Have you heard about digital money which employs cryptography as a shield against counterfeiting? If you haven’t– then let us walk you through the world of cryptocurrencies. As you read on, you would literally be thrilled to find out about this wondrous creation of sorts. It is virtual money which is immune to any form “substitution” – thanks to the infallible cryptography it is backed by. Notably, this form of money is not really issued by any government or central authority to say. As such, this form of transaction is conspicuously free of any form of government intervention.
The History of Cryptocurrency: Why it was introduced
The history of cryptocurrency dates long back to the times of the World War II when the world was in dire need of secure communication. However, with the advent of time and the eventual dominance of the digital era—cryptocurrency only witnessed further evolution. Now, with the employment of mathematical theory and computer security, cryptocurrency has evolved to be more infallible than ever in terms of security.
The need for secured communication was felt more intensely during the Second World War—because the global financial market was conspicuously destabilized by counterfeit notes and this was the reason why cryptocurrency came into existence at the first place.
How does Cryptocurrency Work?
Now, the absence of government interference shouldn’t be reason enough for you to invest in it arbitrarily. We are definitely not advising you against investing in the same – but make sure that you are only doing it after making yourself thoroughly acquainted with the ways cryptocurrency works and of course its pros and cons—only then will you be able to figure out whether you should invest in cryptocurrency or not.
At the very first instance, let us tell you that you can use this form of money anonymously. You can make payments and store money (in a secure fashion) without having to use your name or any banking services. These are distributed public ledgers known as blockchains responsible for maintaining a record of all the transactions held and updated by currency holders. Its anonymous yet secure nature serves as the greatest allure and it can well be understood that a system of money introduced by a reticent internet user couldn’t be anything but “secretive” in nature.
Yes its creator Satoshi Nakamoto was a near-mysterious internet user who came up with the first version of cryptocurrency – i.e bitcoin. Bitcoin was notably introduced in the year 2008 but it was only circulated on the internet in the year 2009. Over the years, post 2009, several other forms of cryptocurrencies were introduced in the market. A few important names are:
– Ethereum (ETH)
– Zcash (ZEC)
– Ripple (XRP)
– Monero (XMR)
The question is – how exactly can you deal in cryptocurrency? It should be noted that in many countries the technology is still in its nascent stages. However, keeping its secured nature in view, all the biggest financial systems in the world are willing to embrace it in its more evolved form.
The Popularity of this form of Transaction
One can presumably gauge the popularity of bitcoins by actually learning that currently, this particular form of cryptocurrency demands a market worth $45 billion as of July 2017. It is the most common type of cryptocurrency used till date.
Cryptocurrencies are very popular because they back easy transfers backed by public and private keys for safety purposes. You can transfer fund for very little processing fee.
Now, we can well understand that cryptocurrency was introduced in the market with the basic view to do away with the counterfeiting which became so rampant post World War. The independence from Government control is the reason why this phenomenon has assumed such a popular shape today.
Should you use cryptocurrency?
However, if you think that the popularity of cryptocurrency is the only reason you should invest in them then you are wrong – let us tell you that this form of currency is not really immune to drawbacks. Please do not forget that cryptocurrencies are not backed by a central repository. So, if your computer crashes today, the entire record of the transaction will be gone. Plus, the prices are primarily dependent on demand and supply. So the rate of exchange for which this money can be exchanged for a different currency is actually subject to fluctuations. The currency is not immune to hacking. A look at bitcoin’s history will tell you that. Bitcoin has had the record of 40 thefts so far.