What is Cryptocurrency and how it works? || How to earn and invest in Cryptocurrency?

Cryptocurrency is made up of two words “Crypto” which means “secrets” and “Currency” which means “Medium of Purchase of Goods and Services”
So, cryptocurrency are secret or private currency. There are many cryptocurrency present like Bitcoin, Ethereum, Dogecoin. Bitcoin is considered to be world’s best known cryptocurrency and is the largest in the world according to Market Capitalization followed by Ethereum. There has been great increase in the demand of cryptocurrency in the past few years. This rise is due to various advantages like Decentralization, No Government Control.

What are cryptocurrency and how it works? || How to earn and invest in cryptocurrency?

What is Cryptocurrency and how it works?

As we know Cryptocurrency is medium of exchange, such as dollar but in digital format. The amount of cryptocurrency present in the world is already fixed. For example, 21 Million Bitcoin are present. The rise and dip in the price of Cryptocurrency will depend on the Supply and Demand.

To maintain the accounts of cryptocurrencies “ledgers” are present. Ledgers are maintained by set of computers so it is called as “Peer to Peer Network” which means Person to Person Network.
This ledger is maintained by the revolutionary technology which is known as blockchains. Again, Blockchain is derived from words “Block” and “Chain” which means when one blocks gets filled with transactions again block gets the chance. There is a chain of blocks for transactions. The first transaction on each block is attached with the last transaction of the last block which make the chain. This blockchain is available in lot of computers with full transparency, which makes easier to track if someone tries to do fraud or do something wrong.
Suppose there are 2 friends Alex and Peter. If Alex has 2 bitcoins and he gives 1 to Peter, then the role of Blockchains comes into play. The blockchains checks all the transaction history of Alex and Peter if they really had the cryptocurrency. Then everything is done within the fraction of seconds and transaction is approved accordingly.
The people who maintain the “Public Ledger” are known as “Miners” and the process of validating and recording transaction is known as Mining. This is all system generated and is done automatically but there are special computers and technology required. Miners gets reward in the same currency due to their investment in terms of money and work.
Now the question comes if my ledger is maintained in all the computers then there is no privacy. Everyone will know how much money I owe. But this is not true. Here comes the role of cryptography. Cryptography is the code behind all the record. Earlier, the problem with real money was if the money is ours, then why banks and authorities take the charge of money that we earn and invest.


Difference in Digital Currency and Cryptocurrency

1. Stability

Digital currency are stable currency that are backed by fiat currency like US Dollars which gives intrinsic value while Cryptocurrency depends on the supply and demand.

2. Reserve Asset

Digital currency are easier to understand as they are underlying reserve assets while Cryptocurrency are present only over internet.

3. Government Regulations

Digital Currency has government regulations and thus it cannot be under or overvalued over the period of time while Cryptocurrency does not obeys such laws.

4. Privacy Concerns

Digital currency are backed by different institutions and government bodies which tracks the transactions while Cryptocurrency are somewhat hard to trace since it is not regulated.


How to earn and invest in Cryptocurrency?

It can be done in two ways:

1. From someone

Buying it from someone usually happens in two ways – an exchange facilitated transactions or a peer-to-peer transactions.
The money has to be added in the wallet by completing KYC process and then exchange can be done.
There are many platforms for this such as CoinDCX, Zebpay, Bitbns, Giottus etc.

2. Mining new crypto coins

This is a complex process which required time & money. Strong featured computers and space are required for this purpose. Huge amount of electricity is required and the surrounding should be ideal in terms of temperature.


What are bitcoin? How Bitcoin works and why is it so popular?

Our bank is maintaining records of all the transactions by a Centralized Systems and making sure that the transactions is successful.
It’s alternate can br seen through Bitcoin currency. Although many cryptocurrencies have come into the market, but the acceptance of Bitcoins among all other are very high.
Bitcoin is a digital cryptocurrency and there is no physical existence. When we buy bitcoins it means we are buying some bitcoin addresses through which we do the transactions on another specific bitcoin address.
Bitcoin is an automatic structure that does nit require programming or coding. It’s algorithm run on autorun, but to run the algorithm, system and computer are required. The amount of bitcoin are already fixed that is 21 Millions.
In 2009, you could generate 200 bitcoins in 2 to 3 days but now 1 bitcoin generation can take more than 150 years which means that the ROI on bitcoins are very high but it also means that the risk involved in such investments are also very high since it is very volatile. Bitcoins worth changes every 30 seconds are thus it becomes very difficult to calculate the absolute value of the bitcoins.
Many companies have invested hugely on bitcoins like Facebook, JP Morgan Chase, Paypal and are enjoying great returns but smart investment is required.


Future of Cryptocurrency

Cryptocurrency becomes more popular that we are starting to see signs that if could become part of our financial future. Cryptocurrency can make banking cheaper, lending cheaper and moving resources cheaper. Think of how transferring resources to any part of world would be easier through cryptocurrency. But these transactions record through cryptography is itself takes huge amount of energy. Carbon emission and Infrastructure itself is a huge investment. The best benefit of Cryptocurrency is that it cannot be overruled by any of the outside authority or central authority. So, we have a potentially new type of money and a new kind of investment asset and also a new kind of computer. But there are also a lot of people who consider it as a bubble or a fraud. But the usage of Cryptocurrency will depend upon the acceptance and how ready we are to transact with asset which has no physical presence.

Best cryptocurrency to invest in 2023

2022 has been the craziest year to invest in Cryptocurrency so far. Larget altcoins going to zero crypto companies going bankrupt and nine figure hacks are just a few of the headlines many of us would love to forget. With these things going many people are thinking whether 2023 will be bullish or bearish for the market. We have chosen 3 crypto according to their potential that can perform best in the coming days.

1. XDC Network

It focuses on international trade and finance. It is based on 3rd generation blockchains which emphasises on scalability, speed and interoperability which fixed all the loopholes associated with international exchanges. This provide services for multinational companies with instant payments and contracts. It is ISO 20022 approved. ISO 20022 is a new protocol planned to be adapted worldwide by all the financial industries. This ISO 20022 will form the backbone of most of the financial systems and by 2025 it will be global payment way for all the major banks.
Current price of XDC is $0.025 will is really good price looking at the potential to grow with ISO 20022 compliant.


It is a relatively new crypto compared to the other but it can be really big in the future. It competes directly with the Solana. Many people call Solana a killer because Solana was created to compete with Ethereum. And so APTOS can be called a Ethereum competitor. Solana can do around 65000 TPS (Transactions per seconds) while APTOS can do around 160k TPS which is really high.
APTOS uses the programming language “Move” which is the same language used in Solana which is why APTOS is called killer. Apart from this APTOS is backed by some major companies which has hits the valuation by $4B after strategic investment from Binance Labs.


It solves the real life problems that is neglected by most of the investor associated with cryptocurrency. It is related to DATA LOSS. Data is lost every seconds and since lots of data is created, it becomes very difficult to find them. Also broken links make it impossible to find since the interlinking system between the transactions is detached. The website associated with broken links is transferred to dark web and it is no longer accessible to search engines. This is the problem solved by ARWEAVE.
The data stored by ARWEAVE is forever. Also, Solana stores all the data on ARWEAVE and since Solana is huge the credibility and importance of ARWEAVE is high since it is associated with it.



Is cryptocurrency real money?

No, cryptocurrency are digital currency. There is no physical presence of cryptocurrency. All the transactions that are done on digital platforms. The transactions are maintained in the Public Ledger.

Do people get rich investing in Cryptocurrency?

People often dream of becoming overnight rich by investing in cryptocurrency. But this is not always true. Many cryptos has been discontinued and companies have become bankrupt. Smart investment looking at stability and potential to grow is required.

How much money needed to invest in Crypto?

This depend on the platform through which you start your investment. Some allows investment starting from just $5. It varies from one to another. It is always advised that for beginner investment in Crypto should be low because high risk factor is involved in this market.

Read More Satoshi Nakamoto Net Worth 2023

3 thoughts on “What is Cryptocurrency and how it works? || How to earn and invest in Cryptocurrency?”

Leave a Comment