The Know How’s of Cryptocurrency
After the financial crisis of 2008, the crumbling markets resulted in the creation of what would become cryptocurrency. Satoshi Nakamoto published a paper describing what would become bitcoin as well as blockchain technology in the near future. Since its creation, the use of cryptocurrency has spawned many ‘altcoins’ which are alternative forms of cryptocurrency.
Bitcoin is essentially a “digital asset”, meaning that the network if often referred to as a digital currency. Unlike fiat currency which use physical value to determine their worth, bitcoin has been born out of the idea of making a digital currency that solely exists on the digital realm.
With digital currency comes a new way to use it. With traditional bank accounts, the balance is maintained by a “private ledger” which is usually a computer that is owned and operated by the customers bank. The users of bitcoin use an alternate “public ledger” which is known as blockchain. Blockchain technology enables the information from individual transfers of money to be completely transparent which helps to form trust in payments.
The currency is run throughout computer networks that operate to find and use the currency as a whole. To actually obtain the currency, people called “miners” mine for coins using advanced computer systems. Since the current rate of bitcoin is $4,500 per coin, miners can earn $112,000 for only 10 minutes of work solving a problem which gives them the coin. Since the coin cannot be mined forever, the difficulty of the problem as well as the reward for solving it will be downgraded over time.
With using bitcoin comes several risks. The first of those being fraud and criminal acts. Since it is online, there are hackers that have the ability to hack into individual accounts and due to the anonymity that makes it so popular, they will not be found. It also is a relatively new currency which means that the regulations are slim if not non-existent.
With all this said, bitcoin and digital currency will hopefully continue to shine as time goes on, and traditional banking and financial systems are fazed out.