What is the true meaning of Token in the Cryptosphere?

 

If you are dealing in cryptocurrencies then you might have heard the word token. But do you know the true meaning of word tokens and how they are mistaken with coins?

Here is a complete guide to giving you a full understanding of the tokens in the Cryptosphere.

What does a token refer to?

A token is a type of cryptocurrency which is issued on top of another blockchain. It does not have a currency use case. The utility of an asset is represented by tokens.

Token-in-cryptocurrency

A token is the secondary asset on any blockchain which has an independent market value. Tokens cannot exist independently while coins can exist independently like Ethereum. Tokens such as GNT and CIVIC cannot exist without the Ethereum infrastructure.

Benefits of Using Crypto Tokens

  1. Transparency

The ownership and the transfers of the tokens in the blockchain platform is transparent and verifiable. These tokens cannot be counterfeited which gives them real value.

  1. Usability and speed of exchange

The tokens in the crypto world are exchangeable for other forms of value. The speed of transactions is very fast with the help of crypto tokens and the cost is much less as compared to traditional methods.

 

Drawbacks of the Crypto Tokens

No technology comes without drawbacks. As there are many advantages of using crypto tokens, there are some drawbacks too.

  1. No government Control

Although it is considered the biggest benefit if cryptocurrency that it has no government control over it, but it is also the biggest drawback for the tokens. Lack of government control enhances the chances of frauds and scams in this crypto world which can cause people to lose millions.

The legal status or the location of the company or an ICO is unknown and since so many things are available on the internet, people make use of this drawback to their advantage to cause frauds.

  1. Attractive to Scammers

 

ICOs are based on promises that a fruitful product will be launched and at the ICO stage it is only a mere idea and not a full-fledged product. It allows fraudsters to make easy money and then disappear without a trace.

Thus, cryptocurrencies are like free money to scammers and the irreversible feature of the cryptocurrencies make it more beneficial for the bad elements to make money.

Defining Blockchain in easy terms 

 

The entire crypto ecosystem works on the blockchain platform and it is very important to understand what a blockchain is. Here is a simple guide to tell you about all the basics of a blockchain.

 

What is a Blockchain?

As per definition, a blockchain is a continuously evolving digital ledger or list of records. It is very important in the crypto world because with the help of blockchain, each and every transaction can be verified which proves that every transaction was valid and the funds were transferred.

This ledger is completely transparent and public. They are shared globally and are completely secure.

 

Origin

The concept of blockchain was initiated in 1991 during the cypherpunk movement. But the successful implementation of the blockchain based secured cryptographic digital currency was done by Satoshi Nakamoto nearly 20 years after the initial concept in the form of Bitcoin blockchain.

A blockchain means that each and every change in the digital ledger of the cryptocurrency can be tracked. The uses and applications of this system are endless. It is not merely a database but a virtual supercomputer.

 

Working of Blockchain

Each new block or transaction in the blockchain must agree with the previous block. If there is a lack of agreement between the new block and the previous block, the cryptocurrency will automatically reject the new block and make it an invalid transaction.

Blockchains use smart contracts which make the entire platform secure and fair. In the case of smart contracts, the next step is triggered only when the previous conditions are met. This enables the smart contracts to manage even the most complex transactions including financial transaction.

 

Nature of Blockchain

As the name suggests, a chain of blocks is created in this platform. Each new block is chained to the previous one as the blocks are distributed widely among different computers and servers across the world. And because of the distribution of blocks, not a single entity can change the history of the blocks making it decentralized in its approach.

 

Advantages of using Blockchain

  1. Secure: Blockchains are more secure than private databases.
  2. Resilient: The blockchain records are immutable and resilient to attacks.
  3. Transparent: The complete database is transparent and every transaction is verifiable.

Best Practices to Safely Store Your Cryptocurrency Private Key

3 Best Practices to Safely Store Your Cryptocurrency Private Key

Engaging in cryptocurrencies is akin to being your own bank – taking complete responsibility of your funds and transactions in your own hands. In today’s vulnerable cyber world, managing cryptocurrency securely can be a real cause of concern.

Keeping an eye on the recent trend of cyber crimes and online frauds related to the cryptocurrency market, it is of utmost importance to ensure that all transactions are handled in a safe and secure manner.

Private key or seed key is one of the most crucial aspects to safeguard in this regard. Especially the newbie investors often deal with the private keys in a careless manner – thus jeopardizing the security of their cryptocurrency funds.

Let’s find out three best practices to secure your cryptocurrency private key.

Use Hardware Wallets

Hardware wallets are an excellent tool to secure your private key. It looks similar to a flash drive and has been designed specifically for storing altcoins in a secure manner. These devices generate private and public keys via mnemonic phrase when initialized. While mobile/desktop wallets are also quite secure for small investors, if you are serious about your business, hardware wallets are much more trustworthy. Ledger Nano S and Trezor are a couple of highly recommended hardware wallets that can protect your private keys effectively.

Don’t Use Online/Cloud Storage

Online storage is one of the most vulnerable storage mediums that are susceptible to cyber-attacks. As a rule of thumb, make it a practice not to store your private key in any online medium, email or cloud storage. If you don’t use hardware/desktop wallet, it is better to store your private key in an encrypted offline flash drive.

Never Take a Screenshot/Photograph of Your Private Key

We often think that our mobile handsets can be a safe place to store our confidential information. But in reality, you are actually making it straightforward for the hackers to obtain your confidential information. Phishing or malware injections can be a dangerous prospect that can compromise the security of mobile devices. Hence taking photographs/screenshots of your cryptocurrency private key with your smartphone should strictly be avoided.

 

Conclusion

No matter if you are looking to invest in a new type of altcoin or keep track of your existing cryptocurrency portfolio, you must follow an acceptable best practices guideline to minimize the associated risks. If you can adhere to the tips mentioned in this article, it can go a long way to protect your cryptocurrency fund from online fraud and hacking attempts.