Simply put, cryptocurrencies are digital money that are designed in a way that is secure and anonymous in some cases. It is closely linked to the Internet, which uses cryptography, which is essentially a process in which readable information is converted into code that cannot be broken so as to record 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, the same has evolved and become digital today, where various elements of computer science and mathematical theory are used to provide communications, money and information online.
The first cryptocurrency
The first cryptocurrency was introduced in 2009 and is still well known around the world. Many more cryptocurrencies have been introduced in the last few years and today you can find so many available on the internet.
How they work
This type of digital currency uses technology that is decentralized to allow different users to make secure payments as well as store money without necessarily using a name or even going through a financial institution. They are managed mainly on a blockchain. Blockchain is a public book that is distributed publicly.
Cryptocurrency units are usually created using a process called digging. This usually involves the use of a computer power supply. By doing so, it solves mathematical problems that can be very complex in generating coins. Consumers are only allowed to buy currencies from brokers and then store them in cryptocurrencies, where they can spend them with great ease.
Cryptocurrencies and the application of blockchain technology are still in their infancy when it comes to financial thinking. More applications may appear in the future, as it is not known what else will be invented. The future of transactions in stocks, bonds and other types of financial assets can very well be traded with the help of cryptocurrency and blockchain technology in the future.
Why use cryptocurrency?
One of the main characteristics of these currencies 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 canceled or forged. This is the biggest reason why you should consider using them.
The fees charged for this type of currency are also quite low and this makes it a very reliable option compared to the conventional currency. Because they are decentralized in nature, they can be accessed by anyone, unlike banks, where accounts are opened only with permission.
Cryptocurrency markets offer a whole new form of money and sometimes the rewards can be great. You can make a very small investment just to find that it has become something great 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 the purchase.