You must have read many definitions of cryptocurrency online, but those definitions are difficult to crack for a beginner. The purpose of this article is to provide you with information that can be understood by those who have no idea about the cryptocurrency market. Therefore, we will keep things easy, simple and interesting!
What is Cryptocurrency?
Cryptocurrency or digital money is a “medium of trade” similar to regular money such as USD. It uses cryptography to track and verify transfers and purchases. Cryptography is the process that converts readable information into codes that are impossible to crack.
There are many cryptocurrencies in the market but the most known ones are;
- Bitcoin - the first of its kind and the most famous
The concept seems intriguing and cryptocurrency’s growing popularity has created great interest in the masses. You must have been told by many of your peers to “get into the game and take advantage of its increasing value”. But before you decide to dabble in the market there are a few facts you must know about cryptocurrencies.
The concept is a bit complex than you think
Many beginners fail to grasp the mining process and how to get maximum rewards from it and this is just one of the many things you need to know about digital money. It is quite impossible to get into the market and succeed without the proper knowledge of what cryptocurrency is and how it works. You need to understand the entire process and know where the profits lie.
The owner of Bitcoin remains anonymous
Even though the creation of bitcoin is credited to Satoshi Nakamoto but the true identity of the owner is still a mystery. You can say that Bitcoin, to this day, has no known owner. The interesting thing is that even Nakamoto (whoever he/she is) has not come forward to claim the code’s ownership.
There are over 1,500 cryptocurrencies
It is not uncommon for beginners to think that cryptocurrency is synonymous with bitcoin. You will be surprised to know that there are about 1,500 or more cryptocurrencies available; however, bitcoin was the first cryptocurrency traded and to this day remains the most popular and powerful. It holds more than 50% of the current cryptocurrency market.
Cryptocurrency is extremely volatile
The value of cryptocurrency fluctuates faster than your conventional stocks. Take bitcoin as an example; back in 2009, bitcoin was valued at $0.003; the value shot up to $17900 by December last year and these days it is hovering around $6000. Bitcoin went through at least four corrections of 20% within the time period of six months last year.
Bitcoin is not infinite
You may think since it is produced digitally so we may never be short on bitcoin; this concept is absolutely wrong. Mining is done according to a pre-defined schedule. There are only 21 million units of bitcoins out there and by the year 2140, all bitcoins are going to be mined.
The real value of cryptocurrency is in the blockchain
The blockchain is a decentralized digital ledger that keeps a record of all payments and transactions. The records are publically kept and maintained in a chronological order. This means, even though the identity of people involved in a transaction remains hidden, everyone can see how much value was moved.
Decentralization makes cryptocurrency safe
Blockchain technology does not have a central hub for storing information; it is decentralized. Why does decentralization make it secure? There is no central point that can be accessed to steal all the information related to cryptocurrency. The information is distributed among hard drives and servers across the globe, which means even if one of these locations came under cyber-attack the damage would be minimal and would not disable the entire system.
No Wallet, no currency
Rules are simple, you want your money? You keep your wallet safe! In case you lose access to your wallet, you lose access to your money. Since there is no central point that generates codes, therefore, the codes cannot be regenerated. So if you lose your code, you cannot get another one.
FBI believes in bitcoins
A few years ago FBI shut down the online drug market Silk Road and seized bitcoins that belonged to the operators of the marketplace. And today they are among the biggest wallets in the world, which is believed to be worth $120 million.
There are more than 600 wallets
In case you were wondering how popular cryptocurrency is, there are more than 600 wallets active across the globe. To make the process of transactions easier, these wallets can be linked to your credit cards.
With the cryptocurrency market on the rise, investors and businesses are closely watching the progress. As new coins surface, the market will expand and present many new opportunities. It will not be wrong to say, cryptocurrency has the potential to change the finance industry and how it operates today.