Can you believe that at one time, people used to accept shells and stones as payment? Then commerce progressed to the point that people began trading metal coins for goods. (You probably still do that sometimes today.) Shortly, money became small green pieces of paper and then plastic, but now, people can make purchases with bytes of data called cryptocurrency.
It seems like it was just yesterday that half of the world went crypto-crazy, and the other half went wild trying to figure out what cryptocurrency is. People spent their Saturdays under the tutelage of excellent teachers learning how blockchain technology works and how they can profit from it. The real question is, will people trade in bills for bytes? Keep reading to find out if whether or not cryptocurrency is the future of finance!
What is all the crypto buzz about?
Even if you were locked away in a tower in a mythical faraway land, you’d still have gotten some news about Bitcoin in 2017. Why? That’s the year that Bitcoin—BTC on the stock exchange—prices hit $10,000 per unit of cryptocurrency. That’s when people began dedicating their Saturdays to pouring over cryptocurrency guides like Cryptovantage to get oversight about the burgeoning crypto-commodity.
Overnight, people who had invested in Bitcoin nearly a decade before and forgotten about it woke up with millions of dollars to their names. The explosion of Bitcoin and the rise of BTC stock had everyone from Wall Street wolves to software development savants buzzing uncontrollably.
Even though many people have prospered from it, there is still a lot of confusion as to what Bitcoin, cryptocurrency, and blockchain technology are. In short, cryptocurrency is encrypted digital money, and Bitcoin is a type of currency—like the US dollar. Blockchain technology is the system that allows consumers to do commerce with crypto cash.
Just like with other currencies, the value of cryptocurrency depends on the magnitude at which people use it. A unit of currency is called a byte, and its value can range from a few cents to thousands of dollars.
What is blockchain technology?
The blockchain technology is what has made the world of crypto-finance attractive to cryptocurrency traders and regular consumers alike. Not many people can use the technology as it requires computers with intensive input abilities, but anyone can reap the benefits of it.
Whenever someone completes a transaction, computers go to work trying to solve the math problem that is encrypted in the transaction. The first computer to solve the problem and decrypt the transaction gets to verify it and then puts it in a “block”—or group of transactions—on the ledger. Each block is allowed to have up to1 million bytes in it. Once the purchase is on the ledger, it cannot be changed and anyone in the network can see it.
Pros and Cons of Cryptocurrency
As with everything in business and life, there are pros and cons associated with crypto-finance. However, the question isn’t whether or not this new currency is perfect, but is it the future of finance?
One of the great benefits fo the blockchain technology used for Bitcoin transactions is that it provides security and transparency. Once someone confirms a purchase, it’s final and available for the whole network to see. Because these transactions are visible, encoded, and require computers with intensive input capabilities to manipulate, they’re hard to hack.
Another benefit of cryptocurrency is that you don’t have to worry about a foreign exchange rate. Bitcoin is worth the same amount of money here in America that it is in China or France.
One of the disadvantages of cryptocurrency is that it can be challenging to understand if you aren’t tech-savvy. You also have to deal with the high fluctuations in the value of bytes and the fact that there is nothing to protect you from losses.
All of this information still doesn’t quite answer the question of whether or not cryptocurrency is the future. The truth is that the answer is still a matter of time, technical analysis, and tangible gains and losses by consumers. As for the luminary Elon Musk? Well, he’s all in!
Video – Cryptocurrencies
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Interesting related article: “What is Blockchain?“