Cryptocurrency is an online medium of exchange to conduct financial transactions. Essentially, cryptocurrency is invisible money – a type of digital money that allows people to make payments through an online system without a bank being involved.
In fact, you could say that the most important feature of cryptocurrency is that it’s not controlled by a government.
Also, cryptocurrencies can be sent directly between two parties and these transfers can be done with minimal processing fees, so that users are able to avoid the fees charged by traditional financial institutions.
Encryption is used to verify transactions in which it is involved. The purpose of it is security. Advanced coding is involved in storing and transmitting cryptocurrency data between wallets and to public ledgers.
Created for anonymity
Cryptocurrency was created to enable anonymous wire transfers, and like regular money, it’s a universal product that serves as a measure of value when buying and selling other goods.
Cryptocurrency also has no value set by law and they are worth what people will pay for them. There are many different cryptocurrencies, and a new cryptocurrency can be created at any time.
Of all the different cryptocurrencies you could say that the most familiar one is Bitcoin. Other of the better-known ones are Litecoin, Cardano, Ethereum and Ripple.
The technology that enables cryptocurrency
It was already way back in 2008 that a report detailing the workings of a new form of currency, Bitcoin, was revealed. Blockchain technology enables public ledgers to hold data in a secure and encrypted way. It’s the technology that enables the existence of cryptocurrency such as Bitcoin.
Bitcoin, launched in 2009, was designed to electronically copy features of a cash transaction and to also allow person-to-person transactions without the need to even know the other person in the transaction.
As mentioned, the Bitcoin system uses blockchain technology to record transactions. Blockchain is a public ledger of all transactions that ever happened within the network, and everyone in the network can see every account’s balance.
Every transaction is a file made up of the sender’s and the recipient’s public keys or wallet addresses as well as the number of coins transferred. The sender signs off the transaction with their private key.
Within a crytocurrency, only miners can confirm transactions and they take transactions and mark them as legitimate and spread them across the network. Once the transaction is confirmed it is not able to be forged.
Cryptocurrency mining is a lot like accounting and miners are actually nodes that perform a special task that makes transactions possible. Mining is the way cryptocurrency networks such as Bitcoin verify transactions. It prevents double-spending without the need to trust centralized accounting as banks do.
Any cryptocurrency network is based on the consensus of all the participants regarding the legitimacy of balances and transactions. Should there be disagreement on a balance, the system would basically break, but fortunately there are a lot of rules programmed into the network that prevents this.
Each time a transaction occurs, it forms part of a new block that is added to the chain. In other words, the blockchain provides a database of each Bitcoin transaction and is available for anyone to see and update on a public network.
The Bitcoin system is protected by cryptography, which checks and secures data making use of mathematical codes that protects the system.
Changing Needs – changing currencies
Yesterday, experts in finances tell us that it is not likely that cryptocurrencies will replace more traditional payment methods, but the future of the currency will depend on how well it meets the needs of users.
Nowadays, however, cryptocurrency is becoming more mainstream, and you can spend it on a host of different things. Ohio in the United States, was the first to accept cryptocurrencies for tax payments.
There was a time when trying to find a cryptocurrency merchant was difficult, but the situation has changed. Today there are many small and large merchants that accept Bitcoin as payment. In fact, Apple has authorized some 10 different cryptocurrencies as a means to pay on its App Store.
Kids need to know about cryptocurrency
Cryptocurrencies are also for investment, albeit it high-risk investments. If you decide to invest in cryptocurrencies, Bitcoin is still the main one. These exchanges believe that Bitcoin, as well as other cryptocurrencies, will substitute the Dollar, Euro and other currencies.
People have always got involved in Bitcoin as it serves as a hedge against traditional currencies or fiat currency. If you want someone to send you cryptocurrency, you tell them your public key.
Financial experts tell us that Bitcoin represents the best asset investment for the foreseeable future. If you’re thinking about an investment portfolio, Bitcoin is a sure way to optimize return. Kids particularly need to be looking at how money is going to be looking like in the future.
Especially post COVID-19, blockchain and cryptocurrency technologies are going to change the world of money. With the coronavirus, everyone is aware and anxious about the use of money as we know it and the spread of the virus.
It would seem as if the world will be needing to change the way we use this germ-infested money and move towards something safer.
Many leading businesses adopting cryptocurrency
As with any other investment, with cryptocurrency, you need to track cryptocurrencies’ market value. Over the last couple of years, digital currency has been gaining interest because blockchain technology ensures secure digital transactions through encryption.
In a corrupt world, with security like this, blockchain technology is making an impact on the different segments of our lives.
Leading banking institutions such as Barclays as well as Walmart have invested their money into cryptocurrencies such as Bitcoin and Ethereum.
Towards digital cash
Wealthy countries are also looking to adopt cryptocurrency as legal and other countries such as India have reduced circulation of cash bills to steer the country towards electronic payments, and even the Reserve Bank of India is now looking at cryptocurrency.
Will crypto go mainstream because of COVID-19? Yes, it appears it will, because the coronavirus has escalated the need for a digital payments system such as cryptocurrencies as handling of coins and paper money is seen as a virus-risk and the solution to this is to simply move towards digital cash.