You may have heard about cryptocurrency in the news or from a friend, but what? Don’t feel bad if you still need to understand this new type of asset. It can be hard to understand if you don’t know the basics of how they work.
Let’s talk about what cryptocurrency is, how it works, and about the blockchain market. Once you know more about these topics, you will have a much better grasp of them.
What is Cryptocurrency?
Cryptocurrency is digital money used on the internet and not controlled by a central bank. Cryptocurrency is run and held in a way that doesn’t have a central authority like a central bank. Distributed ledger technology, or blockchain, is what makes cryptocurrency work. Bitcoin was the first digital currency, and people started paying attention to it in 2008. Today, many other cryptocurrencies exist, such as Ethereum, Tether, Solana, and Cardano.
How do cryptocurencies work?
Blockchain is the name given to the underlying technology of digital currency. It records transactions that can’t be changed and keeps track of who owns what. When people tried to make digital currencies before, they ran into a problem: people could make copies of their money and try to spend it twice. Blockchains solved this problem.
Depending on how they are used, the units of a cryptocurrency can be called coins or tokens. Some are meant to be used as units of exchange for goods and services, others to store value, and some to play games or use financial software.
The Blockchain Market
As of May 2021, the total value of the cryptocurrency market is a huge $1.7 trillion. At the time of writing, there are more than 10,000 listed cryptocurrencies, which will only grow. In terms of market capitalisation, Bitcoin has the largest share, which is about $650 billion. Ethereum and Tether are next in line.
Cryptocurrency is becoming more and more accepted around the world. This trend has been going on for many years. For example, when Overstock.com, a big US online store, started taking Bitcoins in 2014, it made $124,000 in Bitcoin sales on the very first day. More interestingly, corporations realise this digital asset can be a good investment. In 2020, MicroStrategy Inc., based in the US, bought over $1 billion of Bitcoin.
The future is here with cryptocurrency. In order to begin trading and investing in Bitcoin, Tron, Ethereum, and other cryptocurrencies, you will need access to a reputable cryptocurrency exchange.
Here, you can also read – The Pros and Cons of Using Cryptocurrencies for Transactions