What is cryptocurrency?

What Is Cryptocurrency?

What Is Cryptocurrency?

Lately, there is a lot of talking about various cryptocurrencies and their growing importance on the global market. Although the technology that backs them up is more than a decade old, cryptocurrencies have seen immense breakthrough to mainstream traders and investors only in the past couple of years. Surely you have heard about Bitcoin, a virtual currency that doesn’t need a centralized authority like government or bank to approve and record transactions, because all of that is done automatically. There is a lot of other cryptocurrencies bearing more or less similarities to Bitcoin in existence today. The crypto marketplace is truly vivid with its current cap surpassing 150 billion dollars, increasing more than ten times in a single year! Now you see why more and more traders are entering the market, since cryptocurrencies are in its early stage and profits are almost guaranteed. Want to know what is cryptocurrency and how can you invest in one? Read our introductory article and learn the basics of trading crypto!

What is cryptocurrency? | The inception

The first effort in creating cryptocurrency happened back in 1998, when the system of so-called “b-money” was described. It was to be a form of electronic cash system distributed between anonymous parties. However, despite the promising idea, the project did not go into major development. However, in the very same year, American computer scientist and cryptographer Nick Szabo created what will be a predecessor of Bitcoin, called Bit Gold. Although the final product was never really implemented, it is consisted of some key elements found in the Bitcoin core architecture as well. For instance, Bit Gold has introduced the proof-of-work concept, determining the computing power needed to solve series of complex cryptographic puzzles. The participant of the network that succeeds in solving the cryptographic problem creates a block, a list of approved transactions in the given timeframe. That block is added to the immutable ledger called blockchain, and the creator of the block earns a revenue in a form of variable amount of cryptocurrency.

The same proof-of-work scheme is a key principle of Bitcoin network, designed in 2008 as a result of global economy crisis. One man or a group of people hidden behind the name Satoshi Nakamoto wanted to develop a truly decentralized peer-to-peer electronic cash system. Backed by lack of faith in governmental institutions and stability of fiat currencies in general, Bitcoin rose to prominence in the coming years due to its decentralized nature and independence of institutions. Every participant of the network has a copy of a whole ledger with all transactions made from the very inception of Bitcoin, giving the currency much-needed stability and preventing attacks that could make changes to the blockchain. This was the beginning of a vivid market we have today. Now, let’s see how one can join in!

What is cryptocurrency? | Entering the market

So you’ve seen the potential behind the concept of cryptocurrency and now you want to get involved. But how do you do it? Well, there are several ways – you can start mining them, speculate their price fluctuations or buy them, either for day trading or holding long term. Buying cryptocurrencies is the most popular way, since the growing number of exchanges give you a plethora of trading opportunities. These exchanges don’t differ from the traditional ones, except they only allow you to buy and sell cryptocurrencies and exchange them for several supported fiat currencies.

The first step in trading cryptocurrencies is choosing your desired exchange. It is advised to choose among most popular ones such as Coinbase, Bittrex or Binance, since they incorporate more security measures and are less vulnerable to cyber-attacks. Upon registering, you’ll be asked to provide some personal information including documents for identity checkups, as well as some payment information for deposits. Be sure to enable two-factor authentication option, which gives an additional layer of security to your funds. Now, scroll through fiat currency pairs (these are usually limited to top 10 currencies), choose the one you want, place an order and that’s it! You’ve become an owner of your first cryptocurrency. Now you can keep it in your personal or exchange wallet, sell it, swap it for others or spend it wherever it’s recognized as a legal payment system. Keep on reading and learn why you should be doing this right now!

What is cryptocurrency? | Why join?

There are many advantages that cryptocurrencies have comparing to traditional, government-backed currencies. Due to their encryption and digital form, cryptocurrencies can’t be counterfeited or lost, since all transactions with input and output addresses are written on the blockchain and distributed to all network participants. They eliminate the need for a mediator such as bank, since all transactions are automatically executed. Transaction fees are significantly lower than with traditional methods, and the speed of execution is higher as well. Also, due to decentralized nature, cryptocurrencies are maintained through peer-to-peer protocol involving all participants, rendering them immune to any possible government manipulations. And finally, since you can send as much crypto to as much people you want, cryptocurrencies are creating a global marketplace without any middlemen. This is only the beginning of the revolution, so get on board while it’s still not too late!

What is cryptocurrency? | Conclusion

After reading our introductory article, you now have a basic knowledge about the concept of cryptocurrency. Designed as the people’s response to manipulative economical operations done by global corporations, which resulted with economy crisis, it will truly change the world as we know it. Market cap is growing each day, as more and more people tend to realize the major advantages of cryptocurrencies. We will surely see much more innovations here, so it’s safe to say that we are currently at the beginning of something truly special. Therefore, we suggest you to roam around our website and go through our library of articles describing other key features of trading cryptocurrencies. That way you’ll educate yourself properly, which will surely result in high incomes once you decide to enter the market. Good luck in investing in your prosperous future!

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Author: Ben Prescott

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