Cryptocurrency is a digital currency that works as a virtual asset and is designed to be secure and, in most cases, anonymous. Cryptocurrency is used as a medium of exchange, while using encryption, in online transactions.
This virtual currency which gets its name from being is associated with the internet that uses cryptography, which is the process of converting legible information into an untraceable code, in order to track purchases.
The first popular cryptocurrency was Bitcoin, which came into being in 2009. Since then, there have been quite a lot of different cryptocurrencies. It is estimated that there are about 1000 different cryptocurrencies on the internet. Just like with the stock market, cryptocurrencies are prone to fluctuations in value as it uses decentralized control. For instance, the value of Bitcoin skyrocketed as high as $20,000 but recently crashed to $8000.
Creation of Cryptocurrency
Unlike centralized banking, decentralized cryptocurrency is produced by the entire cryptocurrency system. It can be built by those who understand coding by building upon existing codes, as most codes are open sources and freely available on platforms like GitHub. Developers can choose algorithms to develop to create their altcoins. However, the true value of altcoins is determined by their adoption and ability to gain traction.
Trading and Mining Cryptocurrency
In order to trade cryptocurrency, you need to choose cryptocurrency wallet and an exchange to trade on. The cryptocurrency wallet stores “keys” or “addresses” which can be used to receive or spend the cryptocurrency.
Mining cryptocurrency is one way to invest in this virtual currency. Mining validates transactions and miners receive new cryptocurrency as a reward.
Safety and anonymity
Rather than being anonymous, cryptocurrency is pseudonymous. What this implies in simple terms is that the currency is not tied to specific person or owner and are instead known by specific keys or addresses. Therefore, as a safety measure, cryptocurrency owners’ identity is hidden. However, records of online transactions using the currency is publically available on the blockchain, which is a central record that validates the currency. Given the growing interest in cryptography and the internet, cryptocurrency has become a buzz word among most internet users. However, be sure to do due diligence to identify the best options for investment in cryptocurrency.