So you are one of the curious folks who heard about how cryptocurrencies are going to change the world and now you want to learn more? You've come to the right place. Welcome to Coinario.
Let’s start from the beginning. Bitcoin was launched in 2009 as the first attempt for a decentralized digital currency. At first it was adopted by a few tech devotees, lovers of everything new, but has been slowly gaining traction (and value) and turned into a global phenomenon by 2016. Bitcoin was the first cryptocurrency, the one that started this new technological revolution. Its importance is often compared by many experts to the invention of the internet.
Cryptocurrencies are decentralized digital money which operate independently of any government, bank or any other central authority. They are the ultimate pinnacle of the growing trends in shared-economies and peer-to-peer technologies, giving power to the people. Through solid technical execution, scarcity and utility they have gained value, and the most prominent cryptocurrencies are traded on exchange markets for fiat currencies.
All decentralized cryptocurrencies are based on the revolutionary technology called the blockchain. The blockchain is a database shared across the whole network, across every active user of the cryptocurrency. It’s a huge chain of blocks containing data (transactions) and its existence relies on cryptography. Users compete with their computing power to add new blocks to the chain and the majority (51%) of the network then has to agree on each newly added block. Once a block is added, it can’t be changed retroactively, and since the blockchain is stored everywhere, it can’t be hacked.
Mining is the finding of a new block. A certain amount of computing power, which grows with the currency’s prominence, is required to “find” the next block of the blockchain – one that only includes valid transactions and meets other criteria, in order to be verified by the rest of the network and added to the chain. There is a reward for the miner who finds the new block. Finding the new block is random, but the more shovels you have (hashing power) the more likely you are to find the block. Which is why special mining rigs have been created and whole mining plants established to get a higher chance of finding the blocks at a cost-effective ratio. Bitcoin mining is a big business dominated by multi-million companies.
Because the mining scene is almost monopolized now, it’s better and more cost-effective to simply buy the prominent cryptocurrencies at market exchanges. It’s best to trade on regulated markets, they are more secure and under supervision. Check the list of the prominent cryptocurrency exchanges.
Many exchanges offer to keep your investments into cryptocurrencies on their own secure storages. There’s nothing wrong with that, but if you prefer to “physically” own the coins (as much as digital coins can be physically owned) there are wallets for cryptocurrencies you can use.
Some work online, others are meant to be installed on your computer. There are wallets meant for your phone, and even hardware wallets you can carry with you, the so-called cold storage for bitcoins. Read more about cryptocurrency wallets.