What is cryptocurrency? Is Bitcoin the definition of cryptocurrencies? If you have asked these questions of late, you are not alone. There’s an information overload on cryptocurrencies, and for anyone interested in learning, this is not an ideal situation. To make things worse, most people think Bitcoin is the only cryptocurrency. The goal of this article is this: demystifying cryptocurrency.
Whether you are an ordinary internet shopper looking for a safe medium of exchange or an investor looking for the best place to put your money, there’s no way to avoid talk of cryptocurrency.
You will always come across people vouching for or rallying against cryptocurrency. The fact that even the U.S President, congress and governments across the world have talked about Bitcoin and other cryptocurrencies shows the impact these digital currencies have.
Whatever the motivation behind your urge to learn about cryptocurrencies, it is advisable to first get the basics. When you learn more about cryptocurrencies, you can make informed decisions when trading or making other online financial transactions.
Cryptocurrencies in Brief
When demystifying cryptocurrency, we need to consider how ordinary currency works. In order for an ordinary currency to work, people have to come together and agree to use a particular medium of exchange. There’s an aspect of trust in such a medium and its value changes now and then. It is a store of value, and everyone recognizes it. In this regard, think of the dollar, Euro, Pound or other currencies.
Now, the internet technology has tremendously altered the world of commerce. More people shop for goods and services online. Online transactions are fast and convenient, and they have also made global trade easier. However, there are hiccups brought about by different currencies used across borders. With central regulators controlling different currencies, online transactions sometimes move at a snail pace.
What if all internet users agreed on a specific medium of exchange that they all trust and control? This is the idea of a cryptocurrency. In its simplest definition, cryptocurrency is an internet-based medium of exchange.
There are hundreds of these digital currencies currently available online. Over 1500 cryptocurrencies have emerged since the launch of Bitcoin in 2009. Bitcoin happens to be the most popular of these electronic peer-to-peer currencies. As of June, Bitcoin’s share of $350 billion crypto market was the highest since 2017. It is the world’s largest cryptocurrency by market capitalization.
Blockchain technology is the infrastructure that makes digital currencies a reality. This is a digital ledger or register for all virtual currency transactions. It is visible for all cryptocurrency owners and makes this a safe and transparent medium of exchange. This is the technology that ensures no one controls a digital currency.
Benefits of Cryptocurrencies
Before you start using any cryptocurrency, it is important to assess the benefits. Some of these advantages include:
- Lower transaction fees than with ordinary currency: There are no third parties involved in transactions.
- Decentralization: No central regulator controls this virtual currency. The network controls all transactions.
- Faster settlements and instant payments: With cryptocurrencies, you enjoy faster settlement in all transactions. Also, unlike credit card payments that take days to go through, businesses and other service providers can now enjoy payments immediately.
More benefits of these innovative currencies continue emerging, forcing individuals and businesses to embrace this technology. The popularity of cryptocurrencies has seen Facebook enter the market with their digital currency known as Libra.
Altcoins: Cryptocurrency Alternatives to Bitcoin
Altcoins are alternatives to Bitcoin and work just like their older brother. Whether you want to trade in Bitcoin or use it to transact, you might find it difficult and expensive to get hands on the currency. This is where altcoins come in handy.
Alternative coins are less competitive and also affordable. You have thousands of altcoins to choose from, and like Bitcoin, they have users across the globe. Most of the altcoins that emerged a few years back have surged in market capitalization as more people look for alternatives to Bitcoin.
Some of the popular altcoins to consider are also Litecoin, Ethereum, Zcash, Dash, Cardano, EOS, Monero and Ripple. These offer an exciting opportunity for anyone looking to make money. When making transactions online, you should always look for the opportunity to use altcoins because it is cheaper and faster.
Wrapping Up on Demystifying Cryptocurrency
There’s so much going on in the cryptocurrency world. You have to keep learning to get the best out of these virtual currencies, whether as an investment or for online transactions. We hope this article has fulfilled its purpose for you, being demystifying cryptocurrency.
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