Initially a thing of science fiction, cryptocurrency has been gaining popularity. The security, convenience, and privacy that cryptocurrencies such as Bitcoin and Etherium provide, has made them popular, especially amongst techies, financial professionals, and regular currency traders alike.
This technology has come a long way, from concept to threatening established institutions such as banks—due to its decentralized nature. As it continues to gain support and acceptance worldwide, it is apparent that cryptocurrency is the future of financial transactions and wealth storage.
How cryptocurrency works
Being a digital asset purposed to serve as a medium of exchange, cryptocurrency makes use of cryptography to facilitate its transactions, to regulate the production of additional units, and to confirm the transfer of units. Unlike centralized forms of currencies, where governments control the supply of currency by controlling the printing and minting of money, cryptocurrency is decentralized, meaning that no central institution governs its production. The underlying system manages the creation and management of the cryptocurrency. You can read more on this here.
There are two general ways through which you can acquire cryptocurrency, buying, or mining.
This is straightforward, you pay someone or a particular organization a fixed amount of money for some cryptocurrency units of equal value. This is the same as Forex Exchange, where for instance, you pay a number of US Dollars, for British Pounds of the same value. So for instance, if you wanted to buy some Bitcoins, you will have to exchange it for your local currency, of course, you will be charged for the services.
On the other hand, you can mine your cryptocurrency. Cryptocurrency mining can be described as the process through which computers within a cryptocurrency blockchain network, compute some algorithms to verify transaction records. In return, they earn some units for their service. Read more on Cryptocurrency mining here.
Mining usually requires a lot of computational power. This is usually achieved by using computers with the best hardware specs, or specialized mining computers.
Just like any other currency, cryptocurrency is no exception when it comes to storage. You will need a place to safely store your units. This is where the cryptocurrency wallet comes in. Think of it as a virtual wallet. Usually, it has an address, so when you want to store the virtual currency in it, you send it to that address, and it gets deposited inside the virtual wallet.
When it comes to selecting a wallet, personal preference reigns. You can store it in your computer; sign up with services such as coin base that will host your account for you, which you can access online via a web browser or specialized apps; or buy a hardware wallet, which is a USB Flashdrive-Like device. If you are interested in cryptocurrency hardware wallets, check out our top pics here.
Here are some factors to consider when selecting a virtual wallet to store your virtual money.
Selecting the perfect cryptocurrency wallet
Ease of use
The first thing that comes to mind when looking for digital wallets to store your virtual currencies is the ease of use. The platform that hosts your wallet should be intuitive to use, especially if you have limited knowledge with such a technology. The technology should be well explained, and the interface takes a minimalistic approach.
Accessibility is another important feature that should be seriously considered. Make sure that the wallet you go for is compatible with the devices that you already own. However, this factor should be secondary to security and recovery.
When it comes to technology that holds wealth, then security must be very tight. Go for a platform that is actively maintained, and regularly updated. This will ensure that your wallet is secured using the latest security measure, hence safe from compromise.
The best thing regarding using digital wallets is the fact that you can make a copy of it and store them safely. However, it is not as simple as copying a file and saving it in a different storage medium. The backup copy has to be updated in real time every time the original one is changed for accurate recovery.
Compatible digital currencies
Apart from the common Bitcoin and Etherium, there are hundreds of other virtual currencies accessible to the public. When selecting your virtual wallet, make sure that it can store as many of these virtual coins as possible.
Hopefully, you learned a thing or two about cryptocurrency. If you are interested in acquiring some virtual money, first you will need a wallet to store the money, and a platform to buy the virtual currency. For a wallet, you can either get a hardware wallet or sign up for an online wallet. Both have their pros and cons, so choose wisely. For buying bitcoins, you can get them from coin base or similar platforms.
Apart from using them for online transactions, cryptocurrencies can also be bought and sold for profit just like Forex Exchange. You buy some Bitcoins, Etherium, or any other digital currency of choice, store it in your wallet, then sell it when its value has increased. You can sell your bitcoins on coin base or Remitano, just to name a few.