Cryptocurrency tends to fall into one of three opinion categories:
- Some people have never actually heard of it and continue to live without knowing that it exists.
- Most people are aware of the existence of things like Bitcoin and other cryptocurrencies, but either do not know enough about them or are too sceptical about trying using them.
- There are those people who understand and use cryptocurrencies on a daily basis.
With advancements in technology, security, and more, the future is heading in many different directions and keeping up is going to be something that most people will need to do at some stage. So, if you have never really heard of cryptocurrencies or are thoroughly confused about what they are here is a quick guide as to why 2021 is the year that you should get on board.
What are Cryptocurrencies?
Well, basically cryptocurrency is digital money. There are many different currencies within this umbrella term, just like there are across various countries of the world with real money. Most people who have heard of cryptocurrency may also identify with the word Bitcoin, but there are others like Litecoin, Ethereum, and Dogecoin. It is quite reasonable to be confused by how cryptocurrencies actually work because some pretty complex technologies are running in the background. Still, we’re going to try and simplify things a little bit and explain it in an introductory way, as much as possible.
Blockchain
In order to be able to get your head around cryptocurrencies and Bitcoin, you also need to learn a little bit more about the terminology blockchain and what this means. So blockchain is basically data, that has been digitised, and can be found stored in a database which is public. Each section is called a block and contains information about a transaction, for example, the dollar amount, the time and date. Also stored in these blocks, there is information pertaining to the people involved in the transaction. In order to be easily identified, each of the blocks assigns itself a unique code, and this is known as a hash. This identifier is generated by some complex algorithms but gives a totally unique allocation so blocks can be differentiated between.
When it comes to cryptocurrency and a transaction based in Bitcoin, for example, the person sending the Bitcoin and the person receiving it must both sign off the payment to create a form of digital signature that is needed to authorise the transaction. This also generates a document which is stored in a public ledger, therefore offering the confidence of transparency and accountability meaning that cryptocurrencies are safe and more importantly real which is the concern of a lot of people.
As you know, when it comes to real money, or cold hard cash, or banks and governments are responsible for regulating and ensuring that it is all legitimate and runs smoothly. In the world of cryptocurrency, this role is replaced by a computer network. So blockchain can be described as decentralised. This has been welcomed by many people as they feel it gives control of the money back to the person who owns it rather than being accountable through third parties like banks and governments. Because of that, sending and receiving their money across the Internet is infinitely more straightforward. So, how do you get Bitcoin or other cryptocurrencies? Well, you can purchase or exchange real money from your country for the equivalent value of cryptocurrency. There are several cryptocurrency exchanges who offer this service. In some countries, it has already become a legitimate way to trade, and whether you are purchasing a new car, or your weekly groceries Bitcoin is an acceptable form of payment. It is likely that this will continue to expand so sceptics and those not familiar with the process will need to try and get their head around it and learn more about it.
Why Would I Want Bitcoin?
One of the reasons why Bitcoin and other cryptocurrencies are becoming so popular online is because they have a much higher security potential when compared to regular bank accounts. This means they are much harder to hack and less likely to be a result of cybercrime. One of the reasons why security is so much better is because the blockchain information keeps things much more anonymous. The way it is stored does not reveal the personal identity of the owner. So, for certain transactions, there is no traceability back to you, now obviously if you use something like Amazon and pay with cryptocurrencies you also have to provide a shipping address so the two could potentially be linked but, big sites like Amazon also have added security to ensure that cybercriminals do not have any success.
It is also much easier to transfer cryptocurrencies across borders and countries which of course can be a good thing and also play right into the hands of criminals. Since cryptocurrency garnered popularity, it has also found a presence on the dark web where illegal items such as weapons, identities and drugs are sold but to be fair; this happens with every single currency on the planet anyway. So, if you are making transactions across the Internet and like the idea of not needing to store or reveal your full identity or location, then Bitcoin and other cryptocurrencies could be an excellent way for you to go. There are plenty of online resources to help you get started.
Founder Dinis Guarda
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