What is Cryptocurrency and How Does it Work?

Cryptocurrencies are digital cash planned to be faster, cheaper, and more trustworthy than our usual money issued by the government. In cryptocurrency, you don’t need to be dependent on the government for money, nor do you need a bank to reserve, you can directly transact your money with each other and keep it to yourself. As people can directly send money without any third party, transactions are normally very reasonable and quick. To avoid imposter and exploitation, whoever is using cryptocurrency at the same time can note and check their transactions and other transactions as well. The copy of the digital transaction is called a “ledger”, and this ledger is easily available to the public. Public ledger has made transaction proficient, everlasting, safe, and visible. Because of the public ledger, cryptocurrencies want people neither to trust any bank to keep their money nor to trust the person with whom they are doing business. The whole process of cryptocurrency needs no trust, and this exceptional, optimistic quality is called “trustless”.

How Do Cryptocurrencies Work?

Cryptocurrencies use the decentralized method so that users can make safe payments and preserve money without using their names or going through a bank. They work on a circulated public ledger called blockchain, which is evidence of total transactions updated and preserved by currency bearers. Mining is the process through which units of cryptocurrencies are made, and where the computer is used to solve difficult math problems that produce coins. Cryptocurrencies can be bought from brokers as well, and then the users can store it or spend it through cryptocurrencies wallets. Cryptocurrencies and the use of the blockchain method are still growing in economic terms, and more functions should be projected. Cryptocurrency transactions can also be used in the trading of bonds, stocks, and other economical assets.

Why Should You Use Cryptocurrency?

Cryptocurrency is well known for giving safe and secure transactions. Transactions in here cannot be forged or inverted, and there like to be cheap fees, making it more trustworthy than usual currency. Being a new form of cash, cryptocurrency markets are booming, where little investments can return you huge money overnight. Because of this fast and easy cash, both experts and amateurs are investing in Bitcoin and other forms of cryptocurrencies. People who are willing to buy cryptocurrency should be aware of the instability of the market and what risks may appear in the future. Cryptocurrency has failed drastically many times, which costs potential investors losing their millions. Because of the intensity of secrecy they provide, cryptocurrencies are frequently related to illegal activities, mostly on the dark web. Investors should be more cautious about the implications when choosing to buy the currencies.

What are the Most Common Cryptocurrencies?

• Bitcoin: It was the very first cryptocurrency to be traded to date. This currency was introduced by Satoshi Nakamoto in 2009, which gradually expanded its blockchain. By May 2018, Bitcoin’s market capitalization was $128 billion.

• Ethereum: It is the second most famous and worth cryptocurrency, introduced in 2015, and this currency was used in the Ethereum blockchain. By May 2018, this currency’s capitalization in the market was $56 billion. After a huge failure in 2016, it again gained popularity in 2017 as a launchpad for cryptocurrencies, which used the Ethereum blockchain’s code.

• Ripple: Ripple is another circulated ledger scheme that was introduced in2012. It can record the transactions of not a cryptocurrency but others as well. The company behind Ripple has performed with banks and economic organizations, including Santander and its market capitalization was around $24 billion.

• Litecoin: it is quite similar to Bitcoin, but transactions over here are faster. The total worth of Litecoin is around $6 billion.