All that you should know about what cryptocurrencies are, the way they work, and just how they’re valued. At this point you may have learned about the cryptocurrency craze. Either a family member, friend, neighbor, doctor, Uber driver, sales associate, server, barista, or passer-by on the street, has probably told you how he or she is getting rich quick with virtual currencies like bitcoin, Ethereum, Ripple, or one of the lesser-known 1,300-plus investable cryptocurrencies.
But how much do you actually know about them? Considering just the number of questions I’ve received from the blue from your aforementioned group of people over the last month, the reply is probably, “not really a lot.”
Today, we’ll change that. We’re planning to walk with the basics of cryptocurrencies, step by step, and explain things in plain English. No crazy technical jargon here. Just sticks and stones types of how today’s cryptocurrencies work, what they’re ultimately trying to accomplish, and exactly how they’re being valued.
Let’s get going. What exactly are cryptocurrencies?
To put it simply, cryptocurrencies are electronic peer-to-peer currencies. They don’t physically exist. You can’t pick up a bitcoin and hold it inside your hand, or pull one away from your wallet. But just simply because you can’t physically hold a bitcoin, it doesn’t mean they aren’t worth anything, as you’ve probably noticed from the rapidly rising prices of virtual currencies in the last couples of months.
The amount of cryptocurrencies are there? The number is always changing, but in accordance with CoinMarketCap.com since Dec. 30, there have been around 1,375 different virtual coins that investors could potentially buy. It’s worth noting the barrier to entry is especially low among cryptocurrencies. Quite simply, because of this if you have time, money, as well as a team of people that understands crafting computer code, you possess an opportunity to develop your personal cryptocurrency. It likely means 香港比特幣 continues entering the space after some time.
Why were cryptocurrencies invented?
Technically, the concept of an electronic peer-to-peer currency was being tinkered with decades ago, nevertheless it wasn’t truly successful until 2008, when bitcoin was conceived. The cornerstone of bitcoin’s creation, and all sorts of virtual currencies which have since followed, would be to fix several perceived flaws with all the way cash is transmitted from one party to another one.
What flaws? As an example, consider how long it can take to get a bank to settle a cross-border payment, or how banking institutions have been reaping the rewards of fees by acting as a third-party middleman during transactions. Cryptocurrencies work across the traditional financial system by using blockchain technology.
OK, just what the heck is blockchain?
Blockchain will be the digital ledger where all transactions involving an online currency are stored. If you pick bitcoin, sell bitcoin, use your bitcoin to purchase a Subway sandwich, and so on, it’ll be recorded, in an encrypted fashion, in this particular digital ledger. The same thing goes for other cryptocurrencies.
Think about blockchain technology because the infrastructure that underlies virtual coins. It’s the cornerstone of your house, as the tethered virtual coin represents all of the products built on top of this foundation.
Why is blockchain a potentially better choice compared to current system of transferring money?
Blockchain offers numerous potential advantages, but is made to cure three major difficulties with the current money transmittance system.
First, blockchain technology is decentralized. In simple terms, this just means there isn’t a data center where all transaction information is stored. Instead, data from this digital ledger is stored on hard drives and servers throughout the globe. The reason this is done is twofold: 1.) it helps to ensure that no one person or company may have central authority spanning a virtual currency, and two.) it acts as a safeguard against cyberattacks, such that criminals aren’t able to gain charge of a cryptocurrency and exploit its holders.
Secondly, as noted, there’s no middleman with blockchain technology. Since no third-party bank is required to oversee these transactions, the thought is the fact transaction fees might be lower than they currently are.
Finally, transactions on blockchain networks may get the chance to settle considerably faster than traditional networks. Let’s remember that banks have pretty rigid working hours, and they’re closed one or more or two days a week. And, as noted, cross-border iclbje can be held for several days while funds are verified. With blockchain, this verification of transactions is always ongoing, which suggests the chance to settle transactions far more quickly, or maybe even instantly.