You may have heard about the term Cryptocurrency. Today many people are using it to buy goods and services. As this is a digital currency it will utilize an online ledger and also strong cryptography that keeps the online transactions safe. Many people try to trade the currency for-profit and many have increased its prices too. Therefore the world of the cryptocurrency market is large and sometimes hard to understand. Here you will learn about cryptocurrency and blockchain. If you know how it works then you can be ready for the future.
So continue reading to know more.
Table of Contents
What is cryptocurrency all about?
The cryptocurrency is a payment form that many use as an exchange for goods and services. Many companies have made their currencies like tokens. These can be used for the trading of goods and services that they offer. You have to give real currency to get the cryptocurrency and then use it for various purposes.
So how does Cryptocurrency Work? Cryptocurrencies work through the technology called the blockchain. It is a decentralized technology that handles cryptocurrency and transactions. Many people like this technology because of its security.
Do you know that more than 6,700 different cryptocurrencies are available? Now according to the studies, the use of Cryptocurrency is raising. As of this year, the value of cryptocurrency is $1.6 trillion. Also, the famous digital currency pegged at $969.6billion. That is why many people are trying to learn about blockchain and cryptocurrency.
Where did it all start?
An anonymous person called Satoshi Nakamoto wanted to develop a Peer-to-Peer Electronic Cash System. Before him, many people failed to make digital cash. So he became the great genius who created the bitcoin. It did not have any central authority and Nakamoto introduced it on 09 January 2009 at SourceForge. Then this was the birth of cryptocurrency. At first, it was a bit complex for people to understand it however now many are trying to learn it.
To use digital cash you need a payment network that contains accounts, transactions and balances. As it is a decentralised network there is no server. Therefore every entity in the network has to do the work. Every person in the network will get the transaction record to prevent double-spending.
What is Blockchain?
Blockchain is one of the advanced technologies in the world today. It has made record keeping and financial transactions easy. Nobody can change, hack or cheat in this system.
So what is a blockchain in simple words? It is a digital ledger that contains all the transactions. Each block in the blockchain has several transactions. Then it gets added to the participant’s ledger. Moreover, this is a database without any central authority so multiple participants manage it through the Distributed Ledger Technology (DLT).
Blockchain is a DLT where the transactions available in a cryptographic signature termed as a hash. So even if one blockchain gets changed then participants immediately can know that somebody has tampered with it. That is why it is s secure database.
Why is the cryptocurrency bitcoin popular?
Many people love cryptocurrency and they are supporting it. Some are even calling it the future of currency. Here are some of the things about cryptocurrency bitcoin that has made it popular.
- The supporters are seeing it as the currency of the future and that is why they are flocking to buy it now. They predict that in the future cryptocurrency bitcoins can become valuable.
- The cryptocurrency is famous because of its decentralised database. This means that there is no bank to manage its money supply. As banks tend to lessen the value of money because of inflation, people like cryptocurrency to take the center stage.
- The technology behind cryptocurrency is blockchain so many supporters like that about it. As blockchain uses a decentralized processing and recording system it is safe and secure for transactions.
- Some people like cryptocurrency because of its ever-growing value.
Is it good to invest in cryptocurrency?
Cryptocurrencies are growing up in value. So investors are seeing it as a good time to invest in it. But many people do not see cryptocurrency investment as a real investment. This is because it is similar to the real currency as the cryptocurrencies do not offer cash flow. Therefore if you want to make a profit someone has to offer more cash for it than you. Many sources are also sharing that Bitcoins like cryptocurrencies are not a secure investment option.
Even smart investor like Warren Buffett compared the bitcoins to paper checks. Many people are seeing bitcoins as the currency of the future but they forget that a currency has to be stable. Throughout history, bitcoins like cryptocurrencies have not displayed stability. Their values keep on changing. So the price volatility in the cryptocurrency creates a problem. Moreover, if people believe that the value of the bitcoins gets high in the future they may not spend it today.
How can you buy cryptocurrency?
Some cryptocurrencies like bitcoins are available for purchase. You have to buy it in US dollars. But you can also use bitcoins to purchase it. You have to use a wallet which is an online app where you have to keep your currency. Furthermore, you can keep an account on an exchange where you can transfer real cash to purchase the cryptocurrency.
One of the famous cryptocurrency trading exchange is Coinbase. This is a place where you will be able to create a wallet. Also, you can buy and sell cryptocurrencies. You can find other online brokers too like eToro, Tradestation, Robinhood, Sofi Active Investing and more.
How can you be safe?
If you have decided to buy a cryptocurrency through the ICO here are some of the things you have to know.
- You have to know about the details of the owner of the company.
- Check if any major investors are part of it.
- Are you going to own a stake in the company or just tokens? Think about this question before buying the cryptocurrency.
- Check if the company has a good reputation.
These are the important information you have to know about cryptocurrency. Blockchain technology is one of the most talked-about topics. Therefore, it is good to know about it all.
Also read: The Tips For Trading Bitcoin And Altcoins
Also read: How to Buy TRX with ETH