What is cryptocurrency?07 Dec, 2019 Judy Rubio
A cryptocurrency is a digital form of currency that is created and transmitted using cryptographic methods. It is based on blockchain technology. It has an official rate, but the main difference from real money is that the cryptocurrency exists only in digital form. And therefore, it is out of reach of the Central Bank.
The history of cryptography as a method of confidential payments begins back in 1990. But the term "cryptocurrency" began to be officially used only in 2009. Then there was bitcoin, created by Satoshi Nakamoto, a mysterious developer or even a group of programmers who remain undiscovered.
At the moment, there are more than 2556 different cryptocurrencies on the market, and their total capitalization is about $261 billion.
- The use of cryptocurrencies is anonymous. Since the cryptocurrency wallet ID is not publically linked to a certain real person, the user can be sure that his data is safe. The circulation of cryptocurrencies is very difficult to track, so in some ways, they are similar to cash.
- Cryptocurrencies are trusted. The stability and reliability of cryptocurrencies are comparable to world currencies, therefore, the liquidity of this means of payment is quite high. Besides, digital money has a good chance to become an official asset - all countries are actively working on crypto-laws.
- Investments in cryptocurrencies can bring you money. Of course, for this, you will need to acquire knowledge of the market and start-up capital. Invest wisely, observing risk management and learning about token information and news background. Trading skills will also be useful - most of the standard exchange patterns have already migrated to the crypto market.
- Relative stability. When it comes to money, no doubts, there are risks in any business. Bitcoin, despite its considerable volatility, remains more stable than the state currencies of many countries, for example, Venezuela.
What types of cryptocurrencies exist?
The market is represented by bitcoin and altcoins (alternative cryptocurrencies). Here are a few coins from the current top 5.
Ethereum. The main difference from bitcoin is that its quantity is not limited. It accounts for about 18% of the cryptocurrency market, and the value of all issued Ethereum is $26 billion. It is often used to invest in other crypto-projects.
Litecoin. The main feature is the speed of transactions, which is 4 times higher than bitcoin. This cryptocurrency occupies only 2% of the market.
Ripple is a cryptocurrency with a high transaction rate, its technology already starts to be used in the banking sector.
How to get cryptocurrency?
The main ways to get cryptocurrency are trading and mining. Trading allows you to buy the needed tokens on the exchange and trade them: buy on the decline, sell on the increase. Thus, getting returns on your investment by following market trends.
Mining is a more technical process, it allows you to get a guaranteed cryptocurrency as a reward for helping in the work of its blockchain, but requires serious investments. One needs at least a mining farm (used for mining coins) and a source of cheap energy to power it.
However, the easiest way to get a coin is simply buy it in the exchanger or on localbitcoins.com from other owners.
Today, digital assets are on the rise. Major global companies develop own cryptocurrencies, and brands accept it as a form of payment, for example, Amazon, eBay, PayPal and many others. Even though the concept of digital money is still relatively new, in the nearest time we will be able to use bitcoin or another coin even more often than usual dollars.
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