Simply put, cryptocurrency is digital money, designed to be secure and anonymous in some cases. It is closely related to the internet making use of cryptography, which is basically a process where readable information becomes code that cannot be decrypted in order to address all transfers and purchases made.
Cryptography has a history dating back to World War II, when there was a need to communicate in the most secure way. Since then, it has evolved and today it has been digitized where different elements of computer science and mathematical theory are being used to secure online communications, money and information.
The first cryptocurrency
The first cryptocurrency was introduced in 2009 and is still well known around the world. Many more cryptocurrencies have been introduced since then in recent years and today you can find so many available on the Internet.
How they work
This type of digital currency makes use of a decentralized technology to allow different users to make secure payments and also, to store money without necessarily using a name or even going through a financial institution. They run primarily on a blockchain. A blockchain is a public record that is publicly distributed.
Cryptocurrency units are typically created through a process known as mining. This usually involves the use of a computer. Doing it this way solves the math problems that can be very complicated in coin generation. Users can only buy coins from brokers and then store them in cryptocurrencies where they can spend them very easily.
Cryptocurrencies and the application of blockchain technology are still in their infancy when they are thought of in financial terms. More uses may arise in the future, as it is not possible to say what else will be invented. The future of stock transactions, bonds and other types of financial assets could be traded with cryptocurrency and blockchain technology in the future.
Why use cryptocurrency?
One of the main features of these coins 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 reversed or falsified. This is by far the main reason why you should consider using them.
The fees charged in this type of currency are also quite low and this makes it a very reliable option compared to the conventional currency. Because they are decentralized in nature, anyone can access them, unlike banks where accounts are only opened with authorization.
Cryptocurrency markets offer a new form of cash, and sometimes the rewards can be excellent. You can make a very small investment only to find that it has become something fantastic in a very short period of time. However, it is still important to keep in mind that the market can also be volatile and that there are risks associated with buying.