The money of internet- cryptocurrency has always been in the limelight, and is still ruling the digital world. People not only use it for digital transactions, but also for investment purposes. However, it still gives a dubious notion because of being too young and owning the market that is too volatile. Nevertheless, the digital currency has a lot of power! If you have made up your mind for investing in cryptocurrency, read on to know everything about this powerful currency. But before, let’s look at the history of cryptocurrency so that you can gauge more on this invention.
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History of Cryptocurrency:
Cryptocurrency market is decade old. The first-decentralized digital cryptocurrency, which was designed in 1998 by Nick Szabo, was touted as ‘bit gold’. Though, bit gold was never implemented, it was always considered as a direct precursor to blockchain or bitcoin architecture.
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However, the modern digital currency came to existence in 2008, when an anonymous name Satoshi Nakamoto launched its paper detailing of how bitcoin works. Thereafter, the crypto become popular and bitcoin become the first decentralized coin with Ethereum (ETH), Ripple (XRP), and Litecoin (LTC) following the league.
Now, there are more than 1,300 virtual currencies on the internet and as per 2017 reports, the total market cap of all of these was calculated $60 billion.
Things You Should Know Before Investing
Investing in Cryptocurrency is a roller-coaster ride:
If you have plans to plunge into the world of crypto, be ready to have a roller-coaster ride.
Bitcoin is quite a volatile asset, and volatility in crypto means measuring the price movements with time for a traded asset. It can also be termed as the stability or instability of the crypto market. Therefore, if you cannot bear the peaks of 200-300% value, and then a sudden decline of 100%, ask a professional before investing or learn about cryptocurrencies.
Moreover, investing in crypto depends on your risk appetite, luck and your knowledge.
The golden rule: don’t invest what you can’t afford to lose:
Since the crypto market is quite volatile and it has swift high and lows, don’t invest that you fear of losing.
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Also, there are scammers, who scam people of millions of dollars, so refrain from them. Always look for the exchanges that offer proper security measures.
How Does Cryptocurrency Works?
Cryptocurrency is a decentralized, encrypted digital currency that is transferred between ,peers and confirmed in public ledger through a process called mining. Have a look at basic concepts of how it works:
Initially, all transactions are stored in the public ledger in which the identities of the coin owners are encrypted through a system which uses crypto techniques to ensure the legitimacy. The ledger keeps an eye on the digital wallets to calculate the spendable balance as well as the new transactions to make sure that each transaction only uses coins.
In terms of bitcoin, this public ledger is called as transaction blockchain.
Transfer of funds or transactions:
The transaction between two digital wallets gets submitted to the transaction blockchain to wait for the confirmation. These transactions are made through an encrypted electronic signature, which is also called as a cryptographic signature. This crypto signature ensures that the payment is made through the owner of the wallet not from a scammer. The crypto mining then confirms the operation and adds the amount to the public ledger.
Mining is a process that involves validation of the transactions and adding them to block-chains. Any person with suitable hardware and the access to the internet can intervene in this process.
Mining simply involves combining of all recent transactions into the blocks to let miners solve them as a puzzle. The miner, who will first solve the block, will get shifted to the next block on the blockchain with some rewards. Rewards are the combination of the newly released bitcoin and the transaction fee associated with the complied transactions in the block.
Interesting Facts About Cryptocurrency
As of now, no asset has been a huge contributor to the long-term wealth than the crypto. If this tempts you, have a look at some of the most interesting facts to let you dig-in the crypto craze:
- Since virtual trading occurs on different crypto exchange rates, it is incredibly volatile.
- No central bank or government back digital currencies.
- There’s over 13, 00 virtual currencies in the market, with bitcoin ruling the market.
- Cryptocurrency miners monitors that whether all transactions are verified or not
- Blockchain technology is also tested by many big businesses.
- Blockchain offers transparency and complete user control
- Cryptocurrencies are banned in many countries.
Investing in crypto is all about your monetary sovereignty. So, educate yourself and earn profits!