The notion of cryptocurrencies continues to leave some people intrigued, and others confused. In light of this, some see it as the future of global trade whereas others are quick to dismiss it as one of many online fads. The main reason behind all these contrasting opinions is the fact that some people know a lot about cryptocurrencies, whilst others know very little.
Unlike real currencies, which are physical, cryptocurrencies are digital assets that cannot be held, but are owned and transferred electronically. Using cryptocurrency as an exchange currency means that the owners do not have to rely on financial institutions, thus they can avoid transaction fees.
Cryptocurrency transactions are initiated and processed using blockchain technology or networks. Ideally, blockchains are decentralised, and every user is expected to successfully confirm or okay the deal to have it finalised. This creates a safer transaction, since all transacting parties are involved. The only downside with cryptocurrency exchanges like Bitcoin is the trade might take some time before going through.
Every transaction is put into a ‘block.’ Here, the computers on the network between the transacting parties have to solve a complex mathematical solution, and the answer from each computer is displayed to the other end of the network. If the solutions are similar or the networks are in agreement, the transaction is then completed.
Besides just trading, cryptocurrencies are mined. This implies that there is a finite number of these currencies. For instance, the number of bitcoins that can be on the market is capped at 21 million. If you need some bitcoins, you can find them via cryptocurrency software, exchanges, or on specific cryptocurrency ATMs – for both mining and purchase.
Blockchain technology has played a significant role in the popularity of cryptocurrencies. The decentralised nature of the network is one of the main reasons why cryptocurrencies like bitcoins are considered to be a lot safer and attractive to businesses.