I know there are a lot of newbies on Steemit so I think this will be helpful. Knowledges are so important in cryptocurrencies world.
Introduction.
The evolution of technology has birthed a lot of innovations which has not only made life easier for us but also opened us up to a lot of possibilities, especially on the internet. One of the recent or trending subjects making the rounds online these days is cryptocurrency.
In fact, in a recent development, tax authorities looked into cryptocurrencies with the conviction that people could use them to evade taxes and launder money. China has reportedly banned some Bitcoin trading operators while Canada and the United States have put some laws in place to ensure that cryptocurrencies never find their way to get traded on the stock exchange.
What is a Cryptocurrency?
Cryptocurrency can be said to be digital money, an entity that makes use of encrypted codes to carry out a transaction. Cryptocurrency is designed such that it is not only anonymous – as the case may be in some instances – but very secure as well.
The encrypted codes are acknowledged by other computers within the user community, and an online ledger is updated by employing regular bookkeeping entries. Cryptocurrency uses cryptographic encryption to generate the currency – in the form of coins – as well as to verify transactions.
The new coins that are generated are produced by what is called ‘mining’ while transactions are documented in the online ledger, otherwise known as a BlockChain.
A short story of cryptocurrencies.
Cryptography was put to good use during the World War II when the need to communicate securely arose. The evolution of the cryptography and the World Wide Web has brought about digitalization today in which different elements of mathematical theory and computer science are used for securing money, information, and communication online.
In 2009, the first cryptocurrency emerged and is still the leading coin globally today. Since then, other cryptocurrencies have emerged with so many flooding the internet on a daily basis and can be found on the website CoinMarketCap.
How cryptocurrency works
Cryptocurrencies use decentralized technology that will enable different users to make secure payments while, at the same time, storing money without making use of a financial institution or using a name. Digital currencies operate via a blockchain which is a public – and online – ledger that is distributed openly.
The coins – i.e. cryptocurrency units – are generated via mining. Mining has to do with making use of significant computer power, solving complicated mathematical problems. Users are permitted to buy the cryptocurrencies from brokers and then put them away in cryptographic wallets where they can be spent as the users see fits.
Why should anyone use cryptocurrency?
One of the primary reasons why cryptocurrencies are in vogue these days is that they provide a level of anonymity which is not available anywhere else. Another reason is that they are very secure. Transactions using cryptocurrencies can never be faked or reversed.
The fees that are charged with the use of cryptocurrencies are low, thus making it a reliable option when it is compared with conventional currencies. Bank accounts are opened by authorization, but the decentralized nature of cryptocurrencies makes it possible to be accessed anywhere in the world and by anyone with the proper login details.
Investing in cryptocurrencies can be likened to investing in commodities which can be recognized as investments or assets. You can sell and exchange cryptocurrencies for fiat.
The most popular or common cryptocurrency in the world today is Bitcoin, even though only a few people know of its existence or are using it. In the United States of America, for instance, about 24% of adults have heard of Bitcoin, but only about 2% are even making use of it. Savvy financial investors can, therefore, seize this opportunity of low usage to make investments which may turn out fruitful in the future.
Other cryptocurrencies that are steadily becoming popular are:
- Litecoin
- Iota
- Ethereum
- Bitcoin Cash
- Ripple
- Dash
- Monero