Cryptocurrency has not managed to break its way into the mainstream as of yet; it remains on the fringes. Despite its popularity growing, it seems to easily maintain its air of mystery.
Most people understand the abstract idea behind Cryptocurrencies but nothing beyond that, it doesn’t gain much media attention, and when it does, it is for the wrong reasons. However, in an increasingly digital society, it stands to reason that Cryptocurrency will have a part to play. In order to take advantage, you need to know more about it.
To gain a better idea of where it could go, you need to know where it has come from. Let’s start at the beginning.
How Do Cryptocurrencies Work?
Traditionally, when a purchase is made, people usually use either cash, debit, or credit. They are the vehicles that allow consumers to spend the money that they have in their bank accounts.
When money is taken out of an account or a card purchase is made, a chain of processes need to happen. Firstly, the bank verifies whether or not the money is available. If the money is available, then it is released either at the ATM or to the store. The bank then updates its records.
Cryptocurrencies, on the other hand, are entirely different. When the Cryptocurrency is exchanged, it is classed as a peer-to-peer transaction because there are no third parties or banks involved at all. What happens instead is that every single transaction is recorded. The transactions form blocks which then form a chain, known as a blockchain.
The transactions cannot be deleted or erased. Instead, the blockchain saves them and simply keeps going. The record or blockchain is not centrally located; it isn’t limited to one location. Instead, the chain is stored and distributed through a large network of computers. The information is kept secure through complex systems and security settings to protect the chain and make it virtually unhackable and tamper-free.
The Cryptocurrency Timeline
A lot of people are under the impression that Cryptocurrency is a relatively new concept that has only emerged in the last decade or so. The truth is that the history of Cryptocurrency can be traced back much further.
The first mentions of Cryptocurrency can be traced back to a cryptographer in 1983. David Chaum was arguably a pioneer for the concept. He developed the first brand of digital currency, a transaction system entitled eCash.
This was then refined into another iteration that followed the same principles called DigiCash. One of the most important elements of DigiCash and something that formed the basis of almost all Cryptocurrencies to follow is the idea that the transactions are anonymous and conducted through a public network.
The term Cryptocurrency first emerged in the late 1990s. David Chaum’s efforts paved the way for future systems by providing frameworks and baselines that could then be built upon. Cryptocurrency continued to develop over this time as a new way of exchanging goods and services. However, it was only in the mid-2000s when the value of precious metals like gold and silver began to fall, that Cryptocurrencies began to realize their potential.
In 2008 Satoshi Nakamoto entered the digital currency scene. To this day, they remain anonymous, although there is a number of theories as to their identity. Nevertheless, Nakamoto constructed and published a report that outlined the potential of Cryptocurrency as well as being the first to make a transaction on one of the best-known cryptocurrencies in the world, Bitcoin.
Nakamoto is also credited with inventing the blockchain database used by Bitcoin and, in fact, the majority of platforms that followed. Since this time, more and more Cryptocurrency platforms have emerged as the popularity of digital currency has increased.
As the interest in Cryptocurrency increased, so did the value. Bitcoin specifically reached a high in 2017 where a single Bitcoin was worth $10,000. These market fluctuations and the potential return on interest have meant that Cryptocurrency is a growing investment market.
The Most Popular Cryptocurrencies in 2022
There are around ten thousand different Cryptocurrencies available for purchase today. Choosing between them is not necessarily easy. The most popular forms of Cryptocurrency this year are popular for a reason; they provide a good starting point for those who are new to Cryptocurrencies.
There is Bitcoin, as mentioned above, which is arguably the most well-known. Dogecoin was created in the early 2010s and has slowly been gaining traction since. Litecoin is another one that was developed in the early 2010s, and the exchange rate to real-world currency remains strong and stable.
Ethereum was developed more recently in 2015, and it has an even stronger exchange rate than Litecoin (at the time of writing at least). Cardano was released the most recently in 2017, but it holds a lot of promise.
Cryptocurrencies continue to increase in acceptance and therefore use. As mentioned above, they are a popular option when it comes to investing. There are a lot of Cryptocurrencies to choose from and platforms that can help you to buy, sell, or trade your digital currency as you see fit.
Individual investment and trading does seem to be the majority of its use today. It isn’t widely accepted as a form of payment; however, this could all change.
Cryptocurrencies in the Future
Modern life is increasingly digital, both personally and professionally. The reliance on technology is set to increase; logically, this means that it would not be unrealistic to envision currency becoming more digital.
In fact, there is a train of thought that believes that Cryptocurrencies could one day become the primary form of payment, overtaking both cash and credit. In all honesty, it will likely take years for this to come to fruition.
There would likely need to be a lot of technical and legal reforms to regulate its use. In any case, Cryptocurrency will continue to evolve, and this in itself could affect the financial world in a number of ways.
Cryptocurrency Vs. Real-World Currency
The value of individual real-world currencies is notoriously precarious. All you need to do is look at the exchange rates of different currencies to see that. It seems that financial bad news is rife; recessions and inflation continue to plague citizens in all countries.
The value of the money remains stable; a dollar will always be valued at one dollar, but it’s worth is diminished, that dollar won’t go as far as it used to. It seems that the same amount of money can’t stretch to the same things that it used to, be it groceries, movie tickets or any other activity. Digital currencies, on the other hand, are different.
Most, but not all admittedly, of them have a finite supply. The supply remains stable; the coins cannot be created or erased at will. This is part of their genius because there is a finite number of them their value holds steady; it is protected.
Getting Started with Cryptocurrencies
The truth is that Cryptocurrencies can prove to be a valuable asset when approached properly; they can also be a risky investment for those that don’t know what they’re doing. Cryptocurrencies experience peaks and troughs, as do most assets. However, their volatility does mean that on any given day, there is both the potential to win big and to lose big. As with any asset, they are only worth what other people are willing to pay.
To get started with digital currencies, you first need to do your research. Educating yourself on the market, its influences and niches is important as it would be when creating any investment portfolio.
Get your information from reputable sources, verify that information and ensure that your money is in safe hands. For example, if you wanted to buy Dogecoin in Canada, then you should check out Wealthsimple.
They offer great services to help you get started on your investment journey, not to mention their learning tab, which can help you to take charge of your financial future. Educating yourself simply makes good financial sense.
Where there are high-quality platforms, there will also be their low-quality counterparts. You need to be able to tell the difference between legitimate platforms and technical novelties or, even worse, scams. The scams themselves are few and far between, but they do exist. By doing your research, you are limiting your risk on all fronts; remember that.
The Bottom Line
Digital currencies have come on leaps and bounds since it’s inception in the early eighties; the growth that it, as an industry, has seen in the last fifteen years alone is astounding.
Cryptocurrencies are still evolving as they continue to work towards reaching their potential. In truth, it is difficult to predict where they could go. They could be a flash in the pan, or they could change the financial landscape forever.
One thing is for sure, using them properly can be life-changing; one smart investment is all it takes. The above should help you to form the beginning of your knowledge base that you can build upon as you learn more and take your first steps into Cryptocurrency.
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