Hey there! Are you bombarded with many questions in your mind about Bitcoins and new Crypto Currencies in the market? Read this detailed article with patience for 2 minutes to get more knowledge about the crypto currencies than many people out there. In this digital world, the monetary system is really changing, and what used to be popular in the recent times is now being replaced by improved systems that make transactions easier and safer. However, all these inventions as it has always been a custom, they are often met with conservatives from people all over the world.
A larger number of members of the large monetary systems are not so much convinced with this emerging era of crypto currencies. Despite the reactions against the cryptocurrency era, a country like Japan has already made bitcoin the official legal means of payment. This news really attracted investors who have been investing in the currency. This is what actually made Bitcoin to grow rapidly attracting a large number of investors.
Other countries like Nigeria and China have really shown great interest in incorporating Bitcoin in their payment industry. This move in these countries is influenced by the fact that there are unpleasant restrictions in foreign trade which involves the export of foreign currency and the purchase of foreign currency in both countries.
☞ What exactly is a cryptocurrency?
Cryptocurrency is a type of a digital currency which is designed to make payment or transactions anonymous and has no a central authority. The digital currency is associated with the latest cryptography used to convert legible information into codes that cannot be cracked for tracking transactions.
When comparing the cryptocurrencies to the fiat currencies such as the dollar and the euro we can note some notable differences. For instance, while the fiat currencies are under the control of the central banks that regulate their release or their supply in the market to control inflation, it is different with the cryptocurrencies. The digital currencies are rather designed by people or corporations which become owned by people in their networks. Therefore, this shows that cryptocurrencies cannot be controlled, censured or regulated by any authority. Read 4 Professional Ways to Earn from Facebook without Investment if you are not interested in risking your money in BitCoins and other crypto currencies.
☞ The rise of Cryptocurrencies
For many years, people have been using the fiat currencies which are always regulated by the central banks. The central banks act as the central authorities that control the printing and release of the currency into the economy. However, this control has made money transfers very expensive, complex and lengthy indeed.
Other alternatives that have emerged over the years include the Master Cards, Credit Cards, Money Gram among many others, cannot be termed as very reliable. More often than not, these money transfer methods act as extensions of banking systems, thus are easy targets by fraudsters. Due to this disadvantages everyone would desire to have a currency that is not regulated by a central back and whose transfers will be anonymous. Perhaps this what inspired the invention and the rise of the cryptocurrencies?
Cryptocurrencies can be better traced from 2009, when Bitcoin which the first cryptocurrency was launched by a person with a pseudo name Satoshi Nakamoto. The pseudo name Satoshi Nakamoto is actually believed to be a group of cryptographers as well as financial experts who don’t want to reveal their real identities for legal reasons. In fact, Satoshi Nakamoto is a still a mystery to-date. I strongly recommend you to read BitCoin – 6 Realities Of The Multi-Billion-Dollar Scam to get a different perspective of this topic.
When Bitcoin was launched, it was termed as a network of payment transfer in instantly without the involvement of the central bank or central authorities. In 2008 prior to the launch of the digital currency, Satoshi released a white paper that explained the cashless peer-to-peer system. Following the launch of the Bitcoin, other new cryptocurrencies have been released all based on the Bitcoin core.
In 2011, the NameCoin which is the second altcoin was released and it used the Bitcoin core programme. NameCoin became the first decentralized DNS which actually made the internet censorship very difficult. In December the same year, Litecoin was launched and was the first currency to use script as the main hash function which was a deviation from hashing function in Bitcoin.
During the period between 2012 and 2017, numerous cryptocurrencies have seen their way into the market. Some of them include, Ripple, Monero, IOTA, Ethereum, and Dash among others. Feeling bored of all these terms? Just leave this article and see 5 Proven Ways To Make Millions From YouTube .
☞ Types of people who invest in Bitcoin
There are two types of people who invest Bitcoin. These people include;
The Speculators- these are investors who want to cash in on the universal hype around the cryptocurrency.
There are also those investors who don’t want to get associated central banks and want to protect themselves from the inflation in the market of this currency. This kind of investors do not rely on the hype that is associated with Bitcoin unlike their counterparts the speculators.
☞ What it is like investing in Bitcoin?
Investing in Bitcoin can bring you incredibly large amounts of returns. In fact, an investment in Bitcoin brings about 30% which can be even more than that per month. This is not so with the contributions to the large and most popular joint-stock companies which bring only 1%. Howeevr investors should be aware that the fluctuations rate in this currency are about 90% which is about 86% more than the fluctuations rate of the popular joint stock companies. Generally Bitcoin can be a great way to diversify your investment portfolio due to its huge returns. But you should be very careful not to have it as your long term part of investment portfolio.
☞ Use of Blockchain technology in Cryptocurrencies
Many people find it difficult to understand how the cryptocurrency works. These digital currencies use the blockchain technology which help get rid of the involvement of the central authorities.
The blockchain technology is actually an algorithm and data structure that is carefully distributed for managing the original cryptocurrency, Bitcoin. With this technology, people can send money directly between two points with nodes helping to confirm transactions.
The blockchain can be termed as a public ledger that captures and stores the details of the transactions and afterwards adding them as blocks. For instance if one person New York wants to send Bitcoins to another person Tokyo, he will need to initiate a transaction in the network. Then, the Bitcoin network will generate a complex mathematical puzzle that users in the Bitcoin must solve in order to confirm transactions.
Four things that happen solving the Bitcoin mathematical puzzles:
- The transaction is encrypted
- A mathematical puzzle is generated by the Bitcoin core code with adjusted difficulty which helps maintain the right number of coins in supply
- Miners who are all over the network try to solve the puzzle and the first to get the answer confirms the network and gets some bitcoins as a reward.
- Once a user or a node confirms the transaction, it is added as a block to the public ledger.
☞ CryptoCurrency Mining
There are various ways to acquire cryptocurrencies. You can choose to buy from a cryptocurrency market for example from the Coinbase, Poloniex or CIX.io. In these markets, users can exchange cryptocurrencies either for other cryptocurrencies or fiat currencies such as the dollar.
Interested persons an also acquire cryptocurrencies through a process called mining. Cryptocurrency mining is a process of confirming transactions in a cryptocurrency network and adding new blocks into the public ledger. Here the user or a node has to solve the mathematical puzzle generated by the Bitcoin core in order to confirm the transaction.
Bitcoin many other cryptocurrencies are mined using the SHA-256. Others such as the Litecoin use Scrypt and other hashing functions such as x11 and Scrypt-N which were created to address the problems presented by the original Bitcoin SHA-256. The problems may be in form of high power requirement and low hashing power.
Most people who trade in Bitcoins wonder if mining is profitable. Mining can be profitable only if you have a high hashing power. More profits can only be guaranteed by using the specialized ASIC SHA-256.
☞ Why Cryptocurrencies are becoming so popular
In the last few years, various cryptocurrencies have gained a lot of popularity in the market. Their prices are skyrocketing every now and then. So what is really associated with their fast growth and popularity?
Here are the major things.
- Cryptocurrencies are a cheaper and faster payment transfer method
Sending cash using banks is very expensive, lengthy and very complex. But when sending cash using cryptocurrencies, the cost involved is very small, this is simply because of the fact that transactions are peer-to-peer. Transactions are not lengthy as they are with the sending money using banks. Transactions can be completed within seconds.
- All transactions are anonymous
Everyone would want to send money in an anonymous manner and that is only possible when using the cryptocurrencies. However, this anonymity has attracted fraudsters, scammers and cybercriminals.
- Cryptocurrencies are owned by users
When you have money in the bank account, it said that you own it, but what you don’t know is that the legal tender is actually a government property. It is for this reason that the government has the power to control the value of money through regular printing and releasing it. This is not the same with cryptocurrencies, when you join the network, you become the owner.
☞ CryptoCurrencies Bubble Blasts
Cryptocurrency is a word that attracts a lot of discussion these days. The Team Crypto believe that this arena is actually the next big thing and they are always positive about the future of cryptocurrencies. In direct opposition, there is that team of people who really believe in tradition and warns around the perils of decentralization and fraud that is often associated with pure digital currency.
The cryptocurrency market is associated with fear on both financial and technical sides. On the financial side, cryptocurrency is actually a bubble. The technical side is where these coins will be lost, stolen or hacked and other frauds that are associated with pure digital currencies.
Digital currencies tend to attract a lot of fraud. In fact, we are not done with scams and sites that might get you into a field of some sorts that for a set fee. Hacking is another vice that really is associated with the digital currencies and cryptocurrencies are not spared. As many transactions are happening, there could be a security mistakes that can expose you to hackers and you end up losing your investment. It is actually said that your unregistered currencies are safer from hack than registered. There is no insurance or guarantees for cryptocurrencies, thus investors have a lot of fear that their hard earned money could be stolen in hours or a few days after purchase.
Many cryptocurrencies have not been audited and by their regulators but in 2018, all these currencies will be subject to financial audits. This has therefore led to investors suspecting that their coin miner or exchanger will be shut down due to noncompliance.
A large number of merchants are continue to accept cryptocurrencies as the major, however for them to become widely used they must gain widespread acceptance among consumers. The complexity that is associated with cryptocurrencies is relatively high compared to the conventional currencies and this will likely deter most people from accepting them. The future market of cryptocurrencies can only be guaranteed if cryptocurrencies become mathematically complex in a way to avoid fraud and hacker attacks but also easy for consumers to understand. There should be adequate consumer safeguards and protection.
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