Cryptocurrency is what most people associate with when they think about it. It is a confusing concept that very few people know about, and everyone seems to talk about it as though they do. This report will try to simplify all aspects of cryptocurrency, so you’ll have a good understanding of it all by the end.
It’s possible that you will find cryptocurrency appealing to you, or that you might not. However, you’ll still be able speak with certainty and knowledge that is unmatched by others.
Many people have become millionaires by trading in cryptocurrency. This industry is a new one and there’s lots of money.
The short version of cryptocurrency is electronic money. But, it’s more complicated than that. It is how it gets value.
Cryptocurrency can be described as a digitalized, virtual, and decentralized currency that is produced through the use of cryptography. According to Merriam Webster’s dictionary, cryptography is “computerized encryption and decoding information”. Cryptography is what makes it possible to use debit cards, computer banking, and eCommerce systems.
Cryptocurrency doesn’t have a bank backing it. It’s not backed in any way by the government. Instead, it is backed by complex algorithms. Cryptocurrency is electricity that is encoded in complex strings of algorithms. Their complexity and security from hackers are what give cryptocurrency its monetary value. It is impossible to duplicate the crypto currency’s design.
Cryptocurrency is directly opposed to fiat money. Fiat money refers to a currency that is derived from the government’s rulings or laws. Examples include the dollar, the yen and the euro. Fiat money is any currency that can be legally designated as legal tender.
Cryptocurrency is not fiat money. Another reason cryptocurrency is so valuable, it’s a limited supply, much like silver or gold. These extremely complex algorithms produced only 21,000,000. No more, no less. It cannot be changed by printing more, just as a government would not print more money to boost the system’s efficiency without backing. A bank can alter a digital ledger to adjust for inflation.
The use of cryptocurrency to buy, sell and invest is completely free from government oversight. This system can be a stabilizing force in a global economy that has been destabilized.
You also have a lot of anonymity with cryptocurrency. This anonymity can also be used to your advantage by criminal elements who can misuse crypto currency for their own purposes just like regular money. It can be used to prevent the government from monitoring your purchases and invading personal privacy.
Cryptocurrency comes in quite a few forms. Bitcoin is the original cryptocurrency and the one that all other cryptocurrencies are based on. All are created by precise alpha-numerical computations using a complicated coding tool. Other cryptocurrencies include Litecoin and Namecoin. These are also known as altcoins. Each cryptocurrency’s supply and demand for it determine the price.
It is fascinating to see how cryptocurrency came into being. The creation of cryptocurrency is not like gold which must be mined from the ground. It is simply an entry in a virtual ledger that is stored on various computers around the globe. These entries must be “mined” using mathematical algorithms. A group of users, or individuals, can run computational analysis to identify particular data series, known as blocks. The “miners” find data that matches the cryptographic algorithm exactly. The block is then created by applying the algorithm to the series.
The block of data is unencrypted when the data series in the block matches the algorithm. A specific amount of cryptocurrency is awarded to the miner as a reward. As the cryptocurrency becomes more scarce, the amount of the reward will decrease over time. The complexity of algorithms used to search for new blocks has also increased. It becomes more difficult to find a match series computationally. These two scenarios combine to slow down the creation of cryptocurrency. This mimics the difficulty and scarcity involved in mining a commodity such as gold.
Anyone can now mine Bitcoin. Bitcoin’s creators made the mining software open-source, which means that it is available to everyone. The computers they use are available 24 hours a days, seven days per week. The algorithms are complex and the CPU runs full throttle. Many people have special computers that are specifically designed for mining cryptocurrency. Miners are both the user and the computer specialized for mining cryptocurrency.
The human miners keep ledgers of transactions, and act as auditors to ensure that no coin is duplicated. This prevents the system from being hacked or running amok. This work is paid by new cryptocurrency each week they keep their operation running. They store their cryptocurrency in special files on their personal computers. These files are known as wallets.
Let’s go over some of the definitions that we have learned.
* Cryptocurrency is also known as digital currency.
* Fiat money is any legal tender, government-backed, and used in the banking system.
* Bitcoin: The original and most trusted crypto currency.
* Altcoin is another cryptocurrency that’s based on the same process as Bitcoin but have slight differences in their coding.
* Miners: An individual or group of people who use their own resources (computers and electricity, space, etc.) to mine digital currency. A specialized computer designed to find new coins using a series of algorithmic computing algorithms.
* Wallet: A small file on your computer that stores your digital money.
In a nutshell, how to conceptualize the cryptocurrency system
* Electronic money
* Minted by individuals who mine the coins using their own resources.
* A stable, finite currency system. There are 21,000,000 bitcoins in existence.
* It does not require any government, bank or other financial institution to work.
* The price is determined by the number of coins that have been found and used. This is then combined with the public’s desire to own them.
* Bitcoin is the most popular form of crypto currency.
* This investment can bring you great wealth but there are risks.
The concept of cryptocurrency is fascinating to most people. This is a new area that could become a gold mine for many. This report is for you if you are interested in learning more about cryptocurrency. This report is only a small part of the story. There’s so much more to cryptocurrency than I’ve shown you here.