In 2017, the cryptocurrency market soared to unprecedented heights as media attention and overall buzz surrounding cryptocurrencies led people to invest in digital currencies. The attention even led Merriam-Webster to add the word cryptocurrency to the dictionary. Although it has seemingly taken a step back from dominating news headlines, cryptocurrency is still a concept that is worth exploring and understanding further.
What is cryptocurrency?
Cryptocurrency is a digital currency that uses strong cryptography to secure financial transactions. Part of the cryptography is blockchain technology, a distributed ledger system enforced by a network of computers which keeps all transactions of units secure and public. All transactions are completed using virtual tokens that make entries to the public system. The tokens share the blockchain with all users of the system but prevent it from being altered.
Each cryptocurrency requires mining for record-keeping. Miners utilize computing power to keep the blockchain complete and unalterable by grouping transactions into a block, which is then broadcast to the network and verified by recipients.
Most cryptocurrencies are not issued by a central authority, giving them protection against manipulation and other disadvantages of fiat money such as inflation.
Thousands of different cryptocurrencies exist, with their value fluctuating daily. The first and most valuable cryptocurrency is Bitcoin, which was first described in a 9-page research paper posted online in 2008 under the pseudonym Satoshi Nakamoto. The paper describes how to facilitate peer-to-peer, open, and borderless transactions between users. By 2009, Bitcoin
software began bringing the ideas outlined in the paper to life.
How to buy cryptocurrency?
The first place to check out is investing.com's listing of cryptocurrencies. This will give you an idea of how much each cryptocurrency is worth as well as provide you with statistics of a coin's value over time.
Before you actually buy any cryptocurrency, it is a good idea to set up a cryptocurrency wallet. This digital wallet will save your public and private keys that help you send and receive money.
For actual cryptocurrency transactions, you will need to visit a trading site such as Binance or Coinbase. Each site has different trading fees, so research to find out which one will be the most beneficial for you. It is also possible to buy cryptocurrency at cryptocurrency ATMs. Unlike conventional ATMs which allow you to withdraw money from your bank account, crypto ATMs work more like a stationary exchange where you can anonymously exchange fiat for cryptocurrencies.
What does the future for cryptocurrency look like?
Cryptocurrency has the potential to change how we conduct transactions, but it is still far away from overtaking current financial systems. Nevertheless, more and more institutional money is entering the cryptocurrency market as investors explore the possibilities of digital currency, giving cryptocurrency the backing to keep expanding. In the future, it is also possible that cryptocurrencies will enter stock exchanges such as Nasdaq.
What cryptocurrency has already shown is that blockchain has many uses in our digital world and that is likely not going away. Companies are already exploring ideas such as smart contracts that can be achieved using blockchain. And although the future of cryptocurrency is undetermined, it is worth learning more about.