Simply put, cryptocurrency is digital money, designed in such a way that it is secure and in some cases anonymous. It is closely related to the Internet which uses cryptography, which is basically a process where explicit information is converted into a code that cannot be cracked so that all transfers and purchases made can be dealt with.
The history of cryptography dates back to World War II, when communication was needed in the most secure way. Since then, an evolution has taken place and it is digitized today where various elements of computer science and mathematical theory are being used for the purpose of securing online communication, money and information.
The first cryptocurrency
The first cryptocurrency was launched in 2009 and is still well-known around the world. Many more cryptocurrencies have been introduced in the last few years and today you can find many more available on the internet.
How they work
This type of digital currency uses technology that is decentralized to allow different users to make secure payments and save money without necessarily using a name or even going through a financial institution. These are basically driven in a blockchain. A blockchain is a public ledger that is universally distributed.
Cryptocurrency units are usually created using a process referred to as mining. It usually involves the use of a computer power. The math done in this way solves problems that can be very complicated in making coins. Users are only allowed to buy coins from brokers and then store them in cryptographic wallets where they can spend very easily.
The application of cryptocurrency and blockchain technology is still in its infancy when it comes to financial matters. More uses may emerge in the future because there is no telling what else will be invented. Stocks, bonds and other types of financial assets can be traded very well in the future using cryptocurrency and blockchain technology.
Why use cryptocurrency?
A key feature of these currencies is that they are protected and they offer an anonymous level that you may not find anywhere else. There is no way a transaction can be reversed or forged. This is by far the biggest reason why you should consider using them.
The fee charged on this type of currency is quite low and this makes it a highly reliable alternative to conventional currency. Since these are of a decentralized nature, they are different from any bank that can be accessed by opening an account only with approval.
Cryptocurrency markets are offering brand new cash forms and sometimes rewards can be great. You can make a very small investment just to find out that it has turned into something great in a very short time. However, it is still important to note that the market can also be volatile and there are risks associated with buying.