Some Important Facts You Need To Know About Cryptocurrency.

Hi everyone. Cryptocurrency is big business. Although it only appeared in public awareness a decade ago with the discovery of bitcoin, it developed into a multibillion-dollar industry.

There are some important facts that you should know about cryptocurrency. Today, I’ll be highlighting some of them.

So, without wasting any time, let’s begin.

Although it only appeared in public awareness a decade ago with the discovery of bitcoin, it developed into a multibillion-dollar industry.

The turbulent year of 2018 made the value of bitcoin skyrocket to nearly $ 150 billion Cdn before falling to only a fraction of what was ever worth, and more than a dozen other coins began to catch up, with market capitalization crawling into billions.

And recently the QuadrigaCX Canadian cryptocurrency exchange has declined after news of its founder died — leaving customers no way to access around $ 190 million worth of digital currencies.

Despite its growth, for many people not involved in cryptocurrency technology, it is still unknown. Here is the answer to some questions that you might have.

What is Cryptocurrency?

Cryptocurrency is a digital currency, but that’s not what makes it unique.

“We have possessed digital currencies for ages,” said Ben Perrin, the head of marketing at the Calgary-based Bit National cryptocurrency broker and host of the educational cryptocurrency YouTube channel.

A 3D-printed USB storage drive in the form of a bitcoin logo sits in a cashing in cryptocurrency exchange in Calgary.

Storage drives can hold the key that allows people to access the cryptocurrency they have, similar to online banking. (Sarah Rieger / CBC)

Perrin said it was estimated that the number of legal tenders around the world in physical terms was only between two and 11 percent, with the rest stored digitally.

It’s not surprising for anyone using a debit card or Apple Pay they are more often than cash.

Conversely, cryptocurrency is different from legal tenders issued by the government in two major ways.

Encrypted, decentralized

First, this is encrypted — then the “crypto” part of the name. Coin creation and transactions are verified by cryptographic types.

Second, decentralization, thus eliminating intermediaries.

“The bank runs a fractional reserve system, making it an intermediary between borrowers and savers,” Perrin said.

Napster is a file-sharing site that was closed in the early 2000s after a court ruling over a complaint of copyright infringement.

Users upload their own files directly to the server, making it easier for the government to pull the plug on file transfers.

After Napster’s death, more powerful sites emerged like BitTorrent, which instead divided downloads to host files on computers all over the world.

“When the government dropped Napster, it was because it was a file-sharing center site.

“They cannot drop BitTorrent, because it is a network that is hosted on servers all over the world. Even if they pull all Canadian servers, the torrent will still rise.

“The comparison of Canadian dollar with Napster isn’t really insincere, but if you consult to some cryptocurrency advocates, that’s how they see government-issued currencies — risky, and will soon die.

Safe, anonymous

So for many people, the security and anonymity of cryptocurrency is a big withdrawal.

But that is not the only reason people buy. Some are speculative investors, hoping to make money from coins that quickly increase in value.

Beware of Cryptocurrency: careful buyers with cybercash hype

Others like that can be a fast and inexpensive way to transfer large amounts.

And others are experimenting with the blockchain technology itself, seeing how it can be used to go beyond the traditional definition of money.

What is blockchain?

The easiest way to explain the blockchain is to use the mother of all bitcoin cryptocurrency.

It was created in 2008 by an anonymous inventor (or group of inventors) who called themselves Satoshi Nakamoto.

Bitcoin uses a blockchain, which is a distributed ledger that publicly records all transactions.How the blockchain, the technology behind bitcoin, can change your life

On the blockchain, a group of different people around the world holds identical copies of transaction ledgers on their computers.

The computers are called nodes.

Every time a transaction occurs, the node must independently update and verify it from a piece of data called a block, which is arranged in a chain that together consists of all records of transactions that have occurred, returning to the first bitcoin ever transferred in 2009

The blocks are verified by miners.

What is mining?

Bitcoin miners keep the blockchain running by verifying extraordinary transactions.

This ensures that no coins are sent or paid twice.

Each block contains a collection of unconfirmed transactions, transaction timestamps, and references for the latest transactions in the confirmed ledger.

Miners arrange computer programs to work solving difficult mathematical puzzles that are unique to each block.

The program chews numbers until it emits a series of letters and numbers — hashes — which act as evidence the miner has solved the block puzzle and verified the transaction.

The evidence is then broadcast to all other nodes to make sure they are on the same page. If the node reaches a consensus, the transaction will be added to the ledger and each miner starts working on the new block.

Is Bitcoin the only digital currency?

Bitcoin is the most famous cryptocurrency and, at present, the most valuable.

But Perrin says there are more than 2,000 cryptocurrency — everyday language called altcoin, or an alternative to bitcoin — most of which are very different from each other. And that number is growing rapidly.

“Some cryptocurrency is similar to cash, where they can be used in exchange for goods or services, while others function more like assets such as gold — so they can be stored, such as bonds, or used as raw materials for other products,” he said.

Examples include:

Ripple, a network that allows cross-border currency exchange in seconds.

Ether, which supports smart software applications that can do things like make online selection safer.

VeChain, which allows retailers to track and collect data about products as they move through the supply chain.

How do you buy a cryptocurrency?

The first thing you need to buy cryptocurrency is a wallet — and not the type of skin you keep in your pocket.

“Funds must always be stored in a wallet, digital or paper,” Perrin said.

The wallet is a software program which stores private and public keys that are used to send and receive cryptocurrency.

The wallet can be as complex as an application on your cell phone or computer, or a series of numbers that you write on a piece of paper.

But be careful — if you lose your key, your cryptocurrency will be lost forever.

There is no way to recover the coins because they are not stored or supported centrally, as you can still access your bank account if you lose your debit card.

Instead, all transactions are sent between keys.

Funds are sent to the public key — it’s like the email address sent by electronic transfer. Then you can access your money with a private key, which functions like your password and must be kept confidential.

Once your wallet is ready, you can buy currency at an ATM or at a broker or currency exchange.

But while you can trade between Canadian dollars and cryptocurrencies with online exchanges, you may not leave your money in a position like a bank, Perrin said.

“It’s like a honeypot for hackers. And it’s far more insecure than a bank because exchanges are newer and they have different levels of security.”

That’s a lesson that is difficult for clients to learn from the QuadrigaCX.

Why does the price of cryptocurrency move so much?

Because cryptocurrency is not supported by the government, the only value of coins is given by those who decide to have a value — meaning the value can fluctuate wildly.

The combination of very few coins on the market and demand speculation triggered a meteoric rise at the end of 2017, followed by massive destruction in January 2018 — bigger than the destruction of technology stocks during the dot-com bubble.

But that does not reduce the attractiveness of coins for advocates who say cryptocurrency has long-term potential to be a game-changer in the global economy.

So, was it helpful? Now I would like to hear it from you.