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About Cryptocurrencies

Cryptocurrencies

In simple terms, cryptocurrency is a type of digital or virtual money. It serves as ordinary money, such as dollars, pounds, euros, yen, etc. But it has no physical counterparts — banknotes or coins that can be carried around, that are, the cryptocurrency exists only in electronic form.

A cryptocurrency uses cryptography for security. Many cryptocurrencies are decentralized systems based on blockchain technology and not issued by any central authority.

Cryptocurrencies are systems that allow for the secure payments of online transactions that are denominated in terms of a virtual "token, " representing ledger entries internal to the system itself.

Cryptocurrencies hold the promise of making it easier to transfer funds directly between two parties in a transaction, without the need for a trusted third party such as a bank or credit card company. Fund transfers are done with minimal processing fees, allowing users to avoid the steep fees charged by most banks and financial institutions for wire transfers

Bitcoin

Bitcoin is a digital currency created in 2009, where it is one of the first digital currencies to use peer-to-peer or P2P technology (the exchange or sharing of information, data, or assets between parties without the involvement of central authority) to facilitate instant payments. Bitcoin offers the promise of lower transaction fees than traditional online payment mechanisms and is operated by a decentralized authority.

Bitcoin charts high in popularity, and have triggered the launch of thousands of virtual currencies collectively referred to as Altcoins, such as Ethereum, Ripple, Litecoin, and EOS.

Satoshi Nakamoto is the name associated with the person or group of people who released the original Bitcoin white paper in 2008 and worked on the original Bitcoin software that was released in 2009.

There are no physical bitcoins, but balances that are kept using public and private "keys," which are long strings of numbers and letters linked through the mathematical encryption algorithm that was used to create them.

The Bitcoin is issued through mining, which is the process through which bitcoins are released to come into circulation solving a computationally difficult puzzle to discover a new block, which is added to the blockchain.

In 2017 alone, the price of Bitcoin rose from a little under $1,000 at the beginning of the year to close to $19,000, ending the year more than 1,400% higher. However, it is currently trading around $3,600, with a market capitalization above $63 billion and market dominance at 52.8% (as of Feb 14, 2019).

Digital Wallet?

A digital wallet is a software program where cryptocurrencies are stored. Digital coins are not stored anywhere, but there is a private key (secret number) for every cryptocurrency address that is saved in the digital wallet of the person who owns the balance. The private key is used to access the funds stored in the wallet.

A digital wallet is a software program where cryptocurrencies are stored. Digital coins are not stored anywhere, but there is a private key (secret number) for every cryptocurrency address that is saved in the digital wallet of the person who owns the balance. The private key is used to access the funds stored in the wallet.

The digital wallet comes in many forms; desktop, mobile, web, and hardware are the four main types of wallets.

Also, investors should distinguish between hot wallets and cold wallets. A wallet is hot when it is connected to the Internet. Nothing on the Internet is 100% secure, so funds kept in a hot wallet are always at a slight risk of theft or loss from software bugs or hackers. On the other hand, a wallet is cold when it's safely offline and can't be deliberately or accidentally compromised over the Internet

What is a cryptocurrency exchange?

A cryptocurrency exchange is a digital marketplace where traders can buy and sell bitcoins or altcoins using different fiat currencies or altcoins. A cryptocurrency currency exchange is an online platform that acts as an intermediary between buyers and sellers of the cryptocurrency.

crypto-to-crypto exchanges allow only trading between digital assets, while fiat-to-crypto exchanges permit the buying and selling of cryptocurrencies against fiat currencies.

Traders can opt to buy and sell bitcoin or altcoins by inputting both quantity and price. When a market order is selected, the trader is authorizing the exchange to trade his coins for the best available price in the online marketplace. The exchange then places it in its order book until the price is matched by another trader on the opposite end of the transaction (Maker). But exchanges also can fill a buy or sell order immediately (buy market or sell market) through acting as the seller or the buyer (Taker).

To transact in bitcoin on an exchange, a user has to register with the exchange and go through a series of verification processes to authenticate his or her identity. Once the authentication is successful, an account is opened for the user who then has to transfer funds into this account before s/he can buy coins.

Different exchanges have different payment methods that can be used for depositing funds including bank wires, direct bank transfers, credit or debit cards. A trader who would like to withdraw money from his or her account could do so using the options provided by his exchange which could include a bank transfer, PayPal transfer, bank wire, or credit card transfer.

Cryptocurrency pairs

In cryptocurrency, the term “trading pairs” describes a trade between one type of cryptocurrency and another. For example, the “trading pair” ETH/BTC. With ETH/BTC you can buy Ethereum with Bitcoin, or Sell Ethereum for Bitcoin.

Buying or selling NEO, for instance, would depend on the base cryptocurrencies offered by the exchange. On Yobit.net, you can buy or sell any digital currency using BTC, ETH, Doge, and Waves as your basic currency. In addition, users can buy and sell digital currencies using fiat currencies such as the US dollar and Russian ruble.

One of the most popular base currencies, which you will need to own to purchase new currencies in that market, is the USDT since it is a USD pegged cryptocurrency meant to always retain a peg that will equate it to 1 USD worth for each of these tokens.

Cryptocurrency Miners

What Coin Miners Do. Miners are getting paid for their work as auditors. They are doing the work of verifying previous Bitcoin transactions. This convention is meant to keep Bitcoin users honest and was conceived by bitcoin's founder, Satoshi Nakamoto. By verifying transactions, miners are helping to prevent the "double-spending problem".

Double spending is a scenario in which a bitcoin owner illicitly spends the same bitcoin twice. With physical currency, this isn't an issue: once you hand someone a $20 bill to buy a product, you no longer have it, so there's no danger you could use that same $20 bill to buy lotto tickets next door. With digital currency, however, there is a risk that the holder could make a copy of the digital token and send it to a merchant or another party while retaining the original.

Let's say you had one legitimate $20 bill and one counterfeit of that same $20. If you were to try to spend both the real bill and the fake one, someone that took the trouble of looking at both of the bills' serial numbers would see that they were the same number, and thus one of them had to be false. What a Bitcoin miner does is analogous to that—they check transactions to make sure those users have not illegitimately tried to spend the same bitcoin twice.

Once a miner has verified 1 MB (megabyte) worth of bitcoin transactions, known as a "block," that miner is eligible to be rewarded with a quantity of bitcoin (more about the bitcoin reward below as well). The 1 MB limit was set by Satoshi Nakamoto, and is a matter of controversy, as some miners believe the block size should be increased to accommodate more data, which would effectively mean that the bitcoin network could process and verify transactions more quickly. Note that verifying 1 MB worth of transactions makes a coin miner eligible to earn bitcoin—not everyone who verifies transactions will get paid out. 1MB of transactions can theoretically be as small as one transaction (though this is not at all common) or several thousand. It depends on how much data the transactions take up.

What is Blockchain?

If this technology is so complex, why call it “blockchain?” At its most basic level, blockchain is just a chain of blocks, but not in the traditional sense of those

words. When we say the words "block" and "chain" in this context, we are talking about digital information (the "block") stored in a public database (the "chain").

“Blocks” on the blockchain are made up of digital pieces of information. Specifically, they have three parts: Blocks stores information about transactions like the date, time, and dollar amount of your most recent purchase from Amazon. (NOTE: This Amazon example is for illustrative purchases; Amazon retail does not work on a blockchain principle as of this writing)

Blocks store information about who is participating in transactions. A block for your splurge purchase from Amazon would record your name along with Amazon.com, Inc. (AMZN). Instead of using your actual name, your purchase is recorded without any identifying information using a unique “digital signature,” sort of like a username.

Blocks store information that distinguishes them from other blocks. Much like you and I have names to distinguish us from one another, each block stores a unique code called a “hash” that allows us to tell it apart from every other block. Hashes are cryptographic codes created by special algorithms. Let’s say you made your splurge purchase on Amazon, but while it’s in transit, you decide you just can’t resist and need a second one. Even though the details of your new transaction would look nearly identical to your earlier purchase, we can still tell the blocks apart because of their unique codes.

While the block in the example above is being used to store a single purchase from Amazon, the reality is a little different. A single block on the Bitcoin blockchain can store up to 1 MB of data. Depending on the size of the transactions, that means a single block can house a few thousand transactions under one roof.

Why Trade Cryptocurrencies with HouseFx?

HouseFx offers to all traders the opportunity to trade a wide range of cryptocurrency coins 24/7. Due to the massive popularity of cryptocurrencies over the past couple of years, they have become a conventional and popular asset. The main purpose of this new technology is to allow people to buy, trade, and invest without having to rely on banks or any other financial institutions.

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Trade wide variety of Cryptocurrencies available on HouseFx MT5 trading platforms.

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TRADE AGAINST FIAT CURRENCIES

Our clients can trade Cryptocurrencies against Fiat currencies (USD, EUR, JPY, etc.), as well.



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