The word cryptocurrency is on everyone’s mind right now. It has managed to create an absolute revolution which began when the BITCOIN was revealed to the world. Since then, the hype surrounding cryptocurrencies has increased and more and more people are flocking to invest in the so-called Digital Currency of the Future. Certain cryptocurrency investment mechanism like ICOs to have sprouted over the years. For more details on the different types of ICOs in the market today.
So, what exactly is Crypto Currency and how did it come into existence? These are some of the questions which this article will help you answer.
What Is Crypto Currency?
A cryptocurrency is nothing but a digital form of currency which has been specifically designed to work as a means of monetary exchange. It makes use of cryptographic technology to secure and ensure a verification of all the transactions. They represent limited entries in a database which no one is entitled to make changes to unless certain specific conditions are fulfilled.
What’s the background surrounding Crypto Currencies?
There have been multiple attempts made by certain entities to come up with a digital type of currency as early as in the 1990s. Few prominent systems like Floozy, Benz and Digi Cash were supposed to be gamechangers in the market but their emergence resulted in failure instead. Fraud, failure, etc. are few of the major reasons responsible for this failure.
However, a trusted Third-party approach was adopted by these concepts. This meant that the firms behind the currencies verified and ensure that the transactions went ahead smoothly. However, as these companies failed miserably, the digital currencies too sank with them.
Later in 2009 sometime, an anonymous programmer, or let’s say an army of programmers, disguised under the name “Satoshi Nakamoto" introduced the BITCOIN to the world. Its makers described the cryptocurrency as a P2P type of digital currency. It is not controlled by any central, governing authority or financial body. It is supposed to remain anonymous and decentralized. There was no sort of servers involved.
One of the most prominent hurdles which any payment system must overcome is that which involves double spending. It is a scam method to force the user to spend the same money twice. A possible solution to this was a centralized third-party server which maintained fair records of all the transactions happening. However, this meant that your money was under the supervisions of someone else and hence the concept of decentralized digital currency was wiped out.
Crypto Currencies and Blockchain Technology
So, what powered the BITCOIN? It was none other than Blockchain technology. Blockchain refers to a ledger of all transactions which take place over the network and is then made available to everyone. Every transaction is in a file format which is supposed to contain the details of the sender’s and receiver’s wallet addresses. In simple words, it’s all cryptography. Every transaction can be broadcasted over a network, but only with prior permission.
Within a cryptocurrency network, only its creators also called miners can confirm these transactions by coming up with a solution to a unique cryptographic puzzle. They take a transaction, mark it as legitimate and spread it across the local cryptographic network. Once the entire transaction has been confirmed, it becomes irreversible and on top of that, the miner receives a reward along with a certain transaction fee.
If even one single node or balance in disagreed upon, the entire system will collapse. However, there are many precautionary measures in place to prevent such a collapse to take place.
Cryptocurrencies are based on a consensus keeping process which is backed by strong cryptographic methodologies. Hence, terms such as a blind trust or third parties do not exist in the world of cryptocurrencies.
What All Can be done with a Crypto Currency Unit?
Purchase goods and services
Back in its early days, the BITCOIN had to face a problem of acceptance since there were no merchants who accepted payment in the form of cryptocurrency. However, that’s not the case today.
There are a host of merchants who accept crypt currencies as payments in exchange for certain goods and services. Daily utility places like restaurants, supermarkets, petrol stations, etc. too are now beginning to accept BITCOIN as a form of payment. Cryptocurrencies can be used to make payments at hotels, to purchase jewellery, buy apps, and even pay for your college tuition fee.
However, certain other cryptocurrencies like the LiteCoin, XRP, etc. are still not accepted as widely as the BITCOIN. Even Apple has boarded the cryptocurrency train by accepting more than 10 different types of cryptocurrency units as a form of payment on the App Store.
You can any day exchange your cryptocurrency units for a BITCOIN. To add to the excitement, there are certain websites who are selling Gift Cards whose value is represented in cryptocurrency units. It can’t get any crazier than that now, can it?
Invest in Cryptocurrency
It’s safe to say that Crypto Currencies today represent the hottest forms of investment. People have become millionaires overnight by investing rather small sums of money in purchasing certain Crypto Currency units and then watching their investment grow by the thousands of percent. BITCOIN is the most sought-after cryptocurrency as of today. Just two years ago, a single BTC unit was valued at a few hundred dollars. Right now, it's operating at close to USD 8000 per single unit. That's some jump in value.
In second place comes Ethereum which has recorded the most growth which any cryptocurrency has ever recorded so far. Since 2016 alone, it has managed to rake in a growing percentage of almost 2700 percent! Since the early 2010s, the overall cumulative market cap of all cryptocurrencies combined has grown by a mind-boggling 10,000 percent.
Despite the rise in their value, they are very unpredictable. They have no growth pattern and hence, their value cannot be forecasted. They hence represent a very risky form of investment despite the very high returns on offer.
Another problem with Crypto Currency investment is that it is highly unpredictable when it can be outlawed in any country and not just that, there are high chances that an exchange could get hacked and you end up losing all your investments.
While the BITCOIN is part of almost every cryptocurrency exchange out there, it is not so easy to acquire other forms of crypto units. But, times are changing and certain international exchanges have started dealing in a wide variety of cryptocurrency units such as Bitcoin, Monero, etc. amongst a host of others. To gain more insight into the different types of crypto currency units out there in the market today.
Once you purchase any crypto unit at an exchange, you will then have to store it in a digital wallet which is offered as a service by most prominent exchanges around the world. A wallet represents a safe and viable, method of storing your Crypto Currency units thereby giving you utmost control over your digital assets.
Accept Crypto Currencies as a Form of Payment (For Business Owners)
In case you are a business owner and wish to make your payment system future proof, there is nothing like capering cryptocurrencies as a form of payment. The overall interest being shown in cryptocurrencies is ever increasing and the number of people in possession of them is in the millions now. There are many crypto ATMs too being set up in various parts of the world.
In certain countries, BITCOIN has been recognized as a cash convertible asset which men’s that accepting the BITCOIN as a payment is the same as that of accepting cash. There is absolutely nothing to lose.
Future of Crypto Currencies
While the future of cryptocurrencies cannot be predicted as of now. Experts have predicted that it has the capability to replace national currencies in the future. The most appealing factor involved is in the way they are systemized. The system is completely digitalised.
Hence, despite the uncertainness, invest in cryptocurrencies today to be a part of the future!