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Cryptocurrency: An Introduction to the Future of Finance

| January 31, 2018
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The internet controls everything from communication to paying our bills. It is no surprise that this no man’s land would eventually develop its own form of currency just a country would print its own money.

Cryptocurrency has become a hot topic in the world of finance ever since the whispers of Bitcoin surfaced nine years ago. It is a digital form of currency that uses cryptography, the use of creating digital code, to secure and verify transactions as well as to create new units of the currency.

How Does It Work?

The system works on a peer-to-peer basis meaning everyone is working ensure that transactions aren’t fraudulent. It’s all recorded using a public ledger known as the Blockchain which tracks every transaction that happens in the network. That way, everyone knows what’s going on in each account.

When two people want to make a transaction, they will start a file with their individual keys or “wallet addresses” to send coins from one to the other. The sender signs off on the transaction with a private key.

However, before it can be official, the transaction much be confirmed by a “miner” or people who solve a cryptographic puzzle that legitimizes the transaction before spreading the information across the network. This makes the transaction impossible to forge or reverse. Miners receive a fee for their work.

What Do You Do With It?

You can do the same things with cryptocurrency that you would with regular currency. You can buy things. Invest in businesses. You can even accept it in your business if you have the right hardware. The real difference comes with the role of the miners.

Miners of cryptocurrency can make a heavy profit for solving these puzzles and receiving the rewards from confirming transactions. The issue is you needed both the brain power and the computer power to make that profit. Keep in mind, too, that as more people begin “mining,” it will become harder to receive higher rewards and increases the worth of the currency.

How Many Types of Cryptocurrency Are There?

There are approximately 12 major forms of cryptocurrency today: Bitcoin, Ethereum, Bitcoin Cash, Ripple, Litecoin, Dash, NEO, NEM, Monero, Ethereum Classic, IOTA, and Qtum. Of these, the most valuable and well known is still Bitcoin, but Bitcoin Cash, Ethereum, and Dash are also high in value. Cryptocurrency such as Ripple, NEM, and IOTA, however, are not worth much at all as they are much more common.

How Do I Get Cryptocurrency?

Acquiring cryptocurrency is varied depending on the type of currency. Bitcoin, for example, has Bitcoin ATMs around the world or you can even find it at a cryptocurrency exchange. Less popular cryptocurrencies may not be as readily available and may be better found through face-to-face trading.

While cryptocurrency is as unpredictable as it’s popularity, there is no doubt that it is a glimpse at what the future of finance has in store. As the internet continues to expand and flourish, the world of currency may end up following suit.

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