What is Cryptocurrency: Definition and History

Bittime – Tired of just being a spectator to the success of crypto investors? Now it's time for you to play! However, let's first learn what crypto is, starting from its meaning to how to buy it.

So, read the article until the end!

What Are Cryptocurrencies?

Cryptocurrency, or often called crypto currency, is a form of digital money that uses cryptography to secure transactions, verify transfers, and prevent the creation of additional units.

In contrast to fiat currencies such as Rupiah or Dollars which are issued by the government, cryptocurrencies operate in a decentralized manner, meaning that there is no central authority that controls them.

Why Are Cryptocurrencies Popular?

Unlike its doubtful beginnings, the crypto ecosystem is now very popular. What do you think the reason is? Check out the explanation below.

• Decentralization: No single financial institution controls cryptocurrency, providing financial freedom for users.
• Fast and Cheap Transactions: Cryptocurrency transactions are generally faster and cheaper than traditional money transfers, especially for cross-border transactions.
• Security: The blockchain technology underlying cryptocurrencies provides a high level of security, protecting transaction data from hacking.
• Investment Potential: Many people see cryptocurrencies as an investment opportunity, despite their high price volatility.

Read Also: 6 Differences between Coins and Tokens in Crypto so You Don't Misunderstand

Karakteristik Cryptocurrency

Crypto has several characteristics, such as:

• Digital: Cryptocurrency only exists in digital form and does not have a physical form like banknotes or coins.
• Decentralized: There is no central institution that controls the cryptocurrency network.
• Safe: Uses cryptography to secure transactions and prevent counterfeiting.
• Transparent: All transactions are recorded on a publicly accessible blockchain.
• Limited: Many cryptocurrencies have a limited number of coins, giving them the potential to become more valuable over time.

Fungsi Cryptocurrency

The functions of cryptocurrency are:

• Change Media: Cryptocurrencies can be used to purchase goods and services, both online and offline.
• Store of Value: Cryptocurrency can be used as an asset to store long-term value, much like gold or property.
• Accounting Unit: Cryptocurrencies can be used to measure the value of goods and services.

Type of Cryptocurrency

Here are some types of cryptocurrency popular among users.

• Bitcoin: The first and most famous cryptocurrency.
• Ethereum: Platform for developing decentralized applications (dApps).
• Ripple: Designed to facilitate fast and cheap cross-border transactions.
• Binance Coin: The native token of the world's largest cryptocurrency exchange, Binance.
• Cardano: A blockchain-based platform focused on scalability and smart contracts.

How Cryptocurrency Works

Cryptocurrencies use blockchain technology, which is a digital ledger that records all transactions. Each block in the blockchain contains information about the transaction, such as the sender, recipient, and amount transferred.

Blockchain is transparent, but user identity remains confidential through wallet addresses.

Simple transaction process:

• Transaction: Users send cryptocurrency from their wallets to other users' wallets.
• Verification: Network computers connected to the blockchain verify transactions.
• Mining: The verification process involves solving complex mathematical problems by computers called “miners”.
• Block Addition: Once a transaction is verified, the transaction data is added to a new block in the blockchain.
• Consensus: All nodes in the network must reach an agreement regarding the validity of a new block before it is added to the blockchain.

What is Blockchain?

Blockchain is the underlying technology that powers cryptocurrencies. It is a distributed, secure, and transparent database that records all transactions chronologically and permanently.

Each block in a blockchain contains transaction data, and each block is connected to the previous block through cryptography.

Read Also: How to Check and Recover Secret Phrase in Trust Wallet

Advantages and Disadvantages of Cryptocurrency

Just like other assets, cryptocurrency also has advantages and disadvantages. The following is the explanation.

1. Kelebihan Cryptocurrency

• Fast and Cheap Transactions: Especially for cross-border transactions.
• High Security: Blockchain technology provides strong protection against hacking and counterfeiting.
• Transparency: All transactions can be tracked publicly.
• Investment Potential: Cryptocurrency offers an opportunity to make a profit.

2. Drawbacks of Cryptocurrency

• High Volatility: Cryptocurrency prices are highly volatile, making them high risk.
• Unclear Regulations: Many countries still do not have clear regulations regarding cryptocurrencies.
• Use for Illegal Activities: Cryptocurrencies can be used to carry out illegal transactions.
• Complex Technology: Understanding blockchain technology and cryptocurrency requires a fair amount of knowledge.

Cara Membeli Cryptocurrency

Interested in buying cryptocurrency? Here are the basic steps to get started:

1. Choose a Trading Platform

• Cryptocurrency Exchange: This platform allows you to buy, sell and trade various types of cryptocurrencies. Examples: Binance, Coinbase, Kraken.
• Broker: Some stock brokers also offer cryptocurrency trading services.

2. Create an Account and Verify Identity

Each platform has its own registration procedures, usually involving personal information and identity verification (KYC).

The verification process may require documents such as an ID card or passport.

3. Deposit Funds

Add funds to your account via bank transfer, credit/debit card, or other payment methods supported by the platform.

Please note any deposit fees that may apply.

4. Beli Cryptocurrency

Select the cryptocurrency you want to buy. Enter the amount you want to invest. Confirm purchase.

5. Simpan Cryptocurrency

After purchasing, you can store your cryptocurrency in a digital wallet provided by the platform or use an external wallet for extra security.

Security Tips in Crypto Investment

• Protect your account with a strong password and two-factor authentication.
• Beware of fraud and phishing.
• Diversify your investments to reduce risk.

Important Considerations

Cryptocurrency prices are highly volatile, so invest wisely. Pay attention to transaction fees, withdrawal fees, and other fees. Learn about cryptocurrency and blockchain technology before investing.

Cryptocurrencies are still in the regulatory development stage, so make sure you understand the regulations in your country.

Read Also: The Fed Cuts Interest Rates in September, What is the Impact on the Crypto Market?

Conclusion

Cryptocurrency is a technological innovation that offers great potential to change the way we transact and manage finances. However, it is important to understand the risks associated with cryptocurrencies before deciding to invest.

How to Buy Crypto on Bittime

You can buy and sell crypto assets easily and safely via Bittime. Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti. 

To be able to buy crypto assets on Bittime, make sure you have registered and completed identity verification. Apart from that, also ensure you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application. Study Complete Guide How to Buy Crypto on Bittime. 

Monitor graphic movement of Bitcoin (BTC) price, Ethereum (ETH), Solana (SOL), and other cryptos to find out today's crypto market trends in real-time on Bittime.