Cryptocurrency is a type of currency that is separate from any countries or banks and is organised through a digital network called blockchain. This runs a secure record of each transaction and every time someone buys using cryptocurrency, this transaction is logged in the network. Bitcoin is the most prevalent and trusted cryptocurrency in the market right now and is on the rise in value nearly constantly.
Cryptocurrency is a digital currency that is encrypted to generate money and transactions and new coins are created by ‘mining’. Cryptocurrency differs from other types of currency in that there is only a limited amount available, and users must ‘mine’ for these coins.
To use a cryptocurrency, such as Bitcoin, you’ll need a digital wallet to store the currency and unique ‘public addresses’ to receive the currency. You then simply transfer the funds in or out of the wallet using the public addresses.
To make it simple, imagine cryptocurrency as a big, glass ball. These balls are very heavy so everyone keeps their balls in a public place, when someone wants to buy something, they simply tell everyone that their ball now belongs to someone else.
When cryptocurrency gets transferred, the person spending it sends the transaction to every member of the network, informing them of the transaction. To keep people’s identities safe, the people who are involved in the transaction encrypt their ID’s as a code, these codes are their ‘public addresses’.
The miners in the network then compete to add the transaction to the ledger to legitimise it, they compete by solving a complex maths problem. The first one to do so is rewarded with some newly ‘discovered’ cryptocurrency. This is how cryptocurrency is mined.
Because of the encrypted nature of this type of currency, it has lent itself to being the payment of choice for illegal purchases. Either on the dark web or on other encrypted sites. But, a person using cryptocurrency is much less likely to have their credit card information stolen.
Cryptocurrency doesn’t experience inflation because of the way it works and is mined and produced – with there being a finite number, the buying power cannot be diluted by entering more into circulation.
Bitcoin was the first major cryptocurrency and it only had a value of around $0.05 to $0.10 in 2009. In 2011, its value was $1.
Since then it has increased at a crazy rate, with the emergence of the modern Dark Web and its growth in popularity, Bitcoin was worth nearly $1000 at the end of 2013, before declining slightly in value over the next few years. Now, the Bitcoin is worth around $2000 and fluctuates daily, but never decreasing a significant amount.
It’s a complicated subject and one that needs to be properly researched before delving into the world of mining and transaction, but it’s an interesting concept and one that is definitely worth keeping an eye on over the coming months.