The word "cryptocurrency" has been used with increasing frequency over the past decade. People from all over the world are interested in the cryptocurrency and how it works.
The history of cryptocurrency
This phenomenon, called Bitcoin, was a popular topic in 2009. Let's examine the route that cryptocurrency took prior to its official release.
🔷 1983 - American cryptocurrency entrepreneurs David Chaum and Stefan Brands began devoting their time to the concept of "electronic" currency and proposed the idea of electronic cash.
🔷 1991 - Stuart Haber and W. Scott Stornetta created a dependable digital ledger system, the blockchain. This laid the groundwork for the future expansion of cryptocurrencies.
🔷 1997 - Adam Beck conceived of the concept of "HashCash", a system that was used to distinguish between legitimate and illegitimate email submissions and attacks that deny services. This idea later became integral to the blockchain's technology of Bitcoin.
🔷 2002 - Wei Dai initiated the creation of "b-money" - a system of anonymous electronic cash, which was one of the earliest definitions of cryptocurrency.
🔷 late 2008 – early 2009 – an anonymous person or group of people using the pseudonym Satoshi Nakamoto created the first digital currency, Bitcoin.
The procedure of creating a digital currency was difficult and took a long time, but it was the early concept of HashCash and b-money that facilitated the development of Bitcoin and other cryptocurrencies. Without them, it is probable that cryptocurrency would not be well-known or would not exist at all.
What is cryptocurrency, and how does it function?
A cryptocurrency is a form of virtual currency that is independent of the central bank or government. It employs cryptographic methods to safeguard and verify transactions and regulate the creation of new coins.
The most recognized cryptocurrency is Bitcoin (BTC), but thousands of alternative cryptocurrencies (Ethereum, Litecoin, TRON, USDT, etc.) are commonly used. If you сщьзфку digital currency with conventional currency, cryptocurrency is not affected by inflation, regulations from the government or any other form of restriction.
In everyday life, digital currency is employed to pay for online services or goods. Many online stores (e.g. Etsy, Microsoft, and Shopify) all have services that accept cryptocurrency as a form of payment. This facilitates the acquisition of goods from all parts of the world, as no one is concerned with the exchange rates or fees.
Also, investing is a popular method of utilizing cryptocurrency. A successful example of investment success is Eric Fineman. At the age of 12, the boy invested $1,000 in Bitcoin, which his grandmother provided him with, and at the age of 18, his investment was increased to $1 million, which made him a millionaire.
The advantages and disadvantages of cryptocurrency
Advantages:
✅ Not under the control of any central authority, but processes are currently underway to attain control over the regulation and distribution of cryptocurrencies at the federal level (the SEC in the USA);
✅ Employs cryptography to ensure transactions are safe;
✅ Cryptocurrency is accessible to anyone.
✅ Transactions can take a few seconds or a few minutes to complete.
Disadvantages:
⛔️ The value of cryptocurrency can change rapidly and without predictability;
⛔️ Not subject to any state regulation, so there is no safety in the event of theft or fraud.
⛔️ It's not commonly accepted as a form of payment.
⛔️ Transactions are unable to be reversed once they've been confirmed on the blockchain.
The most popular cryptocurrencies
Bitcoin (BTC) - is the first and most popular cryptocurrency that facilitates safe and anonymous transactions without any central authority.
Ethereum (ETH) - is associated with its smart contract abilities, these enable other developers to utilize Ethereum to create their own cryptocurrencies and web3-based applications.
Litecoin (LTC) - is frequently considered a lightweight alternative to Bitcoin that has faster transactions and lower costs.
TRON (TRX) - is a platform with its own cryptocurrency (TRX) and that focuses on creating a decentralized media system for entertainment.
Tether (USDT) - is a cryptocurrency that is tied to the U.S. dollar in a stable ratio of 1:1. Its value is relatively steady, unlike other cryptocurrencies, which can have significant changes in price.
Each of these cryptocurrencies has a unique attribute and benefit. This is what attracts both investors and enthusiasts.
Cryptocurrencies VS fiat currencies
🟢 Security
Cryptocurrencies: cryptography is employed to ensure transactions are secure.
Fiat money: safeguarded by the government and monetary systems.
🟡 Volatility
Cryptocurrencies: high volatility.
Fiat currency: low volatility.
🟣 Acceptance
Cryptocurrencies: it's not commonly used as a form of payment.
Fiat money: it's commonly used as a form of payment.
Both cryptocurrencies (BTC, ETH, LTC, TRX, USDT) and fiat currencies have specific benefits and drawbacks. Cryptocurrencies have a higher degree of security and anonymity, fiat currencies are more consistent and are generally more accepted, but are subject to government regulation and banking systems.
How to buy, sell, or store cryptocurrency?
To manage the cryptocurrency, a digital wallet is necessary. There are custodial and non-custodial crypto wallets. Non-custodial wallets grant users full authority over their personal keys, while custodial wallets maintain personal keys for users on behalf of them.
Examples of non-custodial wallets:
- Trust Wallet;
- Coinbase Wallet;
- Exodus.
Examples of custodial wallets:
- BitMex;
- Kraken;
- Binance.
Conclusion
Cryptocurrency is a recently developed technology that has had a significant impact on the financial world. It's no secret that cryptocurrency provides an alternative to conventional currency and, in addition, provides greater privacy, safety and accessibility to transactions. Since cryptocurrency possesses a specific set of benefits and drawbacks, you should study them in detail and decide for yourself if it's worth beginning to explore the cryptocurrency world.
