Cryptocurrency, or digital currency is an exchange medium. It uses some tools, such as cryptography, for transactions securing and their verification. Cryptography used as well to control the process of creation of new units of some kind of cryptocurrency.
Basically, cryptocurrency is nothing but a software, or an entry in the database that cannot be changed till some conditions are not fulfilled.
In the 90-ies there were attempts to create cryptocurrencies. Flooz, DigiCash and Beenz are those that mover further than the others. Though they did not exist too long, as there were too many cases of fraud, frictions among competitors, and other problems.
The most interesting thing though was that all of them used the TPP approach. It means, behind each digital currency there was a company that was securing ad facilitating the transactions.
Though as failure was followed one after another, the creation of a new cryptocurrency was seen as a loss of time and energy, and money, of course.
In 2009, a programmer or a group of programmers, under a pseudonym Satoshi Nakamoto, registered a website. That was the start of bitcoin history.
At first, it was announced as a Peer-to-Peer Electronic Cash System. It looked like a file sharing system. It did not have any servers, no controlling authority, the system was absolutely decentralized.
The biggest issue that the system had to solve is the option of double-spending. Traditionally, the Trusted Third Party had to solve it, it is a server that records all transactions and basically, controls the system.
Though bitcoin does it via the Blockchain. The Blockchain is a public ledger for all transactions that are happening in the network. Everybody can get access to it and see the transactions.
A transaction is the data of the sender`s and the recipient`s wallet addresses and the amount of the transferred coins. Then, this data is signed off by a private key of the sender. The transaction is available in the network, but first, it has to be confirmed.
Within the network, it can be done by miners only. They make the transaction as legitimate and spread it in the blockchain. Transactions are also recorded in the database. After confirmation, the transaction becomes irreversible, the miner gets his reward and a fee.
Cryptocurrency is called like this because all is ensured with cryptography.
All the above mentioned makes all third parties not needed.
With Cryptocurrency I Can…
Just some years ago it was impossible to find somebody who would sell for crypto coins. Now, the situation has changed.
There are plenty of companies willing to trade and use cryptocurrency as a payment method. There are many traders that are adopting cryptocurrency for their work. You can use bitcoin to pay for some hotels, for food in some restaurants, etc.
Even though now we can speak just about the main cryptocurrencies, but the trend is evident. The bigger the company is the more cryptocurrencies it accepts. For example, Apple, uses now more than 10 cryptocurrencies.
People are keen on investing in cryptocurrencies nowadays. There are many stories about bitcoin millionaires, those people who have bought several coins when they have appeared, and now, they own millions. Bitcoin, for example, just within some months reached value from a couple of hundreds to almost 15,000 USD per coin.
One more currency that is reliable for investing is Ethereum. Since the start of 2016, its price grew for 2,700 %. The investment profit is evident.
Though you shall remember that investing in cryptocurrencies is risky as well. They are characterized by a very high volatility level. Moreover, they are not regulated. This is an advantage but an additional risk as well. Any cryptocurrency exchange can be hacked, which is also an additional risk.
The most popular, hence, the best cryptocurrency for investing is bitcoin. Though, as now it is very expensive, you may consider some other, also very good but cheaper options, like Kraken, BitFinex, Litecoin, Ripple, etc. Anyway, before investing in any cryptocurrency, check its price movement at least during some months, if there were no sudden raises and sudden drops. Make sure you are not investing your money in a bubble.
After buying a coin, or coins, you have to keep them somewhere. That can be an online or an offline wallet, in an exchange or in your hard-drive. Offline could be even safe, as any cryptocurrency exchange can be hacked.
With any investment, you would follow its price movement. In case with cryptocurrency, you shall be even more attentive than with any other investment because of high volatility.
Mines are the most important in the network of cryptocurrency. Mining is an investment as well, but here, the principle is different.
Miners can be compared with bookkeepers. They solve cryptographic puzzles to confirm a transaction and record it in the blockchain.
One of the most interesting things is that the puzzles are becoming more and more complicated, as the number of miners is growing. speaking simply, the more people are trying to mine, the more complicated the process becomes.
Many people became rich from bitcoin. Earlier, mining was possible just with one computer. Now though, to mine, you shall buy industry hardware. That is not cheap, plus, add huge bills for electricity, as it consumes lots of energy.
Nowadays, the best cryptocurrencies are considered to be Litecoin, Dogecoins and Feathercions, especially if we speak about investors-beginners. Mining Litecoin, for example, you can make up to 10 dollars per day, and this is just with a normal consumer hardware. This fact, that huge initial investments are not needed, makes less popular currencies more attractive.
The more computing power the miner accumulates, the more chances he gets to solve the crypto-puzzle. If he manages to solve it, he gets a transaction fee and a reward – bitcoins.
If you are a businessman and you are in search for customers, then the good solution for you can be accepting payments in crypto-coins.
The interest in cryptocurrencies will be growing, more and more companies accept them as payment methods, they are becoming legalized in more and more countries, hence, this may be the chance to grow your business.
For that, make sure you put a sign of the cryptocurrency by cash register in your website. then, you will be able to accept payments through hardware terminal or even wallet addresses via QR coding.
In some countries, like the USA, Bitcoin and many other cryptocurrencies are regarded as a convertible currency, it means, it is equal to gold, cash, gift cards.
Are Cryptocurrencies Legal?
Cryptocurrencies are becoming more popular, their prices are growing and they are legalized in more and more countries.
Legalizing them, moreover, regulating them is rather complicated as they haven’t been created for that. Though governments are making their best efforts to keep cryptocurrencies under control.
With bitcoin introduction, a completely new concept of money was created. Decentralized and uncontrolled money, which were perceived as a threat to traditional financial system. Money that doesn’t exist in physical form.
All that caused many concerns of regulators from all the world, as it is very helpful for illegal activities, such as making payments for drugs, terrorism funding. And what about money laundering and tax evasion? Cryptocurrency looks like perfect for that.
For now, bitcoin is illegal just in some countries, such as Bangladesh, Ecuador, Bolivia, Kyrgyzstan, Vietnam. In other countries, the regulation may vary, though miners and investors can be calm: their activities are legal.
Storing of Crypto-coins
Cryptocurrency is not a common currency even in the term of storing it. Here, you deal with an absolutely different approach, you do not store the cryptocurrency itself but the private key for transactions.
You can select among some kinds of cryptocurrency wallets. If your main concern is the safety of your crypto-coins, you better store them on paper or in a hardware wallet. There are online and offline wallets, some believe that offline wallets are safer than online ones, as any cryptocurrency exchange can be hacked and your digital money can be stolen.
Now, you can buy bitcoin in many places. There are about 2,000 bitcoin AMTs in more than 58 countries. then, bitcoin can be bought using gift cards, in face-to-face trade, investment trusts. Those are just a few to be named.
If you prefer less popular cryptocurrencies, then you have to check properly where to get them. In most cases, it is either mining or face-to-face trading.
What Awaits Cryptocurrency in Future?
There are different opinions expressed by different specialists. Some, like Bill Gates, believe that bitcoin exists just because “it shows how cheap it can be”. The advantages of bitcoin is that you can use it wherever you are. Though making big transactions I bitcoin is unsafe and inconvenient.
Richard Branson, the Virgin Galactic founder, believes, that as long as it works, it has a right to exist. There is though big industry about this cryptocurrency, some people earn millions while other are losing all they have.
Al Gore, former US president, believes that decentralized nature of bitcoin replaces the controlling function of government, which, as he claims, is really good.
Peter Thiel, Paypal co-founder, shares, that the Paypal idea was similar to bitcoin idea. Though, they have failed in that. They have created just a payment system, a very popular one, but still, one of many. While bitcoin has moved to a new level of money idea.