Simply put, cryptocurrency is digital money, designed to be secure and anonymous in some cases. It is closely related to the internet that makes use of cryptography, which is basically a process where readable information is converted into a code that cannot be deciphered in order to charge all transfers and purchases made.
Cryptography has a history dating back to World War II, when there was a need to communicate in the most secure way. Since then, it has evolved and today it has become digitized where different elements of computer science and mathematical theory are being used in order to secure communications, money and information online.
The first cryptocurrency
The first cryptocurrency was introduced in 2009 and is still well known around the world. Since then many more cryptocurrencies have been introduced over the past few years and today you can find so many available on the internet.
How they work
This type of digital currency makes use of decentralized technology to allow different users to make secure payments and also store money without necessarily using a name or even going through a financial institution. They mostly run on a blockchain. A blockchain is a public record that is distributed publicly.
Cryptocurrency units are typically created through a process known as mining. This usually involves using a computer. Doing it this way solves the mathematical problems that can be very complicated in coin generation. Users can just buy the coins from brokers and then store them in crypto wallets where they can spend them very easily.
Cryptocurrencies and the application of blockchain technology are still in their infancy when thought of in financial terms. More uses may emerge in the future as there is no telling what else will be invented. The future of transactions in stocks, bonds and other types of financial assets could be traded with cryptocurrency and blockchain technology in the future.
Why use cryptocurrency?
One of the main features of these coins is the fact that they are secure and offer a level of anonymity that you may not get anywhere else. There is no way a transaction can be reversed or faked. This is by far the main reason why you should consider using them.
The fees charged in this type of currency are also quite low and this makes it a very reliable option compared to conventional currency. Since they are decentralized in nature, anyone can access them, unlike banks where accounts are only opened with authorization.
Cryptocurrency markets offer a new form of cash, and sometimes the rewards can be great. You can make a very small investment only to find that it has turned into something fantastic in a very short period of time. However, it is still important to note that the market can also be volatile and there are risks associated with buying.