It's been a while since we've discussed Cryptocurrency since the website upgrade. For those who still are not quite sure what it is and how it works, here is an overview of what it is and why there is a boom now compared to the previous years. What is Cryptocurrency?
It is a form of digital money. Cryptocurrency is software. Every function, from how
transactions are recorded to how data is stored, is dictated by code. Cryptocurrencies whose main function is to act as money, cryptocurrency transactions are typically stored in a type of database known as a blockchain (other cryptos use unique technology, but the gist is the same). How Is Cryptocurrency created?
Cryptocurrencies are created by algorithms that rely on cryptography. That is why it is called “crypto” currency. Every transaction relates back to unique cryptographic codes that secure the network. What we think of as cryptocurrency, for example 1 Bitcoin, is just numbers recorded on a cryptocurrency’s blockchain. Another word for that stand-in for value is “token” (often also called a “coin”).
The code of the cryptocurrency defines things like maximum supply, mining rewards, etc. For the most part, new coins are created is by people all over the world running hardware that adds transactions to the blockchain. Otherwise, cryptocurrency tokens are created by other mechanisms contained in a cryptocurrency’s software.
Who Owns Cryptocurrency? It is not owned by any centralized bank or government. This means that it is hosted on many peoples’ computers across the world instead of just on one server by one company. The algorithms generally are written to award coins to computers that add transactions to the blockchain. The process of adding transactions to the blockchain is known as mining.
How Did It Become Popular? The best-known cryptocurrency is Bitcoin, which came into existence in January 2009 and marks the beginning of the rise of cryptocurrencies. Bitcoin was created by Satoshi Nakamoto, though no one knows whether that is a he or a she or even a group of people. Back in 2018, the earlier investors were cashing out millions of dollars and made the headlines for catching government attention because there was no government regulation for Cryptocurrency at this point. Although the government advised to not participate in the purchasing of cryptocurrency, they put taxation laws in place when it is used for sale or cashed out.
In present day, Cryptocurrency has grown in popularity. Most who were uncertain, are now participating in the exchange. More and more people and companies are starting to use it. Some of this money can be spent on the same goods and services we pay for with traditional “fiat” currencies – dollars, euros, yen, etc. There are a number of reasons for that:
- Impossible to counterfeit due to the complicated mathematics and military-grade cryptography that are involved. - It’s decentralized and more efficient – you own your cryptocurrency and no bank or government is needed to issue the money, and no middleman is needed to transfer your funds. This reason is popular among those who are losing faith in paper currency. - There are more opportunities to use cryptocurrencies to pay for goods and services all around the world than there were when it first started. - It helps people without access to traditional banking become part of the worldwide financial system. - It’s programmable money which offers many more options for how it can be used and adapted to one’s needs. - It offers new ways for businesses to reach new customers and raise capital.
Resources: All Cryptocurrencies
How to Buy Cryptocurrency - You buy on an exchange
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