Although cryptocurrency market continues to rise, a significant portion of the world’s population is still unfamiliar with what crypto currency really is about. The versed ones are slowly earning the millionaire status while others are still in the middle of discussing what really is going on.
Understanding the Key Concept of Cryptocurrency
Cryptocurrency is probably the most modern medium of exchange, a form of digital money. It uses cryptography in transferring funds and keeping confidential information. Originally, cryptography was come up to preserve anonymity but later on, it was also proven to maintain security of transactions. Unlike typical currencies, cryptocurrency is not centralized. This only means that it does not maintain a separate ledger for every user. Instead, it keeps a massive public ledger popularly known as the “block chain” and it is through it that transfers are validated.
Before you start investing in cryptocurrency, below are five important things you should be knowing:
Banks are backing off when it comes to endorsing cryptocurrency
Amid its surging market and the fact that a lot of investors are willing to take a risk on it, majority of banks are still staying distant against cryptocurrency. The government does not support it and it is decentralized. For this reason, central banks are finding it hard to engage in the price of credit, exchange rate control, and other monetary policy functions and this makes it disadvantageous and usable for the economy. All transactions are encoded into encrypted calculations. Although this guarantees safety from hackers, this also draws banks away as gathering data about economic activity is impossible.
The government does not regulate crypto currency
As mentioned earlier, cryptocurrency is not backed by the government. It may be a form of currency that is used for buy, sell, and investing transactions but the government can never oversee the banking and systems, preventing them from monitoring any cash flow. Anonymity is exercised and although this may seem like a big plus, such restrictions can also pave way for criminal abuses using crypto money like how regular money is mishandled. And looking at a wider perspective, the drawback of cryptocurrency not being controlled by the government is that authorities will find it extra hard to keep track of transactions that may endanger the investors.
Cryptocurrency is not in favor of “Fiat Money”
As defined in wikipedia, fiat money is any money declared by a government to be legal tender. In other words, the value of fiat money is determined by any law or ruling. What sets cryptocurrency apart from a fiat money is that, like gold, crypto is offered in a finite amount. Its control is neutralized, i.e. the printing of it unlike what is done in government money.
Everyone can engage in crypto mining
Sure you can get your hands on cryptocurrency by purchasing Bitcoin and other altcoins but you may also want to try crypto mining. Mining cryptocurrency yourself can actually help you produce a great deal of profit. Cryptocurrency mining involves keeping track and verifying transactions on the massive ledger called the block chain and it is done with the use of an advanced server with a high-end graphics card to achieve a smooth and fast calculation. By engaging in crypto mining, you are already investing by way of purchasing your own computer. With it, you will be maintaining the crypto currency in technical documents known as wallets. Once all is set up and you do the mining, you are already set to earn real big through the compensations you are entitled to receive for preventing the system from being hacked and making sure coins are not duplicated.
Aside from Bitcoin, there are also other forms of crypto currency that you should know
Bitcoin is the first decentralized form of cryptocurrency and to date, it is still serving as the benchmark of all cryptocurrencies discovered and the ones that are yet to be known. All cryptocurrency forms are made out of complicated programming. These include Dogecoin, Worldcoin, Peercoin, Namecoin and a lot more.