How Does Cryptocurrency Actually Work and Why Use It Anyway?
To put it in simple layman’s terms, cryptocurrency is just a digital form of currency that has been made in such a way to make it safe and secure and also anonymous as well. Cryptocurrency has close relations and connections to cryptography where this is a information that has been processed in a legible way so that it can be converted into a cryptographic code which can’t be deciphered and or “cracked” including all the transfers and payments made with it.
You may not know that Cryptography itself dates right back to the World War 2 where a way to communicate that was secure was needed (so the enemy couldn’t know what was being said). Fast forward to today’s time and this Cryptography has evolved into what it is today into a digital form where complex mathematical theories are used for securing sensitive communications, as well as securing digital money and online payments.
What Was The First Cryptocurrency?
Although Cryptography began way back in the 1940’s, the very first cryptocurrency wasn’t released until 2009 and is the well known Bitcoin cryptocurrency which is well known all around the world today. Since then, there has been many more cryptocurrencies that have come out such as Ethereum, Ripple, Litecoin, TRON and many many more which can be found all over the Internet today.
How Do Cryptocurrencies Actually Work?
The digital currency that is cryptocurrency first and foremost is meant to be decentralized so that it makes the technology much more secure when making and sending payments. As well as making it much safer and more secure to save and store your cryptocurrency without having to make use of a bank or some other financial organization. You can use the blockchain public ledger to send and recieve it.
How to Mine Cryptocurrencies?
Since cryptocurrency are very complicated mathematical theories one would need to solve these complicated mathematical theories in order to create a new cryptocurrency unit which would be Bitcoin or Ethereum ETC. But doing that involves using a powerful computer or many computers at once, a lot of time and electricity also. It’s a very complicated process but can be done on large scales to generate coins with.
You would need a cryptographic wallet to store them in or you can buy it from brokers that sell them, whatever cryptocurrency it is, and of course use your cryptographic wallet to spend them and buy things with or send to other people’s cryptographic wallets ETC.
Right now that’s about all you can do with it but the blockchain technology is still very new and in the future may and is already showing to have a profound impact on human society being used in many applications in life not just in the financial game but in many other ways related to science, health, travel, learning and more and who knows!
Some experts predict that in the future they wont trade with bonds and stocks but be using and trading in cryptocurrencies only all on the blockchain.
So Why Would I Want to Use A Cryptocurrency?
The best reason of all is because as said, it’s one of the most secure and anonymouse ways of paying for something, or being paid for something. Cryptocurrencies offer a level of security and anonymity not offered by any other form of currency both digital and physical (cash for example). Although not completely anoymous for those with the right means and know how, this same security means that transactions can’t be faked or reversed and bounced back like bad checks or fake money. That alone should be the best reason to use a cryptocurrency.
Another good side of it is that the fees are low compared to the fees you would pay when paying in cash or by a credit card or PayPal or some other 3rd party money handling or escrow service. It’s all completely separated from that and the nature of it is anyone can get access to them and use them where as a bank requires you to open an account and pass authorization first, cryptocurrencies don’t.
Can I Make Money Buying and Selling Cryptocurrency?
Yes and no, yes it’s very possible to buy and sell Cryptocurrencies using Cryptocurrency markets where you can buy it in cash or some other form of currency and if you play your cards right the returns and rewards can be very substantial. But not in all cases and it’s not that easy. Of course small investments in early Cryptocurrencies can yield big results later on in time. But it’s a volatile market and there are risks involved.
There’s a lot going for the anonymity of using cryptocurrencies and while this can be used for a good purpose, there are some that might and do try to use it for nefarious illegal things. That said, the blockchain technology has a lot going for it too and a lot of potential to do a lot of good. You just have to be careful when using it and do your homework first and only get cryptocurrencies from a trusted place.
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