What is cryptocurrency anyways?

What is Cryptocurrency? – Simple Guide

Introduction

A few years only a few people knew something about cryptocurrency, and mostly they were those involved in the creation and operations. Today, many people all over the world have a concept about cryptocurrency. Over the last few years, cryptocurrency has been integrated into businesses. This simple guide will give you an understanding of what cryptocurrency really is.

what is cryptocurrency?

Cryptocurrency is a digital currency which is designed to function as a medium of exchange just like the normal currencies. It utilizes cryptography which secures and allows for verification of transactions. All transactions are secure and anonymous and can be done by anyone with internet connection.

A Brief History

During the 90s tech boom, there were attempts at creating digital currency, and this led to various systems like Beenz, Digicash and Flooz which never took long before failing terribly. In 2008 the first cryptocurrency known as Bitcoin was invented by an anonymous programmer or a group of programmers known by alias Satoshi Nakamoto.

Satoshi described the invention as a peer-to-peer electronic cash system. In 2009, the software that would be used to make the concept a reality was developed and released with an open-source license. Cryptocurrency is totally decentralized, meaning that there isn’t a central authority to control it.

The introduction of Bitcoin has made transactions between people happen without the need of an intermediary, like a bank or credit card company. Since then there has been an introduction of many different types of cryptocurrency which still utilize the same peer-to-peer concept.

Blockchains and Mining

Blockchain is a special form of Distributed Ledger Technology (DLT). All cryptocurrencies utilize a blockchain technology which allows for management and transfer of cryptocurrencies without the need for a central authority. Every transfer that happens on blockchain involves the people who are using it, thus all transactions are managed and approved by the people involved in the blockchain.

When a person wants to pay several Bitcoins to another person, all the transactions that will be happening at that moment will be accepted onto the ledger in blocks. This is what actually leads to the name blockchain.

Blocks that are in the ledger can actually be mined so that new currency can be released into the chain. Mining involves solving some mathematical problems that have been provided in the blockchain. This process, however, is quite tough and requires a powerful computer as well as a special program.

What can you do with cryptocurrency?

Buy Goods

Not long ago trying to find a business that accepts payment for goods and services in terms of cryptocurrency was extremely difficult. These days, however, many merchants have embraced the use of cryptocurrency. There are a lot of businesses both offline and online that accept Bitcoin as a form of payment. Bitcoin is the widely accepted cryptocurrency for payment. Others like Ripple, Ethereum and Litecoin are not widely accepted, but as time goes on they will be accepted, widely.

A tool of investment

During the introduction of Bitcoin a few years ago, the price of one Bitcoin was very low. Today, its price is quite huge. For instance, early 2017, one Bitcoin was valued at $800. In December 2017, the price of one Bitcoin had reached a peak level of $19,000. Cryptocurrencies, therefore, are considered by many people as a great investment opportunity.

However, it is wise to note that, investing in cryptocurrencies is highly risky. The market is very volatile and keeps fluctuating. Additionally, it is not regulated by any single authority, and thus there is a high risk of them getting outlawed. Also, the transactions have a risk of getting hacked.

Conclusion 

This is just a simple guide about the about cryptocurrencies. The cryptocurrency world is a complex field and keeps on developing and getting better. People all over the world are embracing this invention and that’s why Bitcoin has huge popularity across the globe.