What is crypto mining?
What is the most popular cryptocurrency?
Bitcoin is the most popular digital asset, as it was the first cryptocurrency in existence. Since the beginning, it was seen as a store of value and technology that can change the way people transact with each other. The bitcoin blockchain technology enables the removal of the middleman to create a secure, trusted peer-to-peer network.
Since the introduction of Bitcoin, the digital currency has proved to be the best performing return of investment compared to every available stock and share. This is undoubtedly one of the main reasons why people continue to invest in Bitcoin. Other than Bitcoin, there are over 5,000 cryptocurrencies, and those are called Altcoins or alternative coins.
Popular cryptocurrencies to watch:
1. Solana (SOL)
With its new marketplace and DApps platform taking off, Solana (SOL) is poised to be one of the top cryptos due to its popularity and interoperability.
2. Ethereum (ETH)
Ethereum (ETH) was said by many to be the “Bitcoin killer”. However, it is worth noting that the network’s platform places a higher emphasis on building apps and smart contracts over decentralized financial transactions.
3. USD Coin (USDC)
USD Coin (USDC) is one of the more well-known stablecoins whose value is said to directly follow that of the United States Dollar.
Stablecoin: A cryptocurrency whose value is meant to correspond to another asset like fiat currency or gold.
Read more: What are stablecoins?
4. Tether (USDT)
Tether (USDT) is another well-established stablecoin. However, it is unique in that it does not operate on its own blockchain, but instead on other chains like Bitcoin’s.
What is a market cap in cryptocurrency?
One of the most important factors in determining a crypto’s popularity and potential stability is its market capitalization.
Market capitalization or market cap is the number of shares multiplied by the current share price. For cryptocurrency, the market cap is the number of the total coin in the market multiplied by the current price of that coin.
So if you check on 13 May 2020, you might see that there are around 18,376,156 BTC in the system, and the price at 11.30 am is $8,910.08, so the market cap at this time is 18,376,156*8,910.08 = $163,732,989,783.
Can I trade cryptocurrency legally?
In many countries, digital currencies have different laws surrounding their use. The trading of digital currencies Crypto/Crypto such as ETH/BTC pairing is legal. However, the jurisdiction for trading Crypto/Fiat pairing defers for different countries. Many governments will generally intersect with banking or remittance services whenever they are exchanged for fiat currencies or visa versa. Therefore it is best to check with your local laws to understand any tax obligations you may have to report.
Can I change cryptocurrency to my normal currency?
To increase the ease of purchasing Bitcoins and other major Altcoins, fiat to crypto pairings are created. However, crypto exchanges that wish to provide fiat to crypto pairings are required to apply for a license based on the jurisdiction of each country. Zipmex recently received the Thailand Digital Exchange License which allows us to provide exchange services for digital assets and cryptocurrencies. This means we are licensed to provide BTC/THB pairing for our Thailand users.
We are in the midst of applying for licenses in countries such as Singapore, where official laws on Digital Asset have been recently published by the MAS regulator. Since Zipmex has been in operation in these countries before the regulation came into effect, we are allowed to provisionally operate while waiting for our actual license. In Australia, Zipmex has registered and is regulated by AUSTRAC (Australian Transaction Reports and Analysis Centre).Now that we know what cryptocurrency is, we hope you will feel more confident investing in it. Please check our blog section to learn more about digital assets trading such as which coin should you invest in first? Or the full explanation of Bitcoin. Follow us on Facebook or Twitter for our latest updates and official launch in Thailand soon.
Start your crypto journey on Zipmex
Getting into crypto can seem tenuous at first. Here at Zipmex we try to make your crypto journey as hassle-free as possible: instant deposit and withdrawals, easy-peasy trading, and of course, beginner-friendly resources.
Sign up for Zipmex today and take control of your crypto journey.
Disclaimer: The information provided in this article is not intended to provide investment or financial advice. Investment decisions should be based on the individual’s financial needs, objectives, and risk profile. We encourage readers to understand the assets and risks before making any investment entirely.
