Although cryptocurrencies have continued to gain popularity worldwide, many people still have no idea what digital coins are and how they work. Despite all the hype, it is crucial to keep in mind that digital coins are not as regulated or as stable as standard currencies, so the more informed we are, the better equipped we will be to deal with them. Here is all the information you need to get acquainted with cryptocurrency.
Cryptocurrency is a digital asset, or digital currency that uses a strong computerized database using cryptography (or encryption), to create money, verify, and transfer different transactions. Contrary to regular currencies, digital coins don’t typically exist in the physical form, and are not as regulated, since they are not backed by a specific bank. Bitcoin is currently the most popular cryptocurrency and is thought to be able to eventually replace the US dollar along with other major currencies in the future.
In order to “mine” digital coins, one simply needs the internet and a specific advanced hardware that can be bought online, which is made for mining cryptocurrencies. In simple terms, mining means the compilation of transactions into blocks and solving a really difficult computer problem. Several miners attempt to solve this puzzle simultaneously and the first person to do so produces cryptocurrencies. The process is very quick, since mining a large number of coins can take a while.
Transactions made with cryptocurrency typically happen through blockchain, which is essentially the backbone of all digital coins. Blockchain is a decentralized and digitized block of chains that are stored in a public database (or chain). The blockchain marks all recent transactions and organizes and records them in chronological order. This allows each person to track their cryptocurrency transactions without having to keep a record of them through a specific central system. That way, digital coin transactions can be anonymous while still being secure.
There are many benefits to cryptocurrencies, which is why the technology has gained so much popularity in the last couple of years. First of all digital coin transactions can be completed much faster than a regular one and don’t come with bulky fees like platforms such as PayPal do. Thirdly, the digital coin network cannot be artificially inflated like stocks can, since no one has control of over 50% of the computing power of cryptocurrencies.
Even though there certainly are many benefits to working with digital coins, cryptocurrencies also have its disadvantages. Currently, there are a number of inconsistencies in the digital world, and unfortunately, bank-backed currencies are still more reliable. While bitcoin started with a value of less than a penny per bitcoin unit, it quickly reached over $19,000 by 2017. However, by 2018, the coin was worth $7,000 a unit. When it comes to the legal field, there are several questions in terms of how much cryptocurrencies subscribe to the law.
Bitcoin is currently the most popular digital coin worldwide and has rapidly come to prominence since the beginning of the 2010s. The coin was released to the public in 2009 and was created by an anonymous inventor, known as Satoshi Nakamoto. When Nakamoto initially came up with the concept, he intended that bitcoin would be an innovative electronic cash system that would use a peer-to-peer network with the intent of preventing double-spending.
The most simple and popular way to buy and sell digital coins is with the use of a website that carries digital wallets. This website allows anyone to use either US Dollars or another currency to obtain Bitcoin. These websites also allow people to sell cryptocurrencies completely anonymously for dollars or other currencies. There are many websites in the market that offer these services for free.
Though there are several options for secure websites, the most popular one at the moment is Coinbase. Coinbase is described as the most trusted platform to buy and sell bitcoins and other currencies, and the easiest and most user-friendly one. If you do decide to give it a go into the digital currency world, it is important to always verify the reliability of the different websites and platforms, as some people have reported having been ripped off by sketchy payment services.