US dollars, Euros, Pounds – these are currencies we were all accustomed to until something totally different came our way, and what’s that? Cryptocurrencies! If you don’t know what these are but you’ve been constantly hearing about them, then you are in luck. Just keep reading and you will find out what all the fuss is about.
What are Cryptocurrencies?
Before we start using all the big words and grammar, cryptocurrencies are simply a form of digital or virtual money that is designed in a way to ensure decentralization, security and anonymity. What this simply means is that you don’t need a middleman or central authority giving you rules and regulations or even restrictions when making transactions.
Just imagine cryptocurrencies as money that you can send to anyone at anytime, anywhere. Interesting isn’t it? Cryptocurrencies act this way using what is referred to as cryptography, which is what enables the conversion of legible information into encrypted and almost undecipherable code that is used in tracking transactions within a network.
But what gives cryptocurrencies this decentralised nature? The answer is Blockchain.
The Blockchain Technology
The blockchain technology is a completely ingenious innovation. Since when it was introduced by the anonymous inventor Satoshi Nakamoto, it has evolved in some many ways, but the question still remains, what is Blockchain?
Blockchain is basically the backbone of the world of digital currencies. It allows the distribution of digital information while at the same time keeping them from being copied or altered by any individual or even machine. It was originally designed for only digital currencies, but many individuals in the tech community have found other ways they can apply the ingenuity of the blockchain technology.
How does Cryptocurrency work?
Just like it has been mentioned earlier, cryptocurrency allows the secure payment and storage of money in a decentralised manner without having to go through a middleman. The blockchain technology acts as a distributed ledger and allows them record all transactions made by members of the network.
All you have to do to become a member of the network is to create a digital wallet that gives them a specific address which can be used in sending or receiving digital currencies. Yes, it is that simple!
Common Cryptocurrencies Out in the Market
Since the introduction of the blockchain technology back in 2009, there has been an in-flux of different kinds of cryptocurrencies, and while some have faded out, others have stayed. Some of the common cryptocurrencies you should take note are:
- Bitcoin: This is the first, and still the most popular of all the cryptocurrencies out there. It was introduced in 2009 and has since grown outrageously.
- Ethereum: This is the second most common cryptocurrency after Bitcoin. It was introduced in 2015 and uses the Ether token in carrying out transactions on its network
- Litecoin: This is similar to the way Bitcoin operates but has some extra features, which is why it is considered by many as a Bitcoin upgrade.
The world wasn’t prepared for cryptocurrencies and the way they have disrupted many global markets. Since 2009 that the blockchain technology was introduced, many cryptocurrencies have emerged but the most commonly traded are Bitcoin, Ethereum and Litecoin.
Though many people have not fully grasped the concept behind the digital currency, it is definitely here to stay.