The idea of what cryptocurrency or digital currency is can still pose some unclear thoughts in the mind of many people. Cryptocurrency, to put it simply, is a form of digital currency. It is a derived name for bitcoin and other currency of its kind.
However, this form of currency is a unique one because the system is decentralized. That is to say, it is not centrally controlled either by a single body or even the central bank, making it impossible to fake transactions. The currency is regulated by some complex mathematical encryption techniques through a process known as mining or digging and uses a currency called Bitcoin.
What is Bitcoin?
Bitcoin is a special type of cryptocurrency being the first of its kind. Although it has been around for a while, it was created in 2009 by Satoshi Nakamoto. Bitcoin transactions are made with no middlemen of any type or form, and unlike the regular paper money, bitcoins can only be stored in a digital wallet. However, it can also be used for any type of transaction across the globe just like the regular currency.
To be more pragmatic, bitcoin is just simply another kind of money. Although it cannot be physically handled, it can be electronically controlled. Think of bitcoin as virtual money you can use to buy goods and services or even trade in the financial market.
How does the bitcoin cryptocurrency work?
In a technical sense, Bitcoins are blocks of sophisticated and highly secured mathematical algorithms and data that are treated as money. The exchange of these data and the verification of the transactions involved from one person to another requires a lot of computing powers. The cryptocurrency system in general centers on an incredibly complex cryptography known as the blockchain. There are cryptographic sequences that are involved in generating new bitcoins and verification of transactions between users of bitcoin.
Controllers of the currency possess equipment that can be used to perform these complex mathematical calculations and procedures for the various transactions going on in the system and in return, new blocks of bitcoins are generated.
These newly generated blocks of bitcoins are then shared accordingly among the people who contributed to the process. This process is what is known as “bitcoin mining”. The amount of bitcoin block an individual gets depends mostly on the amount of hash power contributed to the mining process.
It is important to also note that bitcoins have to be mined before they can be spent just like the conventional currency has to be minted by a government.
Advantages and disadvantages of cryptocurrency
Cryptocurrency comes with many advantages as well as disadvantages. The fact that bitcoin is decentralized (no country’s government owns it) gives it an edge over the conventional currency. So think of it as a payment system where a large amount of money can be moved from one user or place to another without any hassle either from the bank or the government.
With bitcoin, one of the main advantages is that there is no limit to the number of transactions or money that can be transferred from one end to another at any point in time. More also, bitcoin transactions are done anonymously. Unless the person who performs a transaction identifies himself or herself, no one can know who did the operation or from what end a transaction has been done.
One major glitch that bitcoin has is the price fluctuation. The demand and supply chain determine the price at any point in time. In the early days, bitcoin was worth only a few cents, but now its value is about $5,940. Aside from that, bitcoin and cryptocurrency at large has proven to be one of the best mediums of exchange and could be the future of money. This is because;
- ransactions done with bitcoin are almost impossible to counterfeit.
- Transactions with bitcoins can be made anonymously.
- Transactions made with bitcoin are processed within minutes irrespective of the size.
- The value of bitcoin is only determined by the supply and demand chain and cannot be influenced by any government.
- A bitcoin account can be created in no time without having to go through any stress or a lot of unending verification process.
- Transaction fees are comparatively low.
How to get started with cryptocurrency
First of all, it is essential to know that bitcoin is money in every economic sense. Hence, you can either earn it (request to be paid in bitcoin for goods and services) or buy it from one of the numerous exchangers online with a conventional currency. Another right way to have bitcoin is to buy from someone who already has and is willing to sell it. However, the first step to having bitcoin is creating a bitcoin wallet.
The bitcoin wallet works similarly as your bank account. It is just that in this case, you are your own cashier and account manager. Based on recent development, bitcoin can now be spent easily, anywhere across the globe using the bitcoin ATM card. The bitcoin ATM card can be used similarly as the regular credit and debit cards.
There is a corresponding value of the fiat currency that is attached to the bitcoin in your wallet. This allows for a smooth transaction and simplicity as the price tags on most goods and services are not displayed in bitcoin.
Over the years, bitcoin has been seen as an excellent investment opportunity with a high return and has experienced a massive surge. Therefore, people tend to buy bitcoin at a low price and wait until the price increases to resell.
Conclusion
Conclusively, a lot of people are still not informed about what bitcoin is or how it works, but with the way the trend is going, we can be assured that in a few years from now, the bitcoin network will still experience a massive surge. More also, bitcoin has been predicted by many financial experts to be the future of money.
