Even with a lot of digital content available, only a few people seem to understand cryptocurrency? And for those who do, they just have a vivid idea of the terms and conditions and many other general aspects of how the currencies operate.
A cryptocurrency is a type of currency that works on an online platform.
Bitcoin is one common types of cryptocurrencies that we have on the market today. The value of bitcoin has grown significantly over the years making it very attractive to investors.
Other coins include Ripple, Dogecoin, Ethereum, Dash, zCash, and Litecoin.
Cryptocurrency vs. Fiat Money
In the olden days, business thrived due to the existence of barter trade. What made barter trade successful was the double coincidences which existed between traders and buyers.
Finding the right person who needed what the other party was selling made the exchange of goods and services a success. The use of fiat money presented traders with a more relaxed way of doing business. Traders could now store the value of their goods and services in fiat money, and this eliminated the need for barter trade over time.
Similarly, cryptocurrency provides a second choice hence enhancing flexibility in trading activities for the buyers and sellers. People can purchase goods using cryptocurrency and still trade in other currencies using the same item.
Fiat money and cryptocurrency share a lot of similarities even when it comes to liquidity. Over the years their acceptance has grown globally, and many businesses now accept them as a valid payment option for goods and services worldwide.
What value do fiat money and cryptocurrency hold?
Cryptocurrency holds as much value as fiat money since both of them act as a form of payment for goods and services. If people learn and accept them as a means of payment, the currencies have the potential of being a reliable source of wealth due to their increase in value over time.
The benefits, therefore, become more stable.
Flat money and cryptocurrencies serve similar purposes. They enable trade to take place efficiently due to their presence as the media of exchange. It is blockchain technology which allows cryptocurrency to express excellent performance in business.
With the advanced technology, there is adequate online security which guards the currencies. The transactions that various people carry out are therefore secure. Cryptocurrencies come in some denominations with each currency varying regarding value.
You can as well get cryptocurrency in coins or infinite values such as in U.S dollars.
How does Blockchain make Cryptocurrency useful?
The blockchain technology is a network which gets its power from software applications. The blockchain ensures the whole idea of the use of cryptocurrencies runs smoothly. Miners are very important when it comes to the creation of the different form of denominations of cryptocurrency.
The miners also provide a network for every kind of cryptocurrency. The fibers which ensure the efficacy of Bitcoin originate from the connection of a variety of computers. With this, it is easy to authorize secure transactions, conduct thorough verifications and even carry out encryption before conducting any trading activity.
Miners keep ledger records after every specific transaction. Theft of coins also becomes impossible due to heightened security. It, therefore, makes the stores safe for keeping the cryptocurrency.
The ledgers do not pick records of illegal transactions hence eliminating fraud. After a good job, all miners get equal rewards. The compensation depends on the value of the activity that the miners carried out. It can either be verification, a transaction, authentication and even encryption.
Cryptocurrency Wallets and their functions
Cryptocurrency wallets come in various forms. They are mostly in soft copy as most of the transactions take place via online platforms. The software applications operate differently from the hard drives. The cryptocurrency wallets function as record tool for any activity that takes place within the computer systems. The portfolios also act as storage facilities for your valuable coins. What is more is that they sum up everything for you and let you know the worth of the coins in your possession.
If you carry out any transaction with any cryptocurrency, the wallets perform the verification process. The cryptocurrency wallets also ensure that they record your operations in the ledgers hence assuring you of legal possession of the coins. The various portfolios have identifications which consist of number and letter codes. An address enables you to identify the storage options for your coins.
Learning Crypto Investing
You probably have frends or relatives who have mad a killing in the Cryptocurrency market, but before you invest your hard earned money in cryptocurrency you really need to understand exactly how it works and the risks involved.
There are way too many articles and videos about how to make millions day trading alt-coins, but you can bet that most of the people producing this content have not made a dime. They are most likely trying to sell you something – so buyer beware.
One resource I recommend to my friends who are just getting started with Cryptocurrency investing is a course called The Crypto Currency Codex. The sales material will have you believe that this is some magic system (which it is not) but it is a great overview of the most sound strategies organized in a user friendly way. You can read a review of the system or watch the video review below: