There is no doubt that most people who use the internet have heard of cryptocurrencies; With that said, it is also very common for most individuals to feel lost when trying to define what the word cryptocurrency means, and it seems to be a concept that very few people truly understand.
Today, we are going to be talking about the essentials regarding this topic. This is going to ensure that you can have a solid foundation on what these currencies are and what kind of benefits they can bring to your economy.
What is cryptocurrency?
Cryptocurrencies (also called tokens) are decentralized digital currencies, used as a form of payment to purchase products and services online; these currencies grow in value as they grow in popularity. The more people decide to purchase a specific cryptocurrency, the more it turns into a tradable asset.
The most popular cryptocurrency (by total market cap) as of today, is Bitcoin.
Some cryptocurrency benefits include no banking fees, very low transaction fees, the potential for high returns, and more. They are also immune to counterfeiting, they do not require a central authority, and they are protected by very complex algorithms.
Most cryptocurrencies networks are based on a technology called blockchain (a system that records information in ways that make it very hard to hack, change or cheat the system).
What is the difference between cryptocurrency and country currency (USD, EUR, GBP, etc.)?
The main and most important difference between cryptocurrency and standard currencies such as the USD, the ERO, and the GBP is that cryptocurrencies are not regulated by any financial entity. Standard currencies are called Fiat money and they are issued by governments with the use of banks.
Cryptocurrencies are not regulated by any government or financial entity. The regulation takes place within the network of people who own the currencies in a blockchain. This means that there is no middleman taking a cut with any transaction.
How many cryptocurrencies are there?
There are above 12,500 cryptocurrencies in existence, but many of them are still not very popular and they need to gain momentum in order to build value; however, This is not to say that they will remain this way.
There are some cryptocurrencies that have become very popular online and their value has risen to significant levels.
However, it’s important to note that new currencies are being announced all the time but they often fail to gain any notoriety and this leaves them high and dry without the chance of growing in value.
The following is a list of the top 10 most popular cryptocurrencies today:
The value that each of those coins has is constantly fluctuating, but Bitcoin has established itself as the most valuable cryptocurrency to date (by market cap), and It is miles ahead of the rest in terms of value.
Being able to predict which of these coins will grow more valuable is going to help investors make decisions that could turn into massive profit; The process of trading cryptocurrencies has become a very profitable strategy for people who are looking to generate wealth. however, This is not to say that it’s easy to achieve optimal results as a trader.
What are the main benefits of using cryptocurrencies?
It distributes power
Banks and financial entities, in general, can have too much power in their hands. With cryptocurrency, there is never an “owner” or an organization in charge. This is why blockchain is so important because it makes every member of the network an essential part of the cryptocurrency equation. When the power is equally distributed, no one can abuse it.
No more middleman
Cryptocurrencies allow people to stop giving cuts and commissions to banks or financial entities in general for transactions. In the world of cryptocurrencies, every member of the blockchain network acts as a middleman, but their compensation is not going to affect your transaction as a monetary fee. Once again, this is a very deep and complex topic when you try to dissect it, but the essence of it is that you do not pay fees for transactions.
It allows more people to get involved
There are literally billions of people in the world who do not have a bank account or access to any kind of bank-related services. There is a multitude of reasons for this, but with cryptocurrencies, there are no major roadblocks and endless protocols to get involved.
This article could easily be ten thousand words long just to scratch the surface of the cryptocurrency world. With that said, we just gave you the 101 on this global phenomenon, and hopefully, it clears out some basic doubts regarding what cryptocurrency is and how it can be beneficial to become part of the blockchain.