Cryptocurrency Coins
What They Are and How to Get Them

An animated infographic showing a statistics and diagrams for cryptocurrency data.

The last decade has been marked by multiple financial revolutions. It’s the very time to talk transparently about crypto coins and how they affect the financial economics. Since it’s quite of a trend to interact with cryptos, I would like to present everything you need to know about coins to make them part of your daily routine. Once you absorb the basic information about it, you’ll be able to jump on the coin’s bandwagon.

How do Crypto Coins Work?

Ever since financial institutions exist, they are supporting the centralized system, influencing the currencies’ rate and possessing the power to cause an economic crisis. Almost ten years ago this vicious circle was defeated to welcome the decentralized conception. It all comes to blockchain’s technology and its role in a coin’s evolution.

Why the blockchain is the base of everything

Straight to the matter, a coin represents a digital form of a currency, designed to exchange goods. Its base is a cryptographical mechanism, which is strictly relied on the public ledger, registering all the information in a financial database. If you’re willing to understand why the blockchain is the base of the crypto conception, check the reasons behind its invention:

  • Restricted interventions

    First of all, a blockchain is irreversible, which means that once you broadcast a transaction, it’s impossible to take it back. If you want to change a block’s information, you must change the one, consisting of the previous piece. This rule theoretically makes the blockchain unable to get hacked.

  • Network trust

    Furthermore, those types of public ledgers are considered decentralized, since they don’t require a third-party involvement to work. Avoiding a financial institution makes registered information safer and more protected from any malicious interventions. In fact, considering its open source code, it’s a trustless network, since individuals can examine everything that happens in the chain.

  • Dynamics and costs

    Last but not least, transactions are a matter of seconds. There’s no need to wait a few days to get an approval. Opposite the bank institution, fees aren’t a percentage of the amount, but simply a fixed number of coins, depending on the cryptocurrency you have chosen.

Finally, all crypto projects engage with the blockchain’s conception in order to provide these features to the coins’ users. To support the blockchain, you may contribute to the network. For the purpose of preserving the integrity, you can become a node. If you’re partially possessing the blockchain – you’re considered a light node, if you have it all – a full node. The last-mentioned are helping cryptocurrencies to avoid double spending, which makes them very important to exist as part of the blockchain technology. To know some more about it, visit the website Nodes.com.

Mechanism of Consensus

Ultimately, the creation of a certain type of a system with no authority leader imposes the need of a consensus mechanism to work with. In a word, this is a decision all the members agree with to experience equality in the network. Let me show you the main types of consensus protocols, situating each of them in particular crypto coin, so you can better imagine the picture on your own:

  • Proof-of-Work (PoW)

    Here participants are solving a cryptographic problem to find the next block and add it to the blockchain. This requires a big amount of computational power and energy. Once found, other users should verify the result, which leads to receiving a reward.

    Bitcoin is the most popular example of a coin, using the PoW consensus mechanism.

    To completely understand the PoW conception, visit our website HowToMine.com.

  • Proof-of-Stake (PoS)

    Users lock a part of their coins as a stake. After, they start validating blocks by placing bets on it to finally receive a reward, proportional to their bet.

    PivX is a coin, using the PoS consensus protocol as a base.

    If you would like to know some more on the PoS concept, check our website Staking.com.

Anyway, blockchains have different natures, depending on their code. Some projects are orientated to people, looking for more privacy, others are created to satisfy users, searching for transparency. It is all up to the particular coin’s conception and features.

Types of Cryptocurrency Coins

Organically, different kind of coins has been created in order to satisfy the users intent. If your aim is to know which the top performers on the market are, you should consider several criteria such as market cap, price, volume, and circulation supply. There are also multiple categorizations of cryptocurrencies and the most common split them into coins, altcoins, and tokens. The main difference between them is their structure. Let’s make a short overview.

Bitcoin

Considered as the original coin, Bitcoin is a network, powered by its participants, without any central authority. As it is the first cryptocurrency, it faced lots of issues, some scalability problems, hacking attempts, vulnerabilities and lack of adoption. Finally, its idea was to avoid double spending amounts, while waiting confirmations of their payments – a transaction becomes irreversible with the increasing number of verifications.

Altcoins

Altcoin means alternative coin. These projects appear usually as a fork of another project or completely from scratch. They are more or less its improved versions. There are two types of forks – the hard one is observed as a changing of the rules, which cause a completely new coin as result. The soft fork is somehow an updated feature of the currently existing coin.

Tokens

Tokens don’t possess their own blockchain. They are likely to get built, based on an already existing one. They can represent all kind of assets – from goods to a brand-new cryptocurrency. They are created and distributed by ICOs – Initial Coin Offering, which is basically crowdfunding for a new project. Tokens can be easily created by following a standard template on the particular platform.

How to Get Coins?

If you’re curious to become part of the crypto sphere, it all comes to get some coins into your wallet. Generally, there are two options to do so – either you buy or mining it.

Exchanges

This is the place where you can buy, sell or exchange your cryptos. There are two types of exchanges. The first one – a peer-to-peer exchange is based on trust. Because of its built-in reputation system, you’re not required to provide any papers, concerning your identity. You’re directly working with traders, whose funds aren’t visible in the platform. Oppositely, the second type – regular exchanges are using an order book, to match commands between buyers and sellers. Therefore, depending on the platform, you can buy coins either with fiat currency or another coin/token. Anyway, you need to use one first to obtain some coins and then to cash them out. Before you join one, you need to consider several factors – reputation, fees, payment methods, verification requirements, geographical restrictions, and exchange rate. For the purpose of making the best decision when it’s up to choosing, visit the dedicated website Exchanges.net.

Top Three Exchanges

Exchange Cryptocurrencies Fiat Money
Bitcoin, Ripple, Cardano + 10 more USD Trade now
Bitcoin, Ethereum, Monero + 50 more USD, EUR, GBP, JPY Trade now
Bitcoin, Ethereum, Litecoin + 2 more USD, EUR, GBP Trade now

Mining

For the purview of understanding the idea of extracting coins, let me first note that this approach is based on the Proof-of-Work mechanism. Mining represents a process of performing complex mathematical suggestions in order to solve an equation. Once a user completes the missing part, a block is added to the blockchain, respectively an award is received. What do you need to start mining? Before of all – a hardware device, next you might need a software, depending on the mining machine, a reliable internet connection is a must-have to perform successfully as a miner, and last but not least – a wallet to handle your coins. A few words for the hardware – some time ago your PC’s power was totally enough, but nowadays you need a dedicated alternative. Your first option is using a single graphics card (GPU) or a kit of multiple cards, also called a mining rig. The second option is an ASIC machine, able to mine all the coins, using the same algorithm, implemented in the device. Mining means accumulating small profits every day.

How to Make Profit With Crypto Coins?

There are many ways to earn some incomes from your crypto coins. Buying and holding, staking, mining, maybe setting up a Masternode – it all bring you regular profits. Doesn’t matter if you choose to extract a coin, which will increase the number of cryptos in your possession, or just hold some of it and wait for a price increment – you’re earning something on top of your initial investment. Masternodes or staking are alternative to a passive income, which gives you a percentage of your locked coins as a reward for contributing to the network. An infographic showing everything you can do with your coins to make profit.

Trading

Ever since crypto exists, the market is volatile. If you’re willing to trade, you can not only buy or sell coins but also trade cryptocurrency stocks. If you choose the first option, you’ll need a proper exchange to do so, you can check my best propositions back in the Exchanges section. Anyway, if you aim to try the second offer – you’ll need to search for a stock market and the main here is GBTC.

Becoming part of the financial market requires some analysis. Your first to consider factor are prices. Their movement isn’t as random, as you might think – there are many variables, helping you predict a trend in the long or short term. If you’re familiar with what happened before, this will psychologically help you imagine what might happen in future.

Masternodes

Masternodes are using the ideology of decentralized network. They feature either direct or private transactions. Hence, they bring you a certain reward, which can be estimated, depending on the ROI variable in tandem with the node’s rewarding system. Of course, another important factor is the coin’s price, because of the fact that you’re required to lock a number of coins for your Masternode to work. How to become one? Simply, invest the collateral of minimum coins required, so you would be able to profit and vote on improvements. The only additional must-have to think of is the purchase of a VPS server to run your node. That’s pretty much it. Anyway, if you would like to get technical information and go more in details, then check the Masternode.com website.

Staking

Staking is up to altcoins, using the PoS consensus mechanism. There’s no need of investing in a hardware device, but just creating a wallet and unlocking your coins for staking. It’s considered as a guaranteed source of earnings. Each crypto has different requirements if you would like to join its staking community. Basically, you should possess an interrupted internet connection for online staking (not necessary for cold staking), fully synced wallet and the stake itself.

Where are Cryptocurrencies Stored?

Just as your physical wallet, you need also a crypto one to keep your coins in. A wallet’s purpose isn’t just storing but helping you to manage it all – sending and receiving transactions, as well as exchanging where a built-in exchange offers it.

Wallets Cryptocurrencies Type
Bitcoin, Ethereum, Ripple and 20+ more Desktop Wallet visit now
Bitcoin, Litecoin, Dash and 50+ more Mobile Wallet visit now
Bitcoin, Zcash, Bitcoin Gold and 40+ more Hardware Wallet visit now

There are many different categorizations of wallets and the most important criteria come with if it’s the official coin’s wallet or another one. All you need to know about wallets can be found on the following dedicated website.

Official wallets:

  • Created by the coin’s developers
  • Mostly the first one to supporting the particular coin
  • Able to hold only one coin
  • Not always user-friendly

Alternative wallets

  • Invented to extend Official wallets’ features
    • 2FA (Multi Signature)
    • Multi-coin support
    • Remote sync
    • Another OS
    • Mobile versions
  • Providing additional security measures
  • 2FA (Multi Signature)
  • Multi-coin support
  • Remote sync
  • Another OS
  • Mobile versions
  • Users have to trust a third-party

Security

Like any other ideology, the crypto thematic has is weaknesses since it’s a field extremely attractive for hackers and all kind of attacks. Sometimes security isn’t able to resist the contemporary cyber malicious interventions and users lose their coins. Anyway, some of the projects take responsibility to recover partially the losses. The double spending is an issue from the very beginning of the crypto industry. It’s hard to regulate the crypto sphere so, this is still considered as a problem to deal with. A bigger problem to think are the selfish miners, who are manipulating computational power for their own purposes. Last but not least, I should mention the wallet’s vulnerability, which isn’t supporting freshmen in their crypto experience. In breve, it all comes down to knowledge and skills.

Christian Ariely

marketing expert / author

As an astute advisor in crypto coin investment, many people turn to Christian for advice. In sharing his tacit knowledge, he believes to be supporting society in creating a transparent and just value exchange system that will abolish the disparities of wealth..