What are cryptocurrencies?
In recent years, you may have heard people talking about a new kind of currency called cryptocurrency. While it may sound like something out of a science fiction movie, it’s actually a very real and innovative form of digital currency. In this article, we’ll explore what cryptocurrency is, how it works, and why it’s becoming increasingly popular.
What is Cryptocurrency?
Cryptocurrency is a form of digital currency that operates independently of a central bank. Instead of being controlled by a government or financial institution, cryptocurrency relies on a decentralized system (which means: no central institution to have control over it) that uses encryption to secure transactions and to control the creation of new units of currency.
One of the key features of cryptocurrency is that it is decentralized, meaning that it is not controlled by any single entity. Instead, it operates on a distributed ledger called a blockchain. A blockchain is a public ledger that records every transaction made on the network, making it transparent and impossible to alter once a transaction has been recorded.
How does Cryptocurrency work?
To understand how cryptocurrency works, let’s take Bitcoin as an example. Bitcoin is the first and most well-known cryptocurrency, and it operates on a decentralized network that uses cryptography to secure transactions and control the creation of new units of currency.
When a user wants to send Bitcoin to someone else, they create a transaction that is then broadcast to the network. This transaction is verified by a network of computers known as nodes, which use complex algorithms to ensure that the transaction is valid and that the sender has the necessary funds to complete the transaction.
Once the transaction is verified, it is added to the blockchain, where it becomes a permanent part of the ledger. Each block on the blockchain contains a record of multiple transactions, and once a block is added to the chain, it cannot be altered or deleted.
Why is Cryptocurrency becoming popular?
There are several reasons why cryptocurrency is becoming increasingly popular. One of the biggest advantages of cryptocurrency is that it is decentralized, meaning that it is not controlled by any single entity. This makes it more secure and less susceptible to fraud or manipulation. In our opinion, this is the way forward in the future. A decentralised world is a place where there’s no place for financial discrimination of any form.
Another advantage of cryptocurrency is that it is global, meaning that it can be used anywhere in the world without the need for a bank account or credit card. This makes it particularly useful for people who do not have access to traditional financial services, such as those living in developing countries.
Finally, cryptocurrency is becoming increasingly popular as an investment asset. As more people become aware of the potential benefits of cryptocurrency, demand for it is increasing, which is driving up its value. Crypocurrencies are the only form of financial investments where the total amount of ‘coins’ is set. This means that the currency has a maximum distributed total, which again, drives up its value while it becomes popular.
While there are risks associated with investing in cryptocurrency, many people see it as a potentially lucrative opportunity.
Our view
In our opinion, web 3.0 in general, and cryptocurrencies that are bounded to trustworthy projects, inject our future with all kinds of new technology and mindblowing, live-changing opportunities. While investing in crypto is risky, some background research is necessary before investing. One thing is for sure: cryptocurrencies are their backing usecases, are here to stay.
