October 20, 2020
What is Cryptocurrency?
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What is Cryptocurrency?

A cryptocurrency is a digital or virtual currency which use as a medium of exchange. It uses cryptography for security, anti-counterfeiting measures, verifying transactions and control the creation of additional units. It gives a feature to cryptocurrencies that no one can make any changes unless specific conditions are fulfilled. Unlike central banking systems, cryptocurrencies are decentralized. It means no person, government or institution control it. This feature works due to using a technology called blockchain. All the data stored and transactions get process on the blockchain network.

 

Bitcoin as a first decentralized cryptocurrency

There are several attempts in the field of cryptocurrencies since 1983 but, none of them could get the success that Bitcoin could make. After Bitcoin introduced in 2009 a lot of other coins which named altcoins appeared rapidly and started to follow its success path.

Bitcoin introduced by an anonymous person or group of people named Satoshi Nakamoto as a first decentralized cryptocurrency. It is a peer-to-peer electronic cash system and is completely decentralized.

There is fraud technique called ‘double-spending’ that any payment method is struggling with and need to solve it. In traditional system they use a central server that keep the records of transactions and balances but in a decentralized network like Bitcoin, every single user of the network keeps the records and verify the transactions. All these data and information stores and process on a public ledger called “blockchain”. Blockchain technology makes the network transparent, it means that everyone who has access to this network can see every account’s balance. Every transaction on the network need to get verified by the network users who called miners.

Basically, miners confirm transactions by solving a mathematical problem. Once a transaction get the confirmation, it spreads across the network and then receives a reward or transaction fee.

What can you do with cryptocurrency?

 

Pay for goods or services

 

At first there were not enough choices to use cryptocurrencies as medium of exchange. But todays there are variety range of merchants from online shops like Appstore, Overstock or etc. to offline businesses like local shops, bars and restaurant or even hotels and colleges.

Not only users are able to convert their coins to each other, but also there are website that users can buy Gift Cards in exchange of more than 20 different cryptocurrencies and then buy anything they want through using Gift Cards.

Invest

The price of cryptocurrencies has raised a lot through these years. There are stories of people who became millionaire by investing in cryptocurrency market.

Cryptocurrency same as other financial markets is unpredictable. Prices fluctuates daily and unlike other markets, it’s 24/7.

If you are thinking to enter the market and invest on cryptocurrencies, we recommend you to first study and raise your knowledge on the basics that how does cryptocurrencies work and also learn how to use analytic tools.

Mine

Mining could be a form of investment too. Miners invest in this industry by buying the mining equipment and contribute their computing power to the network. In fact, they confirm transactions and record them all on blockchain by solving complicated mathematical problems.

The difficulty of solving these mathematical problems increase constantly in response to number of people try to solve it. It means the more people try to solve these mathematical problems as miner, the more difficult the process becomes.

Previously, when Bitcoin just introduced everyone with a powerful enough computer or laptop could join the network and start to mine Bitcoin. But todays the network difficulty had increased, so it needs industrial-grade mining hardware to make the mining cost-effective.

Still there are some coins that could get mined by using computers and laptops. So if you want to enter the mining industry as a beginner, we recommend to first start with coins like Litecoin, Dogecoin, etc…. Because the network difficulty is not as much as it needs any specific mining hardware.

These days mining industry is getting more popular and more people join the network as miner, in result the network difficulty increase constantly and to have a chance to solve a block and get the reward needs more powerful mining hardware. So, it makes mining industry extremely competitive.

Use cryptocurrency as a payment gateway for businesses

Business owners who are willing to attract potential new customers could use cryptocurrencies as a payment gateway. First of all, it needs to inform customers that cryptocurrencies accepted by using a simple sign at cashier counter. Customers can transfer cryptocurrency via mobile wallet apps or QR codes. For instance, Bitcoin and other cryptocurrencies has been recognized as a form of currency in the U.S., so accepting them is exactly the same as accepting cash or Gift cards.

Legality of cryptocurrencies

In the terms of cryptocurrencies, varies countries and states have different laws and regulations about it. Although some countries banned cryptocurrencies and other activities relate to them, fortunately, many governments accepted cryptocurrencies same as other commodities and have clear regulations about it.

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