Though there were numerous attempts to create a digital currency with systems like Beenz, Digicash, etc. but failed and in 2009 Bitcoin was introduced. Bitcoin and all other digital currencies are decentralised with no servers and no controllers. It is more of a peer to peer concept of money exchange explains a Crypto Capital Newsletter. To secure all transactions it uses cryptography and also to verify and create new units. To know more about what is cryptocurrency and the risks involved in the investment, read www.thesun.co.uk/money/5130535/cryptocurrency-bitcoin-ripple-kodakcoin-iota-price-how-buy-risks/.
How does cryptocurrency work
The earlier forms of digital currency failed as it involved a third party to verify the transactions and the purpose of introducing this type of money was lost. But in 2009, a programmer invented Bitcoin which was a peer to peer cash exchange. No servers were used to verify the transactions, and there was no government or any other authority for control of this trade. The Bitcoin was decentralized meaning everybody involved in the payment had to perform their jobs using a blockchain. It is a public ledger which contains information of the transactions that were done in the network and hence the balance in the account is known to everyone in the system. The public keys of the sender and the receiver and the amount are recorded in that ledger, and with the use of a private key the sender will sign off the transaction.
A Miner in a network is the only person who can authorize these transactions by solving a cryptographic puzzle. Once the approval is provided by the miner, the operation is saved and can be seen by anyone in the network. After confirmation from miners, the payment cannot be reversed; the miner is paid a reward as well as a transaction fee for solving the puzzle.
Where can we use cryptocurrencies?
Cryptocurrency is now accepted as a payment for the goods you purchase, but that was not the case earlier. Many online and offline merchants accept it, some small shops and restaurants to paying for hotels, travel, etc. There are a few college degrees that take it. Though Bitcoin is the most popular currency that merchants prefer, things are probably looking up as Apple has decided to accept ten cryptocurrencies as a payment form in their App store.
Investing in digital currency:
The popularity of cryptocurrency as a good investment option is on the rise, and there are many instances of people becoming wealthy overnight due to investing in them is doing the rounds. Among all the cryptocurrencies, Bitcoin is the most popular and has the best value amongst all other types of cryptos. The next popular one is Ethereum as it has achieved the fastest growth in digital currency and its value in increasing at more than 1000%, but having said that it is a risk to invest in cryptos as the market is volatile. Also, there are chances of your account getting hacked or your government bringing in new regulations and as of now, that market is unregulated. If you want to start investing, then Bitcoin is the obvious choice for a beginner.