Cryptocurrency is the buzzword of the moment, and it has attracted to the attention of many people who wish to invest. For many, the whole concept can seem a little daunting and to fully understand it can take quite a bit of explanation.
On the whole, the concept is pretty simple; Cryptocurrencies are digital payments or digital cash which will at some point in time replace the money we know.
To get to the bottom of it in an easy to understand the way this guide should help and then you can make your mind up.
Cryptocurrency What Is It?
These are digital currencies that allow for fast financial transactions between two parties. This can be making a payment to a friend or family member or a company purchasing equipment. Control is handed back to the individual rather than going to a third party to do the transaction.
A cryptocurrency does not have anyone in control of it such as a bank or a credit card company; it is under the control of the network itself.
These cryptocurrencies are stored in digital wallets which you use to manage your payments much like your bank account yet it is under your control.
How Does a Cryptocurrency Work?
What is cryptocurrency about the network? This is an application that was built as the payment system that sits on top of a new type of network known as the Blockchain.
The whole concept of a cryptocurrency would not be possible if it were not for the underlying technology of Blockchain.
What is a Blockchain technology? The blockchain is a digital network that is spread around the world rather than sitting in one companies building. It is decentralized and has no one who controls it. It is also a very secure technology, and so fat this public ledger has never been hacked.
The blockchain network continually checks itself and all transactions that have happened in ten minutes are reconciled and checked. Each group of transactions is what is called the “block.”
As a result of the way it works, it makes all data transparent so anyone can see, and it cannot be tampered with or corrupted.
What Are Coins?
You might have asked yourself what is Bitcoin that is mentioned everywhere? This is at the moment the forerunner of the many cryptocurrencies which are available. Some of the more common names are Bitcoin Cash which is a derivative of the original Bitcoin as well as Litecoin which was conceived to make payments even more accessible.
Skycoin is an excellent example of an up and coming cryptocurrency and technology. It was based on the original concept of the bitcoin and improved to offer more benefits.
It has been made to be faster, cheaper and is less harmful to the environment than some of the other current cryptocurrencies.
These are a handful of the benefits, yet there are more, and it might be one of the ones to watch shortly.
This coin or token promises a lot, and if it takes off as is expected to in 2018 the way the internet works could also be transformed.
Many of the transactions that take place are confirmed by all the remote nodes on the network. It is their job to process the transaction and verify everything is correct. This is one of the reasons the blockchain and bitcoin security is so high.
The workload is spread around many nodes and trying to hack into instantly shows that someone has attempted.
It is all of these individuals’ transactions that are added to the blockchain distributed ledger for anyone to see.
Are Crypto Currencies Secure?
The temptation is there for anyone to try and steal money. No matter what form it is in. These cryptocurrencies have many security features built into them to ensure nothing like this happens.
An individual’s wallet is secured by a private key and has an address of where to send funds. For any transaction, these must be digitally signed with your private key, so the system knows you are authorizing the transaction.
As the blockchain is highly secure, no transactions can be edited after they have occurred. Cryptocurrencies themselves are a safer method than cash.
A large number of people have taken the advantage already to invest in cryptocurrencies. It might seem the time has been missed yet many are rising up through the ranks such as Skycoin, so there is still plenty of opportunities.
Just make sure you do your homework first, the values of cryptocurrencies can go down as well as up.