When most people think of cryptocurrency they might as well be thinking of cryptic currency. Very few people seem to know what it is and for some reason everyone seems to be talking about it as if they do. This report will hopefully demystify all the aspects of cryptocurrency so that by the time you’re finished reading you will have a pretty good idea of what it is and what it’s all about.
You may find that cryptocurrency is for you or you may not but at least you’ll be able to speak with a degree of certainty and knowledge that others won’t possess.
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Cryptocurrency is electronic currency, short and simple. However, what’s not so short and simple is exactly how it comes to have value.
Cryptocurrency is a digitized, virtual, decentralized currency produced by the application of cryptography, which, according to Merriam Webster dictionary, is the “computerized encoding and decoding of information”. Cryptography is the foundation that makes debit cards, computer banking and eCommerce systems possible.
Cryptocurrency isn’t backed by banks; it’s not backed by a government, but by an extremely complicated arrangement of algorithms. Cryptocurrency is electricity which is encoded into complex strings of algorithms. What lends monetary value is their intricacy and their security from hackers. The way that crypto currency is made is simply too difficult to reproduce.
Cryptocurrency is in direct opposition to what is called fiat money. Fiat money is currency that gets its worth from government ruling or law. The dollar, the yen, and the Euro are all examples. Any currency that is defined as legal tender is fiat money.
Unlike fiat money, another part of what makes crypto currency valuable is that, like a commodity such as silver and gold, there’s only a finite amount of it. Only 21,000,000 of these extremely complex algorithms were produced. No more, no less. It can’t be altered by printing more of it, like a government printing more money to pump up the system without backing. Or by a bank altering a digital ledger, something the Federal Reserve will instruct banks to do to adjust for inflation.
Cryptocurrency is a means to purchase, sell, and invest that completely avoids both government oversight and banking systems tracking the movement of your money. In a world economy that is destabilized, this system can become a stable force.
Cryptocurrency also gives you a great deal of anonymity. Unfortunately this can lead to misuse by a criminal element using crypto currency to their own ends just as regular money can be misused. However, it can also keep the government from tracking your every purchase and invading your personal privacy.
Cryptocurrency comes in quite a few forms. Bitcoin was the first and is the standard from which all other cryptocurrencies pattern themselves. All are produced by meticulous alpha-numerical computations from a complex coding tool. Some other cryptocurrencies are Litecoin, Namecoin, Peercoin, Dogecoin, and Worldcoin, to name a few. These are called altcoins as a generalized name. The prices of each are regulated by the supply of the specific cryptocurrency and the demand that the market has for that currency.