Cryptocurrency has become a media sensation and has been called one of the greatest technological breakthroughs since the Internet. Although it was widely discussed, many people are still confused what cryptocurrencies actually are. The goal of this article is to provide a strong foundation for those who are new to the cryptocurrency market but also a reminder for those more familiar with it.
What are Future Money Trends Exactly?
A cryptocurrency is a virtual medium of exchange that uses cryptography based on various algorithms to secure its transactions and to control the creation of new units. The cryptocurrencies are decentralized as oppose to the centralized banking and other economic systems which are controlling the regular monetary units, known also as the fiat currencies. That means corporate boards, governments or other institutions cannot control the supply of cryptocurrency for instance by printing additional money or making changes or additions to digital banking ledgers.
Cryptocurrencies make transferring funds between two parties or merchant and buyer much easier. These transfers are facilitated through the use of public and private keys for security purposes. The fund transfers are done with minimal processing fees, which are mostly donated to the people who are mining the digital currency to help to cover the operating costs of the needed infrastructure and electicity. This allows users to avoid the high fees charged by most banks and financial institutions for wire transfers or checking. The first system upon which all the later cryptocurrencies are based, was created by the group or individual known as Satoshi Nakamoto in 2008.
The Evolution of Cryptocurrencies
The first cryptocurrency that really caught the public’s eye was Bitcoin or BTC as it’s often shortened. Original BTC was created in 2008 and but launched officially only in 2009. This ground braking cryptocurrency was the new mean of completely digital payment method. As the first decentralized peer-to-peer network, it was powered mostly by its early users and adaptors. At the end of August 2013, the value of all the Bitcoins in circulation exceeded 1.5 billion dollars. Today millions of dollars’ worth Bitcoins are exchanged daily.
Bitcoin’s great success encouraged others to create their own cryptocurrencies. There is an extensive cryptocurrency list but the most popular of these bitcoin alternatives are Litecoin, Namecoin and Dogecoin. Litecoin was released in October 2011 and became the first successful cryptocurrency using scrypt as its hash.
Scrypt was a key, which gave the general public possibility cryptocurrency mining for Litecoins, without the purchase of highly specialized hardware such as the ASIC machines, which are used to mine Bitcoins. Litecoin began receiving media attention in late 2013 when it reached a market cap of $1 billion.
Ripplecoin, created in 2011, was built on the same protocol as Bitcoin, but it is unique in a sense that its services are based on a payment system which supports any fiat and cryptocurrency.
The last 3 years several Network Marketing companies started their own cryptocurrencies, ImperialCoin was the first. It was launched in December 2013 and quickly followed by others such as Global Coin Reserve and Latium.
Most of the attempts of creating a popular cryptocurrency with network marketing have failed, them either been destroyed by the speculators or the creators have turned them into profitable ponzi scemes. The problem for the alternative cryptocurrencies, which might very well be technically superior to Bitcoin, remains the rule of supply and demand.
Why would anyone invest in a currency is it cannot be used anywhere? Still new ones keep on popping up on weekly basis and today the ones with largest networks are Onecoin and Swisscoin, together they have more than 1 million members.
There have been several attempts to regulate network marketing companies creating and selling cryptocurrencies under their affiliate programs and it is now considered illegal to combine cryptocurrency with Network Marketing both in US and Europe since May 2016. Based on this several of the cryptocurrencies based on network marketing strategies have been abandoned as the companies have been closed down or dissolved.
Where To Purchase Bitcoins and Other Cryptocurrencies?
Primary way of acquiring cryptocurrencies is to use one of the many crypto currency exchange services that besides displaying the current bitcoin price, buy and sell bitcoin and other cryptocurrencies for local currency, mostly USD. This is the easiest way to get started and get cryptocurrencies.
The other way is to sell goods and services through cryptocurrency marketplace, such as the popular Coindesk service. There are also some online buy-and-sell websites that accept or ask for cryptocurrency for transactions. This method is similar to the regular online shopping and transferring money via bank account.
Bitcoin ATMs are getting more common and can be found at several large shopping centers, airports and other prime shopping locations. These ATMs allow you to either exchange Bitcoins into local currency or purchase Bitcoins with local currency.
You can of course mine for cryptocurrencies. What you need, in most cases, is a specialized hardware. Mining is the process of verifying the transactions and adding them to the public ledger, blockchain. In addition, it’s the only way to introduce new coins into the circulation, as miners are rewarded for every block of transactions they process as the first. Mining has become such a lucrative business that companies have designed chips solely for running the cryptographic algorithms cryptocurrencies like Bitcoin use for mining.
Finally you can create your own crypto currency, most of the code is publicly available and can be easily modified if you have the right programming skills and knowledge.
People who mine for any of the cryptocurrencies often organize in groups or clubs to get cryptocurrencies more quickly and easier. The method is called pool mining. Miners who share their processing power over a network, pool their resources together and split the reward equally, according to the amount of work they contributed to solving a block.
Where to Store Cryptocurrency?
Virtual money, just like the regular one, is kept in a so called digital wallet. Inside the wallet, you’ll find secret codes that are required to spend your coins, as well as an address which is similar to a PayPal e-mail that you need to give people sending you money. Some wallets generate additional addresses to increase security. This way you can give a unique address to each person only for the duration of the transaction.
There are many types of wallets, including online, desktop program for Windows, Linux and Mac, mobile apps for Androids and iOS to mention some of the most common. The smart phone apps are the most popular type as they are practical if you want to use Bitcoins for purchases in regular shops.
Cryptocurrency credit cards are also rising their heads and several companies offer either VISA or Mastercards, on which you can deposit your Bitcoins and then use for purchases online and offline or withdraw money from a regular ATM.
Advantages of The Cryptocurrencies
Cryptocurrencies have numerous advantages which can make them more desirable to use under certain situations. One of them is complete anonymity. The transactions made with cryptocurrencies can be made completely anonymously. You don’t need a bank account, credit card or personal information to purchase products or services. It basically works like a cash transactions.
You also have the complete control over the transactions you make. This means that no company can charge you with additional fees or other hidden costs. There is no way to automatically withdraw additional funds from your cryptocurrency wallet.
Another advantage of cryptocurrencies is that you can quickly and easily send cryptocurrencies around the world without the need of waiting or paying the processing fees.
Cryptocurrencies are also safe for vendors. Transactions made through cryptocurrencies are secure and irreversible. Transactions also do not contain the customers’ personal information, meaning the customers information is safe.
Cryptocurrencies payments are easier to make than debit or credit card purchases, and can be received by companies without a merchant account. Payments are made from a wallet application that is installed on a computer or smartphone by entering the recipient’s address, the payment amount, and pressing send.
Where to Use Cryptocurrency?
The value of cryptocurrency as an alternative method of payment has been accepted by the investors, technologists, merchants, entrepreneurs, and consumers. Recent events show that cryptocurrency is more than a passing phenomenon. Although many people still don’t understand how cryptocurrencies work and the differences between them and services like Visa or Paypal. new ones are born every day and their usages is getting more and more widespread.
Several large airlines, travel agencies, online merchants, online payment processors, trading companies and utilities companies start accepting most commonly used cryptocurrencies the same way they use other more traditional means of payment. In several countries where the local currency is under heavy devaluation, people request to get paid with Bitcoin. It is only a matter of time until we will start taking cryptocurrencies for granted and use them on a daily basis.
In fact, it represents the beginning of a new phase of digital markets that have the potential to disrupt conventional market strategies and longstanding business practices. The development of cryptocurrencies should benefit the consumers and in the long run – macroeconomic efficiency!
Want to learn how to actually make money online legally? Take a look at here for my recommendations: Start Making Money Online