What is Cryptocurrency?
Cryptocurrency is a digital currency that only exists on online networks. It is transferred between two entities and has no intermediary such as a bank for example.
Transactions are recorded on a digital public ledger called a “blockchain.” The transaction data and the ledger are encrypted using cryptography and that is why it is called “cryptocurrency”.
Cryptocurrency is decentralized, which means that it is controlled by users and by computer algorithms and not by a government system from a central bank.
Bitcoin, generally known as BTC is one of many popular cryptocurrencies; other cryptocurrencies have names such as “Ether (ETH)”, “Ripple (XRP)” and “Litecoin (LTC)” are also available on the stock exchange. Alternatives to Bitcoin are called “altcoins”.
Where does cryptocurrency come from?
One might be tempted to assume that cryptocurrency has been around since the early 2000s when the internet began to gain momentum and consumers began to make payments and purchases online.
Truth be told, the concept of cryptocurrency only began to surface in 2008, when Satoshi Sakamoto laid out its principles and operation.
The introduction of Bitcoin the following year officially launched cryptocurrencies into the financial market (For the record, no one knows who Satoshi Sakamoto really is, which makes his invention even more interesting).
Why does it attract so much?
Cryptocurrency attracts investors in the financial services sector because of the dynamics of its market that is similar to that of stocks. The prices of these digital currencies are indeed established according to supply and demand and are negotiated on many markets. This is the opportunity for investors to make arbitrage, speculation and investment in a growing list of cryptocurrencies that aim to use blockchain technology. Investors also have the opportunity to invest and contribute to the projects they believe in. The cryptocurrency market is an innovative way for startups to raise capital at an early stage.
This method of fundraising is new to investors because it removes barriers to entry, bridging the gap between retail and institutional investors.
Finally the last reason and not the least that makes the crypto-currency know a real boom is thanks to its high rates of return. Bitcoin, for example, posted an increase of around 1,500% in 2018, while Ethereum exploded to over 10,000% (i.e. less-known and riskier encryption tokens are emerging, offering even higher potential returns). Comparison of the crypto currencies of the moment
Cryptocurrencies are virtual currencies independent of banks and governments, and cannot be traded or speculated like a conventional currency. Launched in 2009, Bitcoin was the first decentralized cryptocurrency. Since its inception, thousands of additional cryptocurrencies, called altcoins, have been launched.
Although Bitcoin remains the market leader in cryptocurrencies, other digital currencies such as Ethereum, Litecoin, Ripple or Dash, could present a challenge due to growing demand, the expansion of applications and technological advances. Bitcoin (BTC)
Bitcoin known as BTC is the most popular type of cryptocurrency or digital currency. It is a monetary exchange that takes place exclusively on the Internet using a complex computer system and coding. Like gold coins, bitcoins are worth what people are willing to pay or exchange for them.
To acquire bitcoin tokens, one does not need to open a digital account, such as Coinbase, CEX or Kraken. These accounts act as a wallet similar to a PayPal account. Once the application has been downloaded and you have filled in your information and transferred money, you can proceed to the purchase of bitcoins. Ethereum (ETH)
Launched in 2015, Ethereum is the invention of the prodigious VitalikButerin who wanted to create an open platform for developers to create and deploy decentralized applications such as smart contracts and other legal and financial applications. Ethereum works exactly like Bitcoin.
It is currently the cryptocurrency with the second highest market capitalization and should, according to some, surpass Bitcoin both as a value investment and as the most popular cryptocurrency in the world. LiteCoin (LTC)
Litecoin is based on the same open source code as Bitcoin, with some notable differences. Created by engineer Charlie Lee to be “the most valuable money”, one of the main differences between the two cryptocurrencies lies in their transaction speed.
Litecoin, which generates blocks about four times faster than Bitcoin, confirms the legitimacy of its transactions by processing many more transactions in a fairly short period of time. It should be known that crypto-currencies have a value of their own because of their limited supply. Indeed, once a certain number of bitcoins (btc) or litecoins (ltc) are created, one can no longer create new coins. Bitcoin has a limit of 21 million coins while Litecoin can reach a maximum of 84 million.
Ripple is a service that financial institutions can use to send money and process transactions almost instantly, anywhere in the world. It is powered by its own blockchain and the value of its currencies is directly transferred using XRP tokens.
More simply, the money is converted into Ripple (XRP) which is then sent on the blockchain to another account and then converted back into traditional money.
The technology behind Ripple has been developed since 2004, however it didn’t really start to take off until ten years later in 2014. It is currently the third largest cryptocurrency just behind Bitcoin and Ethereum.
Launched in 2014 and based on the work of Nakamoto the creator of Bitcoin, Dash was originally known as Darkcoin and was designed to ensure the privacy and anonymity of its users. While Dash still has strong encryption features, Dash has since revised its ambitions. Cryptocurrency now aims to become a medium for everyday transactions.
Like BTC, Dash is open-source and has its own blockchain, wallet infrastructure, and community. But unlike BTC, its transaction fees are much lower. What is Blockchain?
A blockchain is a list of transactions that anyone can see and verify. The Bitcoin blockchain, for example, makes it possible to record a person’s transactions every time they send or receive bitcoins.
This list of transactions is fundamental in the world of crypto-currencies because it makes it possible to make secure payments between people who do not know each other without going through a third-party auditor, such as a bank.
Blockchain technology is also interesting, as it has many uses other than cryptocurrency. Blockchains are being used to accelerate research into serious diseases like cancer, improve the sharing of health records, verify people’s identities, and much more. The decentralization of cryptocurrency
One of the biggest attractions of cryptocurrency and blockchain, in general, is its trend towards decentralization. Although they can apply to many different things, the main idea of all decentralized systems (besides the system of cryptocurrencies) is that they cannot be controlled by a single authority. This makes them more democratic by nature.