Cryptocurrency has definitely seen an uptick in popularity in recent years, but despite this, it still hasn’t managed to break its way into the zeitgeist. While it certainly is popular among a large group of people, it remains elusive for the most part. There is a disconnect; this is because people struggle to understand this new approach to finance, where money exists exclusively in the digital space. It is intangible, which contributes to the confusion. As technology continues to advance and society continues to develop its reliance on all things digital, cryptocurrency is likely to take more of a starring role. If you want to get ahead, you should learn more about cryptocurrencies now, which is why we have put together the following information. So, let’s dive in.
A Brief Explanation of Cryptocurrency
Pretty much everyone understands how traditional currency works. Money exists in a tangible way; you can hold it in your hand or choose to house it in a bank. When you make a transaction, the money exchanges hands regardless of whether you use cash, credit, or debit. Using cash is obviously more straightforward. The money physically changes hands, and that is the beginning and the end of the transaction. If you use credit or debit, then the process is a little more involved. The bank or credit provider has to authorize the transaction and verify that you have the funds or line of credit to make the purchase. Once this happens – if it does – the money is released, and the bank or credit provider updates your account accordingly.
This is why cryptocurrencies can be so confusing for a lot of people because they do not work like this. The biggest difference in terms of making a transaction via cryptocurrency is that there is no central point of transaction or regulatory body like a bank. In fact, there is no third-party involvement at all. The transactions are strictly peer-to-peer. The transactions are recorded digitally on a blockchain which is virtually incorruptible, meaning that the transactions are unalterable. The basic details of the transaction are held in the blockchain, but this doesn’t mean they don’t provide you with a certain level of anonymity because they simply outline the details of the virtual wallets involved in the transaction.
A Brief History of Cryptocurrency
Cryptocurrencies only really started gathering steam in the last ten years or so, and while they are still a somewhat emerging technology, their origins actually date back further than a lot of people think. Cryptocurrency as a concept was first mentioned in 1983. The pioneer for cryptocurrency was arguably a man called David Chaum, who was a cryptographer. He developed the idea of a digital currency; his version was eCash which was a digital transaction system. The idea of a digital currency was then taken further, and a second iteration was developed, which followed all of the same principles. DigiCash was really the base for all future cryptocurrencies. They still follow the same idea of conducting transactions through decentralized public networks.
Until the early nineties, these efforts were still largely known as digital currencies; it was only in the nineties that the term cryptocurrency was first termed. It is fair to say that cryptocurrencies would not exist as they do now without the efforts of David Chaum, eCash, and the following DigiCash. The cryptocurrency was built on the foundations laid out by these. They continued to operate on the fringes, holding more appeal to those who are already technologically savvy. Their use started to become more widespread during the early 2000s when other asset classes, like precious metals, began to depreciate in value. Things were then kicked up a notch when the anonymous entity Satoshi Nakamoto arrived on the scene. No one knows whether Nakamoto is a singular person or a group still to this day. In 2008, Nakamoto wrote and distributed a report which took a deep dive into the cryptocurrency as they were and where they could go. They are also the founder of Bitcoin, which remains one of the most popular forms of crypto. Of course, today, there are so many different forms of cryptocurrency to choose from, and thanks to the internet, there are many resources out there to help, like CryptoEQ’s Ethereum upgrade guide report.
Cryptocurrency Today & Where They Could be Headed Next
Cryptocurrencies today are really reaching the height of their popularity, and more people are investing than ever before. There are also tens of thousands of cryptocurrencies available to invest in today. Individual investing and trading are their primary use today simply because these seem to be some of the only options available today. However, this could all change in the future. The modern world continues to embrace technology, and a lot of life today relies on digital processes in one way or another. This is why it isn’t unrealistic to envision a world where cryptocurrencies become the primary form of currency. However, this is not something that is likely to happen soon. This is because cryptocurrencies operate outside of government regulations.
Investment Tips for Beginners
To reiterate the sentiments written above, cryptocurrencies are a great choice for a lot of beginners when it comes to investing. This is because they can be an incredible asset to add to your investment portfolio. As with investing in any form, there are, of course, risks that need to be considered. Most investments are inherent with risk to some degree. The value of the asset tends to ebb and flow; this is how you make money by waiting for the value to increase beyond what you paid for it so you can sell and make a profit. For cryptocurrencies, their volatility is a risk and an advantage. On any given day, you could stand to make a dramatic profit or incur big losses.
If you want to get started and invest with cryptocurrencies, then there are a few things that you will need to bear in mind. Firstly, you will need to do some research. You need to make sure that you understand the market as a whole and all of the extraneous factors that can influence the price of cryptocurrencies. After that, you then need to do some research into the different forms of cryptocurrency that you are considering investing in before you commit to making a purchase. It also makes sense to read up on some investment tips in general, too, like diversification. Lastly, you should also ensure that you can tell the difference between legitimate platforms and deals and scams or novelties, which will simply waste your money.
Cryptocurrencies have seen a huge evolution through the series of refinements and revisions that they have undergone since the days of David Chaum’s eCash. In the last forty years, cryptocurrencies have been incredibly influential on the financial landscape as it stands today. It has also been revolutionary in the way that it operates outside of current financial systems without government regulations. It is hard to predict where they could go in the future. This is mainly because the other forms of currencies, including cash, credit and debit, are so well established, and they are subject to government control. They are a great investment opportunity for those who are willing to learn more about them and how to become a successful investor.