Up until recently, cryptocurrencies have been all the rave, especially with Bitcoin’s continuous price pattern. However, for those unfamiliar, terms such as digital currency, Bitcoin or cryptocurrency may seem like technical language. This should, however, not be the case. Cryptocurrency is already taking over daily transactions with an increasing number of people already using them for exchange. but, understanding the history of cryptocurrency will help you secure legible information to stay ahead of others.
As you can tell, cryptocurrency is made up of two words- crypto for “cryptography” and currency for money. The cryptography part is especially crucial for consideration since it is the technology applied to keep information secure and safe. This explains the meaning that sums up cryptocurrency- a digital asset that has been designed to be used as a medium of exchange with individual records stored in the digital ledger using strong cryptography.
One of the critical traits of cryptocurrency is the use of decentralized technology to allow for different secure payments. In short, the blockchain technology eliminates the need to use your name or even an intermediary financial institution. It’s like having a secure bank account with physical cash in it. However, in this case, its all-digital- the money, the “bank” (blockchain), and transactions.
How Cryptocurrency Works
Cryptocurrency is created using a sophisticated process known as mining. The “crypto-mining” process involves using modern software and hardware to solve complex mathematical problems. This will often include using a lot of computer power and electricity to break the blockchain’s hash algorithm.
Breaking the blockchain’s cryptography allows for the reward or generation of coins to the user.
Apart from the mining, purchasing cryptocurrencies from brokers is the more natural way for crypto users to get a hold of digital currencies.
Bitcoin as the First Cryptocurrency
With the decentralized consensus technology(Blockchain) envisioned in 2008, Bitcoin would follow as the premier cryptocurrency. It was first introduced by pseudonym cryptographer(s) Satoshi Nakamoto as a global peer-to-peer electronic payment system to allow anonymous transactions.
The cryptocurrency was later deployed on the blockchain from 2009 with the same year seeing its first trading. From Jan 2009- Mar 2010, Bitcoin would trade-off for basically nothing but later gained traction to have the value of a few dollars for the first years.
Now since the release of Bitcoin’s Whitepaper, the open-source technology allowed for the creation of alternative blockchains. These new blockchains paved the way for the development of alternative cryptocurrencies known as “Altcoins,” which now stand at over 3,000 coins. They do serve the same purpose as Bitcoin, although there are a number of cryptocurrencies that have other uses. Some of the popular altcoins include Ethereum(ETH), Litecoin(LTC), Ripple(XRP) and Bitcoin Cash(BCH)
Uses of Cryptocurrency
Although still in its infant stages, cryptocurrency technology has found a variety of compelling use cases. Here are some of the uses providing reasons for cryptocurrency use.
Much of the hype with cryptocurrency lies in the fact that you can send and receive payments at high speed and low cost.
The rise of digital token-based fundraising has made investing in new startup ventures much easier. This means enterprises get the much-needed seed capital through the ICO opportunities.
Individuals making financial money transfers have the opportunity to be privacy-centric with the use of digital currencies. You can send large sums of money and receive the same without any delay or bureaucracy.
So now that you have an understanding of what cryptocurrency is, what do you think of investing? Are they worth it? Do they have a future outlook, or its all hype? Let me know.