Last updated on March 28th, 2024 at 06:15 am
With everything becoming dependent on technology, why not money? Monetary transactions have slowly gone digital too. With this form of digitalization, cryptocurrency was also developed which evolved into a medium of exchange.
Bitcoin became the first cryptocurrency that began back in 2009. Now, businesses are looking towards this exchange medium, with the likes of Elon Musk investing $1.5 billion in Bitcoin. Hence, it would be wise to know what cryptocurrency is and why it has already taken the world by storm.
What is cryptocurrency?
The meaning of cryptocurrency lies in its name itself. It is a kind of digital currency that is encrypted for security purposes. As it is encrypted, it becomes impossible to counterfeit like real money or even hack virtually. It comes in the form of digital coins and tokens that one can buy with real money.
Or, if someone has the expertise in technology, they can 'mine' it for themselves via a strong graphics processing unit (GPU).
Most of the cryptocurrencies use Blockchain technology, which is decentralized and records transactions among computers. Cryptocurrencies are mainly used for trade finance. People usually use it to buy goods and services for many beneficial reasons.
Different types of cryptocurrencies
Bitcoin is the most popular among all cryptocurrencies and currently, there are at least 18.5 million tokens being used. Besides Bitcoin, there are more than 6,700 kinds of cryptocurrencies being used in the market nowadays. And, some of them are:
Ethereum: Ethereum uses a token named Ether and it mainly promotes free access. But mostly, it is for developers to get rid of middlemen and control their apps.
Litecoin: Litecoin was created in the light of Bitcoin to improve upon it. It is basically the same as Bitcoin other than faster time for transactions and a few more benefits.
Stellar: Stellar's currency is Lumen and its uniqueness lies in people being able to transact between different countries. Also, huge transactions can be made with little to no hassle.
How to buy cryptocurrencies?
If someone wants to buy some cryptocurrencies for themselves, they will need an app where they can hold the currency like a 'wallet'. Then, they can create an account and transfer real money to buy cryptocurrencies. Some online brokers are also selling cryptocurrencies. Notably, the exchange rate for cryptocurrencies can fluctuate at any time due to its decentralized nature.
Further, cryptocurrencies are very much transparent. They have zero possibility of being stolen. The transactions can also be quicker and made with minimal transaction fees compared to banks or other financial organizations, which makes trade finance a much easier process.
By and large, cryptocurrencies are a little risky but as online transactions are increasing day by day, their importance is increasing too. One should only go along with purchasing cryptocurrencies with their advantages and risks all in mind.
