In this digital era of the internet, technology is moving at a faster pace now than ever before. Almost everything you need is available online. The ever-growing internet world created a need for quick, safe, and secured digital cash assets. Many developers tried creating digital currencies to be used online, but they failed one way or the other. But some projects have real potential to change a number of industries.
What are Cryptocurrencies?
A Cryptocurrency is a form of digital cash that is made safe and secured using cryptography techniques. The transaction and transfer of currencies is encrypted and is independent of any central bank or authority. Cryptocurrencies are decentralized, i.e., they don’t come under restriction or regulations of any third party.
Bitcoin – The first decentralized cryptocurrency
It was the year 2009 when an anonymous developer came up with a cryptography-based currency, named as Bitcoin. It is a smartly designed system built to solve problems of previous digital currencies. As the first cryptocurrency, Bitcoin continues to dominate the market capitalization of the entire crypto market and often affects the prices of all other cryptocurrencies – the so-called Altcoins. It is an interesting fact that to this day the true creator of bitcoin remains anonymous.
What is Bitcoin?
Bitcoin is a form of digital cash that is used in online transactions. Bitcoin is a virtual payment system that operates using peer-to-peer technology. It only exists in the form of token or piece of code, if you are the owner of bitcoin that means you are the owner of a digitally signed copy of bitcoin. You are the owner of whatever the value of that bitcoin at any time is.
The concept of Bitcoin and cryptocurrencies are usually discussed together, as bitcoin laid the foundation of the whole cryptocurrency industry. Now there is a various form of cryptocurrencies available online, and each of them has its properties. The fact that bitcoin was released as an open-source system that is prone to changes by the developers helped software engineers develop a new and advanced form of cryptocurrencies that exists now.
Cryptocurrencies – Decentralized Platforms
Traditional or FIAT currencies like dollars or pounds come under the influence of central banks or governments. They decide the value of these currencies, and the value can be changed based on the economic factors. If you want to perform transactions, you will have to use the bank as a central authority.
The main motive behind the development of cryptocurrencies was to create a platform that is decentralized i.e., without the influence of and third party or central authority. The complete concept of cryptocurrencies revolves around the digital world that is slowly advancing towards decentralization.
So what does a decentralized platform means? A decentralized platform operates based on equality, and there is no judge or a single person deciding the matters going on the platform. The systems or nodes participating in the system are connected and responsible for the transactions that are made online. The platform works on a securely designed system.
Banks and governments do not like the concept of decentralization. However cryptocurrencies are increasingly being used by people who have trust issues with banks, traditional payment methods, and other types of a middleman. The advantages of decentralized platforms include that the transactions you perform on the decentralized network are not noted or under the influence of the government. It is done automatically (and anonymously by some cryptocurrencies) on the system. In short, there is no middle man involved to see or observe what you are doing!
Cryptocurrencies – Changing the Digital World
After the invention of Bitcoin and as people slowly realized the importance of cryptocurrencies. A whole new world of fast and digital cash assets came into existence. As of 2018, there are more than 2000 cryptocurrencies available online, and the number is going day by day. It seems that almost every day, a new currency is released.
Cryptocurrencies are now widely used in online buying and selling, trading, and as an investment asset. Over time, as some big organizations started accepting cryptocurrencies as payment gateways, the trust in the new market has increased.
Now more and more people are using them online or keep them as an investment.
Some factors like less taxation, the value, and the fact that these currencies are safe, fast, and secure, make it best to be used online. Cryptocurrencies like bitcoin could also be traded from one country to another by a few clicks.
Cryptocurrencies – As Investment
Cryptocurrencies are volatile, and their value could be changed within hours. This concept of unpredictable nature and changing worth of currencies attract many new investors. Making the right investment at the right time in crypto could make you rich within a few days. There are opportunities for profits that are unseen in traditional markets, but the risk is also high. If you don’t know what you are doing, you can quickly lose all your money.
That is why you need to invest in yourself first so that you can have the knowledge to build the right investment strategy for yourself.
The basic concept of supply and demand is a significant factor determining the value of cryptocurrencies. Bitcoin has a maximum capacity of 21 million tokens, one day, the production of the so-called “mining” will stop. This creates scarcity, which in turn, combined with increased demand, makes the asset more valuable. This is one of the factors that attract the eyes of investors who understand the concept of supply and demand properly.
Cryptocurrencies – Financing Start-ups
Cryptocurrencies made it easy for new start-ups to get funding. Many new start-ups and non-profit organizations accept cryptocurrencies such as bitcoin as funding sources. Besides this, there are many new start-ups based on cryptocurrencies that reward the user based on their overall activities on the platform. These rewards are usually in the form of token or the currency that the system uses. As these currencies don’t come under some enforced restrictions or high value of taxation, people prefer using it when they want to fund some start-up or a project. Some start-ups also offer investment opportunities in the form of ICO or STOs.
Without any doubt, cryptocurrencies have changed the overall trend of online and digital transactions. A cash system that is encrypted to make it safe and secure is adopted by the users quickly. Now in ever going advancement, all we could predict from now on is that cryptocurrencies will change the world!