Simply put, cryptocurrency is digital money, which is designed in a way that is secure and anonymous in some cases. It is closely associated with the internet that makes use of cryptography, which is basically a process where read information is converted into a code that cannot be cracked to attack all the 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 that time, an evolution of the same has happened and it has become digitized today where various elements of computer science and mathematical theory are used for purposes of securing communications, money and information online.
The first cryptocurrency
The first cryptocurrency was introduced in 2009 and is still known worldwide. Since then, many more cryptocurrencies have been introduced in recent years and today you can find many available on the Internet.
How they work
This type of digital currency makes use of technology that is decentralized to allow different users to make payments that are safe and also, to store money without necessarily using a name or even going through a financial institution. They are mainly managed on a blockchain. A blockchain is a public ledger that is publicly distributed.
Cryptocurrency units are usually created using a process called mining. This usually involves the use of computer power. Doing this way solves the math problems that can be very complicated in the generation of coins. Users are only allowed to buy currencies from brokers and then store them in crypto wallets where they can spend with great ease.
Cryptocurrencies and the application of blockchain technology are still in the infant stages when you think in financial terms. More uses may emerge in the future because there is no telling what will be invented. The future of transactions on shares, bonds and other types of financial assets could be traded well 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 safe and that they offer a level of anonymity that you cannot get anywhere else. There is no way that a transaction can be reversed or forged. This is by far the biggest reason why you should consider using it.
The fees paid on 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, they can be accessed by anyone unlike banks where accounts are opened only by 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 developed into something big in a short time. However, it is still important to note that the market can be too volatile, and there are risks that are associated with the purchase.