What is Cryptocurrency? Cryptocurrency has elicited a lot of attention lately prompting many people to feed their curiosity on cryptocurrencies. Defined as a digital currency, Cryptocurrencies work devoid of a central bank and are independent of regulations. Cryptocurrency developed unintentionally out off an effort to decentralized digital cash systems.
Satoshi Nakamoto is considered the pioneer of cryptocurrency as he invented Bitcoin which was the first form of cryptocurrency. Bitcoin was announced in 2008, setting up the pace for the invention of other cryptocurrencies such as Litecoin, Ethereum, Zcash, Dash, Ripple and Monero.
How Do Crypto Currencies Work?
Cryptocurrencies are digital currencies with no physical print. They are commonly referred to as coins and currently, can be converted to major global currencies. To understand cryptocurrencies better, you will need to understand the terms used and how transactions are conducted.
- Address – This is a user address through which transactions are directed to. A new address can be generated with every transaction to protect the identity of those transacting.
- AltCoin – This describes alternative cryptocurrencies to bitcoin.
- Miners – These are cryptocurrency traders who basically but currencies and hold onto them. As soon their prices spike, they sell off these currencies and make a profit.
- Blockchain – This is a ledger used to input all cryptocurrency transactions.
1Bitcoin is equivalent to $8,500. Over the last few years, Bitcoin gained traction on major global currencies attracting investors from all walks of life. Some have made more than 3 times their invested amount within a short time raising questions on how to coin works.
However, 2018 has seen a negative growth in Bitcoin value, currently falling just below $8,500 mark. With investors warning of the volatility of the coin and expecting more losses, bitcoin investors are confident of a turnaround and are holding their coins. Currently, the bitcoin currency has incurred $72billionin losses.
Besides bitcoin, other cryptocurrencies are performing fairly well in the market. If you are keen on investing n cryptocurrencies, you should be aware of the pros and cons of these currencies.
- Global transactions – Cryptocurrency transactions are acceptable globally making it possible to transact internationally with ease.
- Fast transactions – Any transaction registered on the network is fulfilled immediately and completes in a matter of few minutes.
- Limitless – Unlike other currencies with a lot of bureaucracy when it comes to transacting, cryptocurrencies are independent of this. All you have to do is download the software of your preferred currency and begin to trade from your comfort.
- Irreversible transactions – Once a transaction is confirmed, it is impossible to reverse.
- Pseudonymous – It is not possible to identify the real identities of the individuals behind any transaction.
Cryptocurrencies have revolutionized the way of doing business globally. With several cryptocurrencies to choose from, everyone has an opportunity to invest and trade in the coin of their choice. Although experts warn of the volatility of the currencies, it is anticipated that these will become a globally accepted form of currency even in major global and regional transactions.