Bitcoin, Litecoin, and Ethereum are just some of the most famous cryptocurrencies used daily for many online transactions. But what exactly is a cryptocurrency? Most of us hear this word more and more as days pass and technology becomes even more sophisticated. Through this article, we hope we will make understand cryptocurrencies a less tedious process.
What is a cryptocurrency?
Put in simple terms, a cryptocurrency can be any form of digital money existing without a physical replication. Bitcoin, which was the very first one to be created and currently the most famous one, can only be used for online transactions.
That means that there is no physical form of the Bitcoin or any other cryptocurrency you could hold in your hand except a device where your eWallet would be stored in. Even then you would be holding a digital form of money and not a real currency.
How can you get a cryptocurrency?
There are two main ways an individual could get to own them. First, you can buy them for real money using specific online vendors or specific ATMs like Bitcoin has. Coinbase is the most popular software that enables you to do just that. You just provide your personal credit card/bank account details, select the amount of Bitcoin you want to buy and the address of your eWallet and you are all set.
There are many online vendors where you could buy or exchange cryptocurrencies other than Bitcoin. The second way you can get a cryptocurrency is by a process called mining. Why is it called that?
Because just how miners try looking for something precious the same exact way you can use specific software that harnesses the power of your CPU or GPU to look through a computer function called a “hash” that is compiled by random numbers. If you happen to compute a number below a specific point then you will be awarded a portion of your selected cryptocurrency.
Due to the complexity of those hashes, people now can buy devices built using a special chip. For example, there are the Bitcoin ASIC using machines that can harness the popular cryptocurrency.
The reason why cryptocurrencies have become so popular in so little time is that anyone with the right equipment can make money out of nothing. Digital money that can still be exchanged for real money or services.
The part of cryptocurrencies in economy
At first, Bitcoin was mainly used to transfer a small amount of money, the so-called “micropayments”, as it was a hassle-free quick way to do so and no money needed to go towards payment of transaction fees. Based on the law of demand and supply prices of cryptocurrencies started rising very fast and now even some big businesses have started accepting it as a form of payment.
Their prices are constantly altered just like the worth of real currencies just like dollars, pounds, and euros as well as all others. The previously mentioned online vendors have eliminated the danger of that as you can exchange the digital currencies for real ones at any time you want.
Just to get a grasp of how much cryptocurrencies may worth in the future know that Bitcoin market has a capitalization worth of nearly £55 billion.
Understanding cryptocurrencies is a task that can take a lot of money. There are multiple free online resources you can use to do so. If you are interested in marketing and technology it will seem fun to study and understand them but still very hard as well.