Cryptocurrency is digital, or virtual, money that is decentralised, and secured. On many occasions, the transactions involving cryptocurrencies are anonymous. It utilises the cryptography technique; the ability to convert legible data to untraceable coding.
How Cryptocurrencies Work
As mentioned earlier, crypto coins are decentralised, in a way that people don’t need to use banks, or have their details displayed, for a secure transaction. They use blockchain technology to make this possible. This is basically a public ledger, held and updated, by currency owners.
In a decentralised system, there are no servers. Thus, each entity of the network is required to work to achieve success. A list of transactions are saved for future purchases, and to avoid a problem of double spending.
Mining is a process, via which, units of these virtual currencies are created. This basically involves using a computer to solve complicated mathematical problems to spawn coins. However, users are allowed to buy currencies from brokers and miners. All you need is a wallet where you can Buy & Sell Crypto securely. Common forms of cryptocurrency we have today include:
- Bitcoins; this is the most common of the cryptocurrencies available today. It was the first crypto developed in 2009, by a mysterious programmer called Satoshi Nakamoto. It has the most significant market capitalisation, of approximately $128 billion
- Ethereum; this is the second most traded currency in the world. Its market capitalisation is roughly $56 billion. Ethereum blockchain code has been extensively used by other crypto coins since 2017. It suffered a major hack back in 2016, causing it to split into two currencies
Why Use Cryptocurrencies?
These currencies are famously known for their high-security level and anonymity assurance. You cannot reverse a transaction or fake it. In addition to that, they have a low transaction rate, making it ideal for large transactions.