The rise of alternative methods of payment has been gradual. Most of the changes have been happening within the last ten to fifteen years. The rise of cryptocurrency brought debate, concern, and the need for regulation, but this new form of currency is still too young to stop its growth.
What is Cryptocurrency?
Cryptocurrency is digital currency; the term to describe multiple types of digital coins encrypted into a database that can buy products and services around the world. They are part of a decentralized currency system designed to operate around the world as a world currency as each cryptocurrency bought and sold forms a new digital link or signature. All these links form a blockchain.
What is Blockchain?
A blockchain link occurs when the cryptocurrency purchase, sale or trade occurs. This link is the digital signature and validity of the cryptocurrency and proof of its value. The blockchain is to keep the system balanced and prevent fraudulent cryptocurrency from entering the market.
Most Cryptocurrencies have a cap of how many can be in circulation and restrictions on mining make the creation of more difficult. Mining cryptocurrency brings more crypto into circulation. Capping the market also protects the currency from fraudulent mining processes. Mining started as a reward to reduce transactions frees while using cryptocurrency.
Where is the currency stored?
Crypto wallets store the private and public keys to the wallet. Restricted access to the wallet allows only the holder of the wallet and the institution holding the digital or paper copies of the crypto to access it. The wallets hold specific types of crypt currency and the chains of authenticity that connect them all.
Different Types of cryptocurrency
The first digital currency and it is still the best bet for newcomers to the digital currency world. It currently has the highest market cap and verifies it as a legitimate currency accepted around the world. The coin takes up to 10 minutes to process a request.
The Litecoin is very similar to the Bitcoin. It is a very stable digital currency that is one of the older currencies on the list. It currently takes only 2.5 minutes to process a request which allows for faster transactions. Their algorithm is also more complex, which makes mining more complicated and expensive to undertake.
Ethereum is a flexible currency that uses smart contract functionality. It is easy to transport between accounts and Ether token distribution occurs through public ledgers and pays for digital gas which delivers the currency to its intended location. The tokens pay for transaction fees.
- Bitcoin Cash
The Bitcoin cash is a currency with faster transactions. It is, in fact, two different types of currencies. Bitcoin Cash became a way for people to invest in digital currencies without investing in the transactional portion of the currency. It also limited the size of the blockchains and reduced the number of fees to its parent currency.
Ripple currency operates in real-time for financial institutions to people to transfer their money with fewer fees. Conducted in real-time, the wait time for transactions to be processed is reduced or eliminated.
- Dash (formerly Darkcoin)
Dash is a decentralized currency that operates as an independent currency. It does peer-to-peer transactions that are completely free of financial systems.
The Tether currency is a blockchain meant to mirror the value of the US dollar. The claims for this are unverified, and the issues have fallen to the auditors.
Zcash aims at privacy. The transactions are transparent and shielded from disclosure. It also prevents money laundering and to comply with tax regulations.
The list of Cryptocurrencies is not complete and is growing as currencies join the exchange servers.
What are cryptocurrency exchanges?
Cryptocurrency exchanges are where you can buy, sell and trade cryptocurrency. The usual way to do this is through using United States Money or Euros. The exchanges provide a place for wallets to reside along with the ability to purchase multiple forms of currency.
Not all currencies go through the exchanges, which means multiple accounts required. The exchanges are where you can trade the currency. There are multiple types of exchanges.
- Direct Trading: A direct trading platform connects cryptocurrency users from other countries together. There is no fixed market price, and the country sets the currency rate.
- Trading Platform: These are the direct peer-to-peer exchange networks. It requires both parties to have the same sort of account to manage the transaction.
- Brokers: Broker websites allow people to buy cryptocurrency at the price the broker sets.
Purchasing cryptocurrency is simple when using the currency’s website; though often it has to stay on that website’s digital wallet for use.
What is the benefit of Cryptocurrency
People are buying cryptocurrency as a way to get ahead in the future. A good investment appreciates with time, and many people are looking to cryptocurrency as the future of currency. Decentralization has placed the forms of currency outside the control of financial institutions and into the hands of the holders.
The benefit of cryptocurrency is that it also allows for people in all walks of life to access it and do business around the world with anyone holding similar currencies or allowing for their use. Cryptocurrency is a good long-term investment; because most Cryptocurrencies have caps on long-term currency mining — the availability decreases, which prevents inflation or deflation of the money as more or less.
Stability is a factor many investors are waiting for cryptocurrency to gain. The market for the Cryptocurrencies rocks more than other established securities because they are so new. There have also been several scandals and frauds that have permeated the cryptocurrency markets as fraudulent currencies have risen and fallen with the investor losing millions.
How to buy cryptocurrency
The Bitcoin and other Cryptocurrencies are available on the currency’s specific webpages you can buy them through exchanges or through websites built to be mass trading platforms. The market they represent are available for purchase through money markets though this form of investment is not buying cryptocurrency, it is investing in the technology and development of it.
What are ICOs?
ICOs are the Initial Coin Offerings made when a new currency hits the mainstream market. The ICO is a lot like the initial stock offerings of a new company except they set the going price of the cryptocurrency.