What is cryptocurrency?
A cryptocurrency is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency. They are a subset of digital and alternative currency. Bitcoin (BTC) is the most popular form of digital currency that exists today. As of this writing, one bitcoin is trading at $4,575.01 USD with a total market capitalization of roughly $76 billion (that is, the total value of bitcoin supply in circulation).
Bitcoin became the first decentralized cryptocurrency in 2009. Since then, numerous cryptocurrencies have been created. As of July 2017, there are over 900 digital currencies in existence. Some of the popular ones include Ethereum (ETH) and Litecoin (LIT) which have experienced price booms in excess of 1,000% over the last year.
Cryptocurrencies can be created by mining and exchanged for other currency, products, and services. The transactions are verified through network nodes and recorded in a publicly distributed ledger called blockchain. They cannot be bought directly, instead they are traded through exchanges such as coinbase. The app is free for download and includes a step-by-step guide for easy setup.
How does the cryptocurrency market work? No one knows. It’s all speculation. The market has seen alternating periods of waxing and waning since it rose in popularity in 2013. It is a long-term market, decent returns will take about three to five years to materialize. Many critics see the market as a tech bubble akin to that of the late-1990s that eventually burst. Because of the volatility of the market, there are no guarantees on returns for traders who buy into the market. It is high-risk high-reward proposition so beware.