You have probably already heard the word “cryptocurrency” somewhere or have read it in a social media post. How about the word “bitcoin”? Have you heard of any of those?
Anyway, some people are already familiar with these digital trends. But, on the other hand, some have the wrong belief about it saying that cryptocurrency is an online scam that you should never try. But is it really a scam? Let’s talk about it!
What is cryptocurrency?
Cryptocurrency (or simply crypto) is undeniably a growing trend in the digital market. It is a digital currency or money that uses blockchain technology. It is also highly protected with unique and strong cryptography to ensure secure online transactions.
This cryptocurrency is oftentimes used to purchase goods or services, but other people nowadays use this to trade for profit. Some also invest here to purchase more expensive assets like stocks in large corporations and rare metals.
What is blockchain technology?
To simplify, this blockchain technology is a decentralized and distributed ledger that facilitates the recording of online transactions and tracks the assets of a network. Aside from assets, through blockchain, you can also track the end-to-end details of your business’ orders, payments, accounts, production, and more.
What are some examples of cryptocurrency?
Bitcoin or BTC is the largest cryptocurrency and is said to be the digital gold. As of November 2021, one bitcoin is around $56, 000 based on the market summary of Coinbase and Morningstar. Following the BTC is Ethereum or ETH, with a whopping market value of $4, 000 as of this moment. The third is Litecoin or LTC with a market summary of around $200 as of this writing. Other than these three, there are around 14, 500 different types of cryptocurrencies in the whole world, and developers continue to proliferate new types of them.
How does it work?
Traditionally, when you purchase goods or services using a debit card, the bank system will check the amount of money on your card to see if you have enough money for the items you will buy. However, in a blockchain-operated cryptocurrency exchange, it is different. There are no banks or other parties involved because the transaction is peer-to-peer.
The very first thing you need to do is to have a cryptocurrency wallet which is software used for online transactions like transferring of funds. Next, get access to the private key or commonly referred to as the password to complete a transaction. Each transaction will be recorded in a ledger and it will be represented by a block. Meaning, for every successful transaction, a block will be added to a larger chain, and all the details of the transaction will stay there forever.
Cryptocurrency is definitely a good investment to ponder on. But, even though it is really good, do not forget to be responsible and mindful at all times. Because in the world of cryptocurrency, being ignorant will just lead you to devastation.