Simply put, cryptocurrency is digital money, which is designed to be secure and anonymous in some cases. It is closely connected to the Internet, which uses cryptography, which is basically a process in which readable information is converted into code that cannot be broken into in order to fix all executed transfers and purchases.
Cryptography has a history dating back to World War II, when there was a need to communicate in the most secure way. Since then, the same evolution has taken place and today it has become digitalized where various elements of computer science and mathematical theory are used for the purpose of securing communications, money and information on the internet.
The first cryptocurrency
The first cryptocurrency was introduced in 2009 and is still well known around the world. Many more cryptocurrencies have been introduced in the last few years and you can find them online today.
How they work
This type of digital currency uses technology that is decentralized to allow different users to make secure payments as well as store money without necessarily using a name or even going through a financial institution. They mostly run on blockchain. Blockchain is a public book that is publicly distributed.
Cryptocurrency units are usually created using a process called mining. This usually involves the use of computing power. By doing this this way you solve mathematical problems that can be very complex in generating coins. Users are only allowed to buy currencies from brokers and then store them in cryptographic wallets where they can spend them with great ease.
Cryptocurrencies and the application of blockchain technology are still in the early stages when they are considered financially. More uses could appear in the future because it is not known what else will be invented. The future of transactions in stocks, bonds and other types of financial assets could be very well traded in the future using cryptocurrency and blockchain technology.
Why use cryptocurrency?
One of the main characteristics of these currencies is the fact that they are safe and offer a level of anonymity that you may not get anywhere else. There is no way a transaction can be undone or falsified. This is by far the biggest reason why you should consider using them.
The fees charged for this type of currency are also quite low and this makes it a very reliable option compared to a conventional currency. Because they are decentralized by nature, they can be accessed by anyone, unlike banks where accounts are opened only with authorization.
Cryptocurrency markets offer a whole new form of cash and sometimes the rewards can be huge. You can make a very small investment just to find that it has grown into something big in a very short period of time. However, it is still important to note that the market can also be volatile, and that there are risks associated with purchasing.