New RockItCoin ATMs were just added in Texas! See our newest locations. New RockItCoin ATMs were just added in Colorado! See our newest locations. New RockItCoin ATMs were just added in Alabama! See our newest locations.

RockItCoin Crypto Literacy Services: A Beginner’s Guide

Posted on July 21st, 2022 by RockItCoin

If you are new to crypto buying, trading, and investing, but unsure where to start as a beginner, you are not alone. 

Here is a breakdown of all of the things you need to know as a crypto beginner:

How Does Cryptocurrency Work? 

Most currencies operate through centralized finance systems that require users to work with a middle man when moving money and assets. Cryptocurrency was invented to operate on a decentralized banking system that sends, receives, trades, and stores digital currency without a middle man. Instead, crypto is regarded as a “peer-to-peer” financial system. 

Understanding blockchain technology is crucial to understanding the security and fidelity of cryptocurrency transactions. The blockchain is a public ledger that records digital transactions chronologically. Here is how it works: 

  1. A transaction is requested by an account through an exchange platform or a crypto broker
  2. The transaction is sent out into a network of computers to encrypt the data and verify the transaction. This is when the mining process takes place, as miners solve cryptographic problems (called proof of work) to verify a transaction and record it on the block. Instead of requiring verification from a bank, transactions are verified by other users. 
  3. The first miner to solve the cryptographic equation is rewarded with bitcoin.
  4. Once the transaction is verified it is written into a block. When the block is full, it is permanently added to a previous block on the blockchain. 
  5. The blockchain is legitimized by distributing each block into a network of nodes. Nodes work together to ensure that hackers and outages do not impact the fidelity of the data. 

Eliminating the middle man through decentralized banking ensures that there is no single source of power over the record of transactions and ownership. This system works because cryptocurrency is encrypted to ensure security and fidelity on a blockchain system. 

Why Use Crypto?

Crypto Transactions Are Quick

So why is using cryptocurrency better than using fiat currency? Well, cryptocurrency transactions are faster than fiat transactions because they are peer-to-peer transactions that do not require validation from the middle man. These quick transactions are especially beneficial for online businesses and international payments. Banks may charge fees for international transfers of assets. Without an intermediary, crypto transactions are much quicker without tacking on extra fees. 

Crypto’s Blockchain System Is Secure

Because crypto uses a blockchain system, the fidelity of its data is secure. Once a transaction is stored on a blockchain, it cannot be altered. Because the blockchain is a public ledger, it is widely distributed. This distribution makes it impossible to hack the cryptosystem, as each node cross-checks its digital data throughout the network it is a part of. If one copy of the ledger has been altered, the other nodes can easily single the corrupted data out. 

Data Is Encrypted And Secure

Security is further amplified by the cryptographic processes in place to guard access to digital assets. Data in the blockchain is coded and decoded through cryptographic techniques so transactions are secure, transfers of assets are cryptographically verified, and the mining process (a process that produces more bitcoin) is regulated. 

Crypto’s Decentralized Finance System Avoid Banking Fees

Another reason to use crypto is to avoid centralized banking fees. Because there is no centralized system to charge transfer fees, maintenance fees, deposit fees, etc. a decentralized finance system can be more cost-effective.

How To Make A Profit With Cryptocurrency?

Mining

Mining new bitcoin is one way to make money in the cryptocurrency system. How does this work? In the process of verifying transactions and solving complex mathematical problems, miners use powerful computers to reach a solution. The first miner to solve the problem is rewarded with new bitcoin. Miners also reap the rewards of transaction fees. 

Mining operates to fill blocks on the blockchain by verifying transactions. Mining prevents double-spending and creates incentives for users to help monitor transactional data. 

A new block is added to the blockchain every ten minutes. This means that every ten minutes, more cryptocurrency is minted and in circulation. 

Not all mining “jobs” are equal in difficulty. The likelihood that your mining will solve the mathematical problem is dependent on the computational power of your tools and the difficulty of the mining puzzle. The difficulty of the mining puzzle is called Network Difficulty. The more miners there are working on a puzzle, the harder it is to find the answer. 

Investing

Buying and trading crypto as an investment is another way crypto users make money. Staking and yielding are two basic methods of crypto investing. Here are the basics: 

  • Staking cryptocurrency refers to the practice of buying crypto and letting it collect interest. Crypto staking is useful to verify transactions by providing proof-of-stake.
  • Yield farming cryptocurrency refers to the practice of placing crypto into a decentralized application (like a crypto wallet). Yielding refers to the practice of using decentralized exchanges to earn interest by lending, borrowing, and staking crypto. 

Accepting Bitcoin As A Business Owner

Accepting bitcoin as a form of payment is another way to make cryptocurrency. If you want to add more crypto to your digital assets, consider accepting crypto in exchange for your goods and services. 

Play-To-Earn Crypto Games

Another way to make cryptocurrency is through crypto gaming. Cryptocurrency has grown alongside a boom in virtual universes and digital worlds. As virtual worlds have developed, crypto economies have grown. In play-to-earn crypto games, NFTs are bought and sold for millions of dollars. Digital earnings have real-world value, and cashing out on play-to-earn games has resulted in great rewards for players. Play-to-earn crypto games are also decentralized, making them secure through blockchain technology.  

Buying and Selling NFTs

Non-fungible tokens are digital assets regarded for their scarcity. An NFT represents a piece of art or music that is stored on a blockchain to document transactions and ownership (just like any other form of cryptocurrency). Selling your art, designs, music, and even virtual real estate (in crypto play-to-earn games), can result in great profit for creators. The original artist of an NFT also earns royalties in subsequent sales of their work. 

Users can also make money by investing in NFTs, flipping NFTs, renting NFTs, trading NFTS, or staking and yielding NFTs.

As a beginner, you now know how cryptocurrency works, why cryptocurrency is worth using, and various ways to make a profit with cryptocurrency. Starting out as a crypto user can be intimidating if you do not know what to expect. You can use this page as a point of reference to nail down the basics and make a plan. Gaining crypto literacy is a great first step, and RockitCoin can help you take the next step in the right direction! To buy your first cryptocurrency, check out RockitCoin’s Crypto ATMs: to get started, all you need is cash and your phone number!