What You Should Know About Cryptocurrencies

What You Should Know About Cryptocurrencies Cryptocurrencies are decentralized forms of digital currencies. They are money that is created, held and spent electronically. The Essentials -They are different than making your payment with digital credit cards on your phone. Digital credit cards still use one type of widely known government regulated currencies. -The cryptocurrencies are relatively new, currently not regulated by official government agencies and therefore volatile, unlike national currencies. -There are no cryptocurrency banks, instead, transactions are verified with decentralized peer to peer blockchain technology. -There are no bank accounts, instead, new addresses and verification keys are created for each transaction. -The wallet that keeps the cryptocurrency can be anything that can record a string of numbers: online wallet, desktop apps, mobile apps, thumb drives, or even a piece of paper1. Important Terms Blockchain is the ledger that keeps the record of all transactions with the cryptocurrency of your choosing. Cryptocurrency wallets are used to store credentials such as addresses and private verification keys to access cryptocurrency assets. Cryptocurrency mining is the verification of transactions done by other peers called miners who use their computer power to solve necessary math puzzles for the transaction to take place. The Potential Pitfalls Cryptocurrency promises might be used to manipulate and con naïve users. -There are more than 5000 forms of cryptocurrency2, therefore it is hard to demarcate what is real and what is made up. -Transactions cannot be reversed for change-back in case you are not satisfied with the service or good you were provided in exchange. -Since their value is relatively volatile, value of your investment can diminish in a very short interval of time. -You might easily lose your wallets and private keys, and therefore, your cryptocurrencies. -They require complex technology which is hard to understand for most of us and this opens a wider door open for fake investment advisors. Protection of Cryptocurrency Assets Since the credentials are strings of numbers, their protection is the same as protecting any valuable data. -Back up your address and private keys in multiple ways. -Store your cryptocurrency in an external memory device. -Encrypt all necessary information. -Use multifactor authentication in all of your accounts. -Don’t share your account and private key details with anyone ever. -Protect your devices from malicious intrusion. References 1. The Practical Guide to Cryptocurrency Wallets, https://satoshilibrary.com/cryptocurrency/cryptocurrency-wallets-types/ 2. All Cryptocurrencies, https://coinmarketcap.com/all/views/all/