If you are new to the crypto space, it can be difficult to navigate all of the terms, concepts, and types of cryptocurrencies that are available. However, there is no need to worry! We are here to help you understand some of the basics.
What is Cryptocurrency?
To put it simply, cryptocurrencies are digital assets. Most digital assets are decentralized, which means they are not controlled by a single governing body, and this is what makes them more unique than traditional fiat.
How Does Cryptocurrency Work?
Since cryptocurrency is decentralized, it is important that some rules exist to assure that transactions involving digital assets are legitimate. The blockchain stores all transaction data, chronologically tracking the public digital asset transactions that take place all over the world.
While this may sound simple, this level of data storage takes an incredible amount of work. That is why computers called miners are constantly processing advanced computations to confirm transactions. When someone chooses to use their personal hardware to mine, they are issued a small amount of cryptocurrency called a block reward.
How Do I Get Involved?
If you would like your very own digital assets, it is likely that you will need to purchase some bitcoins (BTC) using fiat. While ShapeShift does not offer this, you may use an external source to purchase bitcoins with your credit card. Remember, you will need to generate your own personal bitcoin address beforehand. To do so, you will need to find a wallet that you like.
Another option is using an exchange like Coinbase that accepts fiat without third-party involvement. You can store your digital assets in your Coinbase wallet, which will also create addresses for you.
Above, we have put some words in bold that you may not fully understand. We have defined them below.
- Decentralized - Something that has had power moved away from a specific authoritative body is decentralized.
- Fiat - Fiat currencies are centralized currencies, such as the U.S. Dollar or the Euro.
- Blockchain - The ledger that tracks digital asset transactions into sequential order.
- Miners - Computers that confirm transactions on the blockchain using a series of advanced computations.
- Confirm - Confirmations are necessary for a successful transaction. The number of confirmations is based on the number of times that the network has accepted the transaction. The more confirmations, the more likely the transaction is to be legitimate. The fewer the confirmations, the more likely it is that coins could potentially be double spent.
- Block reward - New digital assets rewarded to a miner for participating in the mining process.
- Address - An address is an alphanumeric string of letters and numbers that is unique to a wallet. It is what is used to route digital assets across the network to a particular destination. Different coins have unique address formats.
There are a number of cryptocurrencies that exist, but some of the most common are:
- Bitcoin (BTC)
- Ethereum (ETH)
- Litecoin (LTC)
- Bitcoin Cash (BCH)
- Dogecoin (DOGE)
- Ethereum Classic (ETC)
- Monero (XMR)
- Ripple (XRP)
If you are interested in other coins that ShapeShift offers, visit us at ShapeShift.io and view all of our available coins.
ShapeShift is a fantastic tool for anyone that wants to exchange one digital asset for another. We offer over 50 exchangeable tokens and our platform is easy to use. If you need help utilizing our services, please visit this article.
I Want to Learn More
We encourage our users to learn as much about the crypto world as possible, so we try to provide as much information as we can. If you are new to the space, we recommend starting with some of our beginner topics:
- Common Cryptocurrency Terms
- How to Exchange Coins on ShapeShift
- What are Your Terms and Conditions?
- Why Can't I Access ShapeShift.io?
- How Does Your Service Work Without Registration? Why are There No Accounts on ShapeShift?
- Use ShapeShift Securely to Protect Your Assets
- Defining Quick and Precise Exchanges
- What Happens if My Transaction Doesn't Go Through?
- What Do I Input into the Destination Address Field?
- What Do I Input into the Refund Address Field?
- What is an Order ID?
- What is the Deposit Address?
- What is the TXID or Hash?