A cryptocurrency is a form of digital currency, which is highly secure and in many instances, untraceable to the owner. These cryptocurrencies are not manipulated by another currency, which makes it a decentralized market.
Cryptocurrencies are associated with the use of cryptography, which converts comprehensible information into an uncrackable code. This code is used to access funds in a cryptocurrency wallet, send, receive and request money from anyone.
The first ever cryptocurrency was created in 2009. Bitcoin remains one of the best cryptocurrencies amongst its peers.
In the past decade, there has been a massive proliferation of cryptocurrencies. Today, there are over 900 different little currencies on the Internet.
In this article, we will discuss all you need to know about cryptocurrencies. This article will provide an overview of the usage of cryptocurrencies and the types of cryptocurrencies available today.
How do cryptocurrencies work?
With a decentralized system, cryptocurrencies enable users to make payments, store and receive money without having to use their name. All the transactions recorded on the blockchain technology are completely anonymous and do not have to go through a bank.
Even the creator of Bitcoin, Satoshi Nakamoto can’t be identified until today. A blockchain is a distributed public ledger, which has a complete transaction record and is accessible by all currency holders.
Our guide provides you more insight into how you can make the most out of the cryptocurrency market today.
What are the features of the cryptocurrency?
Once you have confirmed your transaction, you cannot reverse it. Anybody else who tries to reverse the transaction will not be able to do so.
No one including the government has control over your transaction. However, this also means that you are exposed to the risk of fraud and have no way of gaining access to your money.
No transactions or accounts are directly linked to any real-world identities. You will send and receive Bitcoins using an address that will be provided by your cryptocurrency wallet platform.
It is possible to analyze the transaction flow, but you cannot connect the real world identity of the users to the address.
Fast and convenient
No matter which country you are in, the transaction is done using cryptocurrencies are very fast. Everything can be confirmed within a few minutes, and you can send these cryptocurrencies to someone on the other side of the world as well.
Cryptocurrency funds are secured in a public key cryptography system. Only the owner of the private key can send any cryptocurrency.
It is virtually impossible to break this key, which makes cryptocurrencyan attractive investing option.
What iscryptocurrency commonly used for?
Bitcoins are used to make payments of any value without any transaction fees. Bitcoin function using the blockchain technology, which is a decentralized ledger, run by powerful computers.
Many people see cryptocurrencies as a way to break free from government control. Different from a regular currency which is subject to bank charges for any transactions, cryptocurrencies such as Bitcoin provide a private and secure alternative to financial transactions.
Since Bitcoin is highly anonymous, it is also an ideal payment choice for illegal activities or purchases. With over 21 million Bitcoins that are available for mining in the market, financial transactions are made simpler and anonymous through a decentralized market. There are many businesses already accepting Bitcoins as a method of payment.
While the use of Bitcoin is becoming widespread, there are still a large number of people who are unaware of the cryptocurrencies. For it to become more popular, people need to be educated about the advantages of using cryptocurrencies.
It will take some time for the world to accept cryptocurrencies as the usage of digital currency cannot fully substitute the usage of physical currencies.
What are the common types of cryptocurrencies?
This is one of the most common types of cryptocurrency. It is the most traded one amongst its counterparts, and Satoshi Nakamoto developed it in 2009.
He helped create the blockchain for Bitcoin. As of July 2017, this cryptocurrency has a market capitalization of around $45 billion.
This cryptocurrencywas created in 2015. It is the second most popular and valuable cryptocurrency after the Bitcoin. As of July 2017, it has a market capitalization of $18 billion. Since its creation, Ethereum has gone through a difficult journey.
After a major hacking into 2016, this cryptocurrencyis split into two different currencies. Its price went from a high $400 to as low as $0.10.
This is another distributed ledger system, which was created in 2013. Ripple can be used to track different types of transactions. The system is used by banks and has a market capitalization of around $6.3 billion.
This is another form of currency which is similar to Bitcoin. However, it has come up with innovative services such as faster payments and processes which enables its users to engage in more transactions. It has a market value of around $2.1 billion.
Why should you use cryptocurrencies?
Perhaps one of the best features of cryptocurrencies is the complete anonymity involved with the transactions. The low fees make it more attractive compared to conventional currenciestraded on the currency exchange market.
The decentralized nature of a cryptocurrency means that it is accessible to everyone. Meanwhile, banks can be specific about who they are allowed to transact through the system.
Cryptocurrencies are also a highly lucrative opportunity for people who know how to take advantage of the market. If you want to know how you can make money with cryptocurrencies, check out our comprehensive guide which will teach you the A-Z about cryptocurrency trading. With cryptocurrency, you can easily quadruple your investment overnight.
One thing to keep in mind is that the market is highly volatile and you should consider the risks of getting into the market before you buy any cryptocurrencies. The anonymity of cryptocurrenciesis associated with illegal activity, especially in the dark web.