Introduction to Cryptocurrencies
Cryptocurrency is a type of virtual currency, and it is designed to let you store, send and receive value like regular money, but without the need of using banks and credit card companies. Until crypto was introduced, you needed banks, credit card companies and also third parties such as paypal and venmo, to send and receive money. These entities were necessary to do things only they could, such as verifying the person spending the money actually had money to spend. They can obviously do it as they hold our money and they have access to our account balances. However, our current money system has some flaws
- Credit card payments and wirecard transfers are outdated
- In majority of cases, the middlemen in this case the banks, take commision during the process which makes it expensive and slow
How it works
In comes cryptocurrency, aiming to solve these problems, if not more. With cryptocurrencies, you may be able to get rid of banks and other centralized middlemen altogether. That’s because cryptocurrencies rely on a technology called blockchain, which is decentralized (meaning no single entity is in charge of it). Instead, every computer in the network confirms the transactions.
I am sure you’ve all heard of Bitcoin by now. Bitcoin was the first product and the first blockchain, developed by an anonymous entity who went by the name Satoshi Nakamoto. Until 2011, bitcoin was the only cryptocurrency, however people started noticing some flaws. The altcoins were introduced in order to improve the speed, security and anonymity.
Risk of Cryptocurrency
Just like anything else in life, crypto comes with its own baggage. Whether you trade cryptos, invest in them, or simply hold on to them for the future,you must understand the risks beforehand. Crypto is extremely volatile, to give you an example, back in 2017 the price of most major cryptocurrencies, including Bitcoin, skyrocketed above 1,000 percent and then came crashing down. Although the crypto hype has calm down, it is very important to have enough knowledge before getting involved. Crypto is one way to create prosperity and it can be done a very accelerated way. However, be mindful of the ups and downs.