How Does Cryptocurrency Work? (A Brief Guide) - Tectum Blockchain How Does Cryptocurrency Work? (A Brief Guide) - Tectum Blockchain

How Does Cryptocurrency Work? (A Brief Guide)

So far we have discussed, the meaning of cryptocurrency, and the process of mining and adding new cryptos to the existing network. We have also discussed the best cryptos to consider, as well as the current exchange rates and market price capitalizations of cryptocurrencies.

In this article, we will answer the question, how does cryptocurrency work? and some terms and processes in cryptocurrency that you need to know in order to get further insight into the workings of cryptocurrency.

 

How Does Cryptocurrency work?

Cryptocurrencies normally operate in a decentralized system where they are stored on multiple digital ledgers called the Blockchain. A Blockchain is a computerized database where all the crypto transactions that take place are digitally secured and recorded. The blockchain ensures that all the transactions that go on it are open to all members of the network, and are immutable (i.e. cannot be retroactively altered). This is how it remains trustworthy even without government regulatory standards.

Blockchains can be differentiated by their speed, calculated by the number of Transactions per second (Tnx/sec). Blockchain like Bitcoin and Ethereum process 7 and 25 tps/sec respectively, on the other hand, the TET blockchain can process 1 million tps/sec

Cryptocurrency mining
Cryptocurrency mining

Some Useful Crypto Terms to Know

In this section, we will discuss some useful terms that you will need to understand in order to invest in crypto

 

How does Cold storage in crypto work?

As a crypto trader, you need to store your cryptocurrency somewhere. The place where cryptocurrencies are stored is known as your wallet (think about your physical wallet only its contents are digital). Of course, since you need the internet to do crypto trading, your wallet is automatically connected when you try to trade, it is called a hot or active wallet.

However, one of the problems of crypto is that because it is not regulated by any central body or government, if hackers hack your wallet and take out all your cryptos there is no way of retrieving them back. Therefore most people store their wallet in a location that is not connected to the internet when they are not actively investing or trading.. Your cold wallet also has your private keys and can therefore not be compromised.

Thus even though your cold storage is safe from hackers and other cybercriminals, you cannot do any transactions with it.

Paper Wallet

Your paper wallet is a basic type of cold storage where your public and your private keys are written on a piece of paper. Most of the time, paper wallets have a QR code you can scan in order to connect your cryptocurrency wallet to the internet and make a transaction.

Airdrop

As we have noted, cryptocurrencies, especially altcoins, are valued by speculation and thus positive PR will raise the price of a given crypto while negative PR will do the opposite.

For this reason, crypto network managers often give away free tokens or coins as rewards to investors, traders, and collectors of their cryptos. It is usually done with the hopes that it will drive up interest in their crypto and encourage more people to buy it (thereby driving up the value). For example, Tectum recently did an airdrop of 50,0000 TET tokens worth about $150,000 to 1500 lucky collectors and investors. It is only the first of many airdrops planned for investors in the TET tokens and is another reason to consider Tectum.

 

How do Taxes work in crypto?

One of the concerns of crypto investors is how their assets may be taxed. Even though cryptocurrencies are not regulated by the central bank, they are still subjected to the same process of taxing fiat currency by the IRS. There are different levels of taxes that cryptocurrencies are subjected to. Check the IRS website to see what tax obligation you may have.

 

Other Resources on How Cryptocurrency(ies) Work

For more online resources and information on how cryptocurrency work, especially how the TET token works, Tectum has a number of resources on YouTube. On the Tectum YouTube channel, your questions will be answered, and you will get more information about the efficiencies of the tectum blockchain, and future airdrops coming on the TET tokens. You will also get information on how the TET token compares to others.