As the cryptocurrency industry is constantly evolving.
We are still in the early days of development, people interested in cryptocurrencies continue to learn about this asset class. The cryptocurrency landscape is constantly evolving.New use cases are frequently discovered, applications are developed and companies continue to adopt them for payment settlement. Despite being an unregulated sector, lakhs of investors are jumping on the bandwagon.
But what exactly is a cryptocurrency?
They are a form of payment that can be exchanged for goods, services and other commodities. Unlike a fiat currency like the rupee, it is fully decentralized. However, its primary purpose is to function as an electronic money system that is not owned by a single party.
The term “cryptocurrency” is a combination of cryptocurrency and currency. It simply means that cryptocurrency makes extensive use of cryptographic techniques to secure transactions. It is based on the simple concept of Blockchain, which is actually quite old.
A Blockchain contains information in packets that are called “blocks” and are connected in a chain. While banks maintain a central ledger, a blockchain’s ledger is decentralized and based on peer-to-peer technology. This blockchain cannot be edited or modified, which makes the ledger extremely secure and eliminates the need for a central clearing authority.
Cryptocurrencies were conceived solely for use as money, and Bitcoin is a classic example. However, modern blockchains such as Ethereum allow developers to execute smart contracts (code) on a decentralized network. This technology also makes NFTs (non-fungible tokens) possible. These blockchains are based on a token, which serves as a digital receipt.
How are cryptocurrencies created?
The first cryptocurrency was Bitcoin, which was created in 2009 and is still the best known. The units of a cryptocurrency are manufactured through a process called mining. It involves the calculation of complex mathematical algorithms to create a virtual currency. The mechanism is chosen to control the supply of coins over time, avoiding hyperinflation. However, each cryptocurrency has its own mining model, distribution and economic principles.
The miner who solves the problem first adds the transaction details to the blockchain. The process rewards the miner with coins as it helps verify each transaction on the blockchain. The system is fully transparent and all transactions made on the blockchain are recorded.
Some newer coins use a different concept of mining, which requires much less energy. Instead of computation, it leverages node blocks that take up storage space on a hard drive. This eliminates the need for high-end mining equipment.
How are cryptocurrencies stored?
Just like a bank account or a Demat account, a blockchain wallet is used to store your coins, often informally called cryptocurrencies. The wallet facilitates seamless exchanges and payments. All transactions are secure, as they are cryptographically signed. It is very similar to the process of sending or receiving money through PayPal or any other digital wallet used today, but you use it for cryptocurrencies.
The WazriX wallet is based on the same concept and is secure. Since its partnership with Binance, the exchange also integrates effortlessly with global exchanges, providing a technological edge over others. To start trading, register with a cryptocurrency exchange, submit your KYC (Know Your Customer) and you’re ready to go!
Here’s how you can trade crypto currencies
Download the app or log in to the crypto exchange website.
Fill in the details to open your account and finish your KYC.
This allows you to set up the account and add funds in INR (rupees).
Once you have added funds to the account, you can start buying cryptocurrencies from the “Exchange” tab. There is a whole range of cryptocurrencies available on the exchange.
Choose the amount of cryptocurrencies you want and enter “Buy”.
After the purchase, the coins can be viewed from the “Funds” option. To buy, you can tap Indian Rupee (INR), Tether (USDT), WazirX token (WRX), and more.
The top ten cryptocurrencies on the platform are Bitcoin (BTC), Ethereum (ETH), MATIC, Dogecoin (DOGE), Shiba Inu (SHIB), Ripple (XRP), and Bitcoin Cash (BCH), Litecoin (LTC), and Tron (TRX).
How can one buy cryptocurrency?
According to CoinMarketCap, there are currently more than 10,000 cryptocurrencies across 384 exchanges. Bitcoin, standalone, commands a market cap of more than $700 billion. However, most of these coins are new, worthless, or experimental. The most active ones are multi-cap coins like Ethereum, Ripple (XRP), Dogecoin, Polygon, and more.
You can buy or sell them on a cryptocurrency exchange. These are platforms that broker the trading of cryptocurrencies for other assets, including digital and fiat currencies. They are independent and operate just like stock exchanges do globally.
WazirX is India’s most trusted cryptocurrency exchange, and Rupee to cryptocurrency transactions are seamlessly possible. It’s a centralized exchange, hence its operations are handled by a registered company. It adds a layer of reliability since an anonymous entity is not brokering trades.