What exactly is Crypto Currency ? The world has seen an enormous shift in what is known as “cryptocurrency.” Bits of code and algorithms have replaced physical money. However, this new form of currency is still far from being mainstream.
To understand what cryptocurrency is and why it’s not just some flash-in-the-pan fad, you first have to understand what money represents.
What is Traditional Money & Cryptocurrency?
Traditional money is a physical currency that governments regulate. This kind of money only maintains its value and worth because of government backing. These currencies are backed in the form of gold and silver, but an agreed-upon exchange rate measures the currency’s value. For example, 1 US dollar = 100 Japanese Yen. The US dollars maintain their worth since they are exchangeable for gold or silver under a specific conversion rate.
On the other hand, cryptocurrency is a digital currency that is decentralized and independent of any government. These currencies are based on an agreement among users of the currency. For example, Bitcoin is a cryptocurrency that is based on the SHA-256 encryption algorithm. As long as the users make sure that they are investing in a Bitcoinhttps://nesteggincomesites.com/1-book-can-really-be-worth-1-5-million-dollars/ that has the necessary hash power to authenticate transactions, they can have faith in the security of their money.
History of Cryptocurrency
Following the financial crisis of 2008, many people became angry. Not only were the banks receiving bailout funds from the government, but they also were paying bonuses for their executives with those bailout dollars. It infuriated many people who took to the internet and started protesting against these practices online. During these protests, some people discussed creating an online currency that would be decentralized and wouldn’t rely on governments to establish its value.
These talks later led to the creation of Bitcoin in 2009. Bitcoin is considered the first decentralized cryptocurrency, but other cryptocurrencies have existed since then. Ethereum is a stable and secure cryptocurrency, unlike Bitcoin, which can often change its value. Other cryptocurrencies include Litecoin, Cardano, Solana, Dogecoin, and Shiba Inu.
What exactly is Crypto Currency? Just How Are They Created?
Whenever someone contributes to creating a cryptocurrency, they are rewarded with cryptocurrency. It usually involves the person using their computer’s processing power to solve a mathematical equation, which is referred to as mining. To protect this system from fraud and lock hackers out, anyone can “mine” in their personal computer, but the reward for a block solved is much higher than it would be if the algorithm were to be “mined” by anyone in a dedicated machine.
It means that if anyone tried to hack the system and make a transaction, other people would notice that something was going on and reject the transaction.
As mentioned earlier in this post, different kinds of cryptocurrencies are based on different encryption algorithms. Every cryptocurrency is unique in its way. Some have rapidly appreciated value, whereas others have remained stable.
To understand their future potential, you will have to look at how each one is mined and used by users worldwide.
How To Choose a Cryptocurrency?
To invest in digital currency, you must understand how each is different. Since there are so many options, you must thoroughly research the market before investing. Since most people are new to this, they do not understand its value.
You should avoid investing in the ones with a high market cap. You should only invest in the ones where you can see active trading by users. Watch out for any signs that the cryptocurrency is undervalued, as it will probably lead to an increase in value.
Ideally, you will want to buy cryptocurrency that has high volatility. It means that the cryptocurrency can rise and fall in value quickly. It is a good sign if the cryptocurrency price is constantly changing. It indicates that people are actively trading and investing in this new technology.
Cryptocurrency Pros & Cons
Pros
When you invest in it, you are investing in the future of money. Your investment is not tied to the volatile market of stocks, bonds, and other traditional investments. With cryptocurrency, you have more control over your money as you can hold and move it to several different currencies without an issue.
You are free from dealing with banks using cryptocurrency because they don’t need your bank information or account information. You can also invest in bitcoin with brokerages like Coinbase or Circle.
Additionally, you will have the opportunity to control your own money securely. If you do not like or agree with a stock’s performance, you can sell it whenever you want. Whereas selling stocks without an issue is very difficult if you have stocks in a traditional bank account.
Cons
Investing in digital currency is not for the faint of heart. It’s a new world where you can lose all of your money. You can also lose all the money you worked hard to earn in a single day. If anything goes wrong, you are entirely out of luck because there is no one to help you. You will be accountable for any losses you sustain.
It’s a Wild West environment where people try to make a quick buck by scamming everyone else. Some scammers are easy to spot, but others are much more cunning and can easily trick you out of your money.
The market is completely unregulated. No laws protect investors from scams or fraud, so you will have to fend for yourself if anything goes wrong.
Conclusion – What Exactly is Crypto Currency
Cryptocurrency is a brand-new industry that is still in its baby steps. We’re not entirely sure how things will turn out in the future. Cryptocurrency may be an amazing investment vehicle, and it will replace the traditional stock market as we know it today. It’s also possible that cryptocurrency will go nowhere and that there are too many risks to consider investing in.
Currently, the cryptocurrency industry is worth more than 200 billion dollars, which has led to quite a lot of interest. Investors are looking at different cryptocurrencies to decide on the next big thing.
If you have the time or inclination, could I suggest you visit the books section on Amazon, where you can find a couple of easy-to-read ebooks on this subject? Recent books I read and recommend are:
The Metaverse: And How it Will Revolutionize Everything, authored by Matthew Ball
And The Only Cryptocurrency Investing Book You’ll Ever Need An Absolute Beginner’s Guide to the Biggest “Millionaire Maker” Asset of 2022 and Beyond – Including How to Make Money from NFTs—published by Freeman Publications.
