What Is Crypto Currency?
Cryptocurrency – Meaning and Definition.
Crypto currency is an electronic currency that uses cryptography to control and regulate the generation of units of currency.
Cryptocurrencies are also called digital currencies, crypto-currencies, virtual currencies, or just cryptos.
What Is Cryptocurrency?
Bitcoin and Ethereum are the most popular cryptocurrencies, but there are over 10000 different cryptocurrencies available. These currencies can be used for almost anything from buying items online to paying your taxes in some countries.
Cryptocurrency is a digital currency that works independently of banks and governments. You can send and receive money from anywhere in the world, and you don’t need a bank account to do it. But there is more to cryptocurrencies than just that.
Cryptocurrencies are not regulated by any governing body or central bank. They are unregulated and their value is often not based on any real-world asset. However, there are some crypto currencies that are ‘pegged’ to specific currencies such as the United States Dollar and a few crypto currencies are claimed to be backed by assets such as gold.
Cryptocurrencies are considered to be virtual currencies, or digital currencies. They can be traded for fiat currencies or other crypto currencies on exchanges such as:
- and hundreds of others.
The most popular cryptocurrencies include HEX, Bitcoin, Litecoin, Ethereum, Dogecoin, Solana and XRP. There are 1000s more.
How Does Cryptocurrency Work?
Bitcoin was invented in 2009 by a person or group known as Satoshi Nakamoto, and since then it has been adopted by the public as an alternative form of currency.
A cryptocurrency is a digital currency that uses cryptography to secure its transactions, to control the creation of new units, and to verify the transfer of assets. Cryptocurrencies are not controlled by a central bank or government, which means their value is determined by the market (what buyers and sellers are willing to pay for it) rather than by a central authority.
Cryptocurrency is the future of money. While it is still in its infancy, this revolutionary form of currency is here to stay.
The idea of Bitcoin is an interesting one. It’s a digital currency that works on a decentralized network of computers, so it’s not controlled by any government or corporation. The value of Bitcoin fluctuates, but it is generally accepted as a legitimate form of payment.
Cryptocurrencies are gaining a lot of attention because of their potential to revolutionize the way we pay for goods and services.
Here is a another video explaining what crypto currencies are:
Please note that the competition mentioned in the video is now closed.
There are thousands of cryptocurrencies available, each with their own unique attributes. Most cryptocurrencies are decentralized, meaning that they don’t have a single owner. As a result, no one entity controls them. The system is also decentralized, meaning that it doesn’t have a central governing body that can make decisions on its behalf. Using the information from the network’s distributed ledger, collectively the nodes (computers that form a particular crypto currency’s network) decide whether to accept or reject new transactions, making it resistant to manipulation by any one individual.
Although it has been available for a few years now, cryptocurrency is a relatively new way to store and transfer money. It’s a digital form of currency that is stored in a digital wallet and is accessed by a public and private key.
What Are Crypto Currency Wallets?
There are a few types of cryptocurrency wallets: desktop, mobile, hardware, paper, web, and hardware. There are pros and cons to each type, but in general, the desktop wallet is often considered to be the most secure and reliable. You can store your cryptocurrency on a computer, a USB drive, or a paper wallet. Hardware wallets are like a safe deposit box for your cryptocurrency. They are the best for ‘storing’ large amounts of cryptocurrency and are considered very secure.
A wallet is an application that ‘stores’ your cryptocurrency. It holds your keys and is protected by a password.
Why are crypto currency wallets important?
Because they provide the interface between you and your funds THAT ARE ACTUALLY STORED ON A BLOCKCHAIN.
More About Crypto Currency Wallets
A cryptocurrency wallet is like a bank account for your cryptocurrency. Using your crypto wallets you can send and receive money from other users in the network, and also store your funds.
Once you’ve stored your cryptocurrency in the wallet, you must keep your passwords and private keys safe.
Once you lose your password and your private keys, you lose your cryptocurrency.
As mentioned before cryptocurrencies are not stored on your computer or mobile device, but rather on the blockchain network where transactions take place. Transactions can be made without the owner’s consent, and so it is essential to keep your passwords and private keys safe.
If you don’t want to use a desktop application, you can also use a mobile application. All you need to do is open the app on your phone and you can send and receive cryptocurrency from any public address. If you’ve ever purchased something online or in store using your phone, you’ll be somewhat familiar with this process. It’s almost the same as how we now pay for our groceries online, and how we can make purchases from Amazon or eBay.
Different Cryptocurrency Wallet Types.
Custodial Crypto Currency Wallets.
The most common type of cryptocurrency wallet is the custodial wallet. Custodial wallets are typically hosted by companies like Coinbase, Binance, and Gemini. These companies hold the private keys of your cryptocurrency. This is what makes them custodial.
However, this opens up a few potential problems.
Non Custodial Crypto Currency Wallets.
A noncustodial wallet is a wallet that you control yourself and do not have to rely on a third party to secure your money. The reason you would want to use a noncustodial wallet is because there are many ways to lose your money if you are trusting someone else to hold it for you.
There are many reasons to keep your money offline and not online.
Hardware wallets are used for storing cryptocurrencies. This type of wallet is a physical device that stores your cryptocurrency offline. Hardware wallets are more secure than online wallets because you don’t need to trust a third party to store your cryptocurrency. However, if you lose the hardware wallet, you lose all of your cryptocurrencies.
What Are Software Wallets?
It is a piece of software that allows you to store your cryptocurrency on a computer or mobile device.
When you have a software wallet installed on your computer, tablet or phone. You access your crypto by opening your wallet app, making a transaction, and transferring the cryptocurrency to your desired recipient.
In addition to the features and functionality, some software wallets also have integration with exchanges. If you use a wallet designed by a cryptocurrency exchange, you may get special features and functionality that includes exchange integration.
Mobile crypto currency wallets behave the same as desktop or laptop wallets, the difference is that you can store and access your cryptocurrency on a smartphone. Some mobile wallets, such as Apple Pay and Google Wallet, work with NFC chips to send and receive funds. Others which use Blockchain technology, are web-based and require an Internet connection.
What Are Hardware Wallets?
As already stated, a wallet is a type of tool that stores private keys, which are necessary for creating and spending digital or crypto currency (HEX or Bitcoin for example). In this section we will discuss hardware wallets.
The term “cold wallet” is sometimes used when referring to hardware wallets.
A “hot wallet” is a wallet that exists on the internet even if it is on your PC, phone or a browser extension.
A hardware wallet is just a way to store your cryptocurrency offline (without an active internet connection). It’s a great way to keep your money safe and secure from hackers, viruses, and the like. You can choose to use a hardware wallet for HEX, Bitcoin, Ethereum and most other crypto currencies.
They can be used to create accounts and store your digital currencies. They allow you to send funds from your account to another person without sharing any personal information. The most common form of a crypto wallet is a USB stick connected directly to your computer. However, there are many other ways to secure your coins such as cold storage devices, paper wallets, mobile apps etc.
The main advantage of the hardware wallet is security. It does not leave traces on your hard drive, unlike software. Software can be easily hacked by malicious hackers who gain access to your computers. A physical device cannot be compromised in this way because it has no connection with your PC.
What Are Some Crypto Currency Hardware Wallet Brands?
TREZOR is a hardware wallet that stores private keys securely on its own device. Ledger is another popular brand of hardware wallet. Both devices come with a secure chip, so you don’t have to worry about losing your private key.
A TREZOR is an encrypted storage device that you can use to store cryptocurrency. When you first set it up, the TREZOR will ask you a few questions. You’ll need to answer them correctly before you can access the funds inside. Once you’ve done this, you won’t be able to recover the information without the correct passcode. This means that the TREZOR is a safe way to protect your money.
Ledger wallets work in much the same way.
Both of these devices are very easy to use. To add funds, you just need to plug in your computer or smartphone. Then, connect the TREZOR or Ledger to it. Finally, enter the PIN code on either device. That’s basically all there is to it!
What Are Cryptocurrency Paper Wallets?
Paper wallets are an excellent way to store your digital assets safely. Paper wallets have become more popular because they are easy to create, can be stored in a safe, and can be printed out and stored in a traditional physical wallet that you’d keep cash in. They also provide a backup copy of your private key, which can be used for future transactions.
Paper wallets must be stored in a safe place where they can be protected from theft or damage.
Cryptocurrency Exchanges’ Wallet Facilities.
Cryptocurrency exchanges offer a convenient way to exchange fiat currency for cryptocurrencies. Many of these services also offer a custodial key storage option to protect your cryptocurrency holdings from theft. It’s important to do your research before using any custodial key storage service. You may not be able to get your cryptocurrency back if the cryptocurrency exchange goes out of business.
It’s very important to keep your cryptocurrency in a secure location where it is difficult to access by others. This could be a deposit box at a bank, a safe deposit box, or a vault.
As with crypto currency exchanges, you may not be able to get your cryptocurrency back if the cryptocurrency exchange goes out of business.
What Are Crypto Currency Wallet Seed Words?
Seed Words are a set of maybe 12 or 24 words that you can use to restore your wallet if it is lost or damaged. The seed words are created using a series of alphanumeric characters.
When you’re using a wallet, it’s important to protect your seed phrase. For example, a hacker could easily steal your wallet by guessing the phrase and then taking control of your digital currency. If you lose your wallet, you’ll need to restore it using your seed phrase. To restore your wallet, you’ll need to enter your twelve word seed phrase into your wallet application.
Thanks for the lesson. It was interesting to learn about the different types of wallets that are available.
Thanks for your feedback.
The course is a very educative course. I have a question. The course stated that “hardware wallet is just a way to store your cryptocurrency offline without an active internet connection”, so what happens if there is a market fluctuation (rise in cryptos) will the hardware wallet enjoy this offer too?
Although they are named ‘wallets’, they are not the same as physical wallets.
Physical wallets store your cash.
Crypto wallets are an interface between you and the blockchain.
A crypto wallet simply shows you your balance on the blockchain, your transactions on the blockchain and allows you to interact with the crypto stored on your blockchain crypto address. In other words the wallet simply allows you to interact with your blockchain address.