Everything you need to know about what cryptocurrencies are, how they work, and how they are valued. Right now you may have heard 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 among the lesser-known 1,300-plus investable cryptocurrencies.
But just how much do you actually know about the subject? Considering just how many questions I’ve received out of the blue from your aforementioned group within the last month, the reply is probably, “not just a lot.”
Today, we’ll change that. We’re likely to walk through the basics of cryptocurrencies, in depth, and explain things in plain English. No crazy technical jargon here. Just sticks and stones examples of how today’s cryptocurrencies work, what they’re ultimately seeking to accomplish, and just how they’re being valued.
Let’s get going. Exactly what 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 in 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 within the last couples of months.
How many cryptocurrencies are available? The quantity is always changing, but based on CoinMarketCap.com as of Dec. 30, there was around 1,375 different virtual coins that investors may potentially buy. It’s worth noting that this barrier to entry is especially low among cryptocurrencies. Put simply, because of this in case you have time, money, along with a team of individuals that understands crafting computer code, you have an opportunity to develop your very own cryptocurrency. It likely means 香港萊特幣 will continue entering the space as time passes.
Why were cryptocurrencies invented?
Technically, the thought 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 foundation of bitcoin’s creation, and all sorts of virtual currencies that have since followed, was to fix numerous perceived flaws with all the way money is transmitted from a single party to a different.
What flaws? For example, take into consideration how long it can take for a bank to settle a cross-border payment, or how banking institutions have already been reaping the rewards of fees by acting as being a third-party middleman during transactions. Cryptocurrencies work around the traditional financial system through the use of blockchain technology.
OK, exactly 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, make use of your bitcoin to purchase a Subway sandwich, and so on, it’ll be recorded, inside an encrypted fashion, within this digital ledger. The same goes for other cryptocurrencies.
Think of blockchain technology as the infrastructure that underlies virtual coins. It’s the building blocks of your property, as the tethered virtual coin represents all the products built on top of that foundation.
Exactly why is blockchain a potentially better option compared to current system of transferring money?
Blockchain offers a number of potential advantages, but was created to cure three major issues 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 using this digital ledger is stored on hard drives and servers throughout the globe. The reason why this is done is twofold: 1.) it makes sure that no person person or company may have central authority over a virtual currency, and two.) it acts as a safeguard against cyberattacks, such that criminals aren’t able to gain control over a cryptocurrency and exploit its holders.
Secondly, as noted, there’s no middleman with blockchain technology. Since no third-party bank is needed to oversee these transactions, the thought is the fact transaction fees might be lower than they currently are.
Finally, transactions on blockchain networks may have the opportunity to settle considerably faster than traditional networks. Let’s remember that banks have pretty rigid working hours, and they’re closed a minumum of one or two days a week. And, as noted, cross-border iclbje can take place for many days while funds are verified. With blockchain, this verification of transactions is always ongoing, which suggests the ability to settle transactions far more quickly, or possibly even instantly.