A cryptocurrency is a digital currency that enables a user to make anonymous exchanges and payments via the internet. Cryptocurrency runs through cryptography and acts as an alternative form of currency online to make exchanges, transfers, and payments. Cryptography and currency together form the new and modern-day version of money, cryptocurrency.
Let us dive deeper into what the purpose of money is in order for us to comprehend better the reason for this new innovation. Money or cash money as we know of today is a token to make exchanges for goods. Money in hand feels of great significance, however, it has no other value than to make our daily transactions. With the modern day and age, and new competitive technologies arising there is a new demand for digital currency. As the internet is taking the world by storm, it plays a great role towards the advancement of our tokens. We know of cash currency, written cheques as a payment form, and then credit and/or debit cards making transfers or transactions more accessible. And now, the physical form of currency has been replaced by a digital form, allowing us to take part in transactions with no limitations, provided that you are connected to the internet.
What differs the cryptocurrency from traditional currency?
Computer programs and algorithms are required to generate and define the functions of a particular cryptocurrency. Their main responsibilities are to:
- Control how new tokens or coins are produced and released
- Observe how transactions are made, processed, and recorded
Organisations, or in other words, the miners have access to all transaction data and if and when, technical computer issues arise they must be there to fix them. Upon successful completion of the issue, they are rewarded with new coins. Essentially, the users that have the power to function cryptocurrency via computers, also have the power to monitor their transactions between other users, instead of bank employees, which is a vital role the user contributes to. This works as a Blockchain, both the currency and transactions are recorded by the user and this is known as a“peer-to-peer” system. What you may not have realised about crypto is that; unlike standard cash money, tokens, and coins are issued by the government, however, cryptocurrency is purely under the control of computer programs and algorithms. Furthermore, as mentioned previously, mainstream currencies which are issued by the government are subject to change in value quickly and unexpectedly. As economies grow, for instance, the GBP (Great British Pound) also must follow that and produce and extract more pounds to support the growing economy. In other words, the value of each unit of pound drops when the economy’s need for various supplies gets bigger.
This is what we call inflation and the inflation rate will continue to grow as long as the economy grows. In a country full of inflation, and currencies working on inflationary purposes, cryptocurrency plays a different role. The current amount that is available will never change according to the economics, therefore, it is limited. Cryptocurrency is a deflationary currency.
The value of the digital currency is unchangeable. The number of coins you may possess today, inevitably, will increase in value as the economy grows as the currency is static, that being the case, you use fewer coins to pay for transactions, goods, and services or to make exchanges.
Today, there are more than 1,300 cryptocurrencies circulating the internet, and while the big demand for digital currencies exists, they all compete among one another and have all created their very own unique qualities. The huge desire today has found Bitcoin, Ripple, Litecoin and Ethereum to be the most frequently used and favoured in the business market. Here we will discover a little on each cryptocurrency.
This is the main crypto of all and has the most successful reputation across all networks and markets is the Bitcoin. Bitcoin, the very first cryptocurrency was created by Satoshi Nakamoto, in 2009. Two versions of this cryptocurrency were created, not only do we have the original version, but also Satoshi supplied us with Bitcoin cash which is an option to be used when the transactions time on the Bitcoin network are too frequent, avoiding any crashes.
Ripple was created in 2012 and is both a payment network – Ripple Net and a cryptocurrency – Ripple XRP. Ripple targets payment that are made between financial businesses and institutions. The main aim is to make the transactions between the institutions quicker and inexpensive, as opposed to, standard payment form that is a long process and found to be more pricey. For those on short deadlines to make payments, Ripple is a perfect option.
The release date of Ethereum was in July 2015 and was designed specifically for those seeking “Smart contracts” rather than everyday usage of general people. Organisations or parties utilise this and no longer need paper contracts to make agreements or modifications to written contracts. This avoids the overall wastage of paper and is an environmentally-friendly way to make transactions.
Litecoin was released in October 2011 and was forked from Bitcoin itself. Like Bitcoin, it is another currency designed for general use. Although Bitcoin is used most frequently, adherents have suggested that Litecoin performs greater volumes of transactions and processes them quicker, making it the new and improved version of Bitcoin.
How to buy Bitcoin and other cryptocurrencies?
As cryptocurrencies are getting more popular than ever, many ask how to buy bitcoins or more precisely how to buy bitcoins online? As Bitcoin is the most popular cryptocurrency it is available on almost every popular crypto exchange. One can exchange other currencies and purchase bitcoins or any other currency for that matter and also they can be purchased with fiat currencies like EUR or USD. However, it is also important to know how to purchase bitcoins safely as there are many scams and hacks where you can lose your money. While buying cryptocurrencies it is important to make sure that you are purchasing or trading them on securities exchanges. While making transfers it is important to check that your payment is directed to the correct and verified address. All cryptocurrencies are likely to fluctuate, and ever so dramatically, despite that, for big companies making transactions via cryptocurrencies is not only useful in their purpose, but also very profitable for the user when used accordingly.