A cryptocurrency is a virtual or digital exchange medium that is encrypted, decentralized, and secured by cryptography. Unlike the tangible forms of currency that have a central authority, cryptocurrency has no central authority and comprises decentralized networks based on blockchain technology. One notable feature of cryptocurrencies is that they are not owned by any government, making them theoretically immune to government manipulation and interference. While cryptocurrency is the perfect way of carrying out business transactions, buying it can be very risky as it requires thorough research for one to fully understand how it really works. Read on to learn more about cryptocurrency at https://www.fameex.com/en-AU/.
How Can You Use Cryptocurrency?
Although it is yet to be considered a mainstream medium of exchange, cryptocurrency can be used to make purchases. You can also load cryptocurrency into your debit card to make purchases. For instance, in the United States, you can sign up for the BitPay Card. This is a debit card that allows you to convert crypto assets into dollars, but there are some charges involved in this process to order the BitPay card and use it for ATM withdrawals. Additionally, you can also use cryptocurrency as an alternative investment option instead of bonds and stocks.
Types of Cryptocurrency
There are thousands of cryptocurrencies available in the market today. Each cryptocurrency usually has a different specification and function. For instance, Ripple’s XRP is used by commercial banks to facilitate transactions between people in different locations. There is also Bitcoin, which is the most valuable and popular cryptocurrency. Bitcoin was created by an anonymous person known as Satoshi Nakamoto and introduced to the world in 2009 via white paper. As of November 2021, there were approximately 18.8 million bitcoins in circulation.
As a result of Bitcoin’s success, other cryptocurrencies referred to as “altcoins” have been introduced. A small number of these cryptos are duplicates of Bitcoin, while others are new currencies that were built originally from scratch. They include; Ethereum, EOS, Solana, and Cardano. To date, Bitcoin represents more than 41% of the total market cap of about $1.2 trillion.
What Is a Blockchain?
A blockchain is an open, decentralized ledger that records all business transactions in code. It can be described as a checkbook that is well-distributed across several computers around the globe. Blockchain records all transactions in blocks that are then joined together in the form of a chain of foregoing crypto transactions. With blockchain, anyone who uses a cryptocurrency can have their own copy of this ledger to create an integrated transaction record. Moreover, the software records each new cryptocurrency transaction as it happens, and each copy of the blockchain is continuously updated with the added new information. This procedure is really important as it ensures that all transaction records are accurate and identical. To prevent the risk of fraud, each of these crypto transactions is simultaneously checked using one of the two main validation methods, which include; proof of stake or proof of work.
Cryptocurrencies are gradually becoming the most common form of medium exchange. The main reason behind this is that their architecture and technology are well-decentralized across the existing monetary system, thus, making it possible for transacting persons to independently exchange money and value without the involvement of third-party institutions like banks.