This goes without saying, for the past couple of years, cryptocurrency has been all over the news. In fact, you must have heard about the same from your family and friends. But, the underlying problems pertain to having a clear understanding of cryptocurrency definition. Now, if you are not aware of the basics of cryptocurrency, you might fully grasp the concept.
So, in this article, we are going to make you acquainted with everything there is to know about cryptocurrency in order for you to get started. Although it is a relatively new technology. It has been around for quite a while now. Starting from the different types of cryptocurrency to where it stands in the coming future. Without wasting any further time, let’s jump right into it.
What is Cryptocurrency?
In Layman Terms, cryptocurrency can be best described as a mode of payment that can be used online in exchange for goods and services. Using the same principle, large enterprises have actually come up with their own idea of currency, commonly known as tokens. These tokens can be further traded in exchange for the services provided by the said company.
Cryptocurrencies can be best compared to casino chips or any arcade token that doesn’t hold any monetary value on its own. But, at the same time, it can still be used for trading with other items. The technology being used behind cryptocurrency is known as the blockchain. It is a decentralized ledger that is spread across various computing machines for managing and keeping records. In fact, the primary appeal of blockchain is the high-level security it provides.
History of Cryptocurrencies
One of the biggest misconceptions of cryptocurrency is that the technology goes beyond several years before it was bought into the light. Although we have stumbled upon it for quite a while now, that is only due to the hard work put forth over the years. Historically, cryptocurrency even dates back long before Bitcoin was ever introduced.
This is where some might even speculate the Bitcoin was the first cryptocurrency. But, Cryptographers has been experimenting with the same long before that. In fact, the most successful attempt for a fully-fledged cryptocurrency was done by a computer scientist named Nick Szabo. He developed the cryptocurrency called Bit Gold back in 1998. Later on, Bit Gold paved the way for Bitcoin.
The Launch of Bitcoin
It was back in October 2008, when Satoshi Nakamoto published a white paper. This included the description of a decentralized network, which was later known as the cryptocurrency Bitcoin. Although his initial speculation was it would take a while to circulate as the new payment method, but Bitcoin started to gain popularity. Over the next few years, many new cryptocurrencies would emerge walking into the footsteps of Bitcoin.
The Rising Popularity of Cryptocurrencies
It is imperative to understand that there are a plethora of reasons what make cryptocurrency appealing to the general public. Some of the most prominent reasons include:
- Cryptocurrencies including the likes of Bitcoin are often viewed as the currency of the future. This, in turn, makes them a suitable asset for investment, presumably with their values increasing over time.
- The idea that cryptocurrencies can replace the entire centralized banking system, meaning there won’t be any reduction of monetary value due to inflation.
- And then there are people who simply like the technology that goes behind cryptocurrency; blockchain.
- This decentralized processing system makes a recording of the overall transaction more secure than any traditional payment system.
- Lastly, the rising popularity is due to the curiosity of the speculators for which the only thing matters is their valuation going up.
Number of Cryptocurrencies in the Market
According to the market research website CoinMarketCap.com, there are almost more than 10,000 cryptocurrencies being traded publicly. Their initial stages of raising money are done by the ICOs (Initial Coin Offerings). As of now, the total valuation of all the cryptocurrencies is close to 1.7 trillion dollars. This, in itself, gives us an overview of the rising popularity of cryptocurrencies among the public.
Also Read: What is Bitcoin Mining?
How Cryptocurrencies are Evaluated?
With the current market valuation of cryptocurrencies, one might argue how exactly they are evaluated. After all, cryptocurrencies are not even recognized as official products from sovereign countries. But, looking at the definition of currency, it doesn’t need actually need a monetary value attached to it. As long as both the buyer and seller agree to cater the same as a mode of exchange, it can be used as a currency. Backed by investors and traders, cryptocurrency has gained quite global recognition.
Is Cryptocurrency Safe to Use?
The idea of safety in cryptocurrency is completely subjective. There are two different ways in which you can look to safety for cryptocurrency. While one is an investment, the other being storage. For starters, looking at its investment aspect, it carries certain risks like every other asset class. But, the gains and losses (volatility) in cryptocurrency is more frequent as compared to other assets.
And it is the volatility of cryptocurrencies that actually helped investors and traders to make a further for themselves. But, at the same time, there are also others who lost quite their fund with cryptocurrency. So, there are risk factors involved if you want to get your hands on cryptocurrency for profits.
On the other hand, cryptocurrency offers easier storage solutions known as wallets. Now, the encryption technology used in order to store your currency is almost impenetrable. It is only you who has access to your wallet.
Future Prospect of Cryptocurrency
With the current trends in cryptocurrency, many speculate for long-term growth. But, no one really knows about the same. Then again, as long as we find usability for cryptocurrencies, these assets certainly give an edge over any fiat currency. For starters, the adaptation of cryptocurrency is going to be implemented over cashless payments.
This is one area, where we might notice a significant rise in cryptocurrency in the coming years. In fact, one of the biggest perks of cryptocurrency is its ease of use. Meantime, we can actually find the true potential of using cryptocurrencies.
Welcome to the Future
So, this was our curated article on what is crypto and how you can get started with the same as well. Now, bear in mind, this article was meant for complete beginners, with the intent to learn the basics. By any means, this shouldn’t be taken as financial advice. And let us know in the comment section below, whether you find the article insightful? Stay tuned, for a more in-depth article on Cryptocurrency.