Because of the fast-paced growth and innovations of the internet, many transactions that could only be done through meetings and other personal activities in previous years can now be done online. In these online transactions, especially those which involve money, having an overview of cryptocurrencies can be very handy.
If you want to understand cryptocurrencies more, here are some facts in our overview of cryptocurrencies that can help you.
What is a Cryptocurrency?
A cryptocurrency is a virtual or digital currency which is generally used for payment of good as well as services online. To make it simpler, cryptocurrency will represent your money in your online trading transactions. It is also compared with tokens as well as casino chips since it serves the same purpose as them.
However, bear in mind that you are going to need real money in exchange for your cryptocurrency to have value and to access services and other products. Some people buy cryptocurrencies in order to buy their needed products, while others sell products in order to acquire cryptocurrencies.
How are bitcoins related to cryptocurrency?
A company may opt to issue its own cryptocurrency, which is often called tokens. However, of all cryptocurrencies issued, the most popular is Bitcoin.
The popularity of bitcoins in online trading platforms, has several reasons. One of the well-known reasons is that bitcoins can be very hard to copy or to create fake ones. Thus, it is safe to use it on trading platforms.
Another reason is that bitcoins are not under the control of the government or any banks, and somehow, most people like this fact. Bitcoins can also be spent anonymously. Although online transactions related to this are well recorded, no one will know that the bitcoin is owned by someone unless that someone admits that the account number used was from them.
Aside from that, bitcoins can be solely spent by their owner. Bitcoins that are not yours cannot be spent by you. This is made possible by the blockchain system.
Is it Safe and Secured?
Cryptocurrencies such as bitcoin are safe and secured to trade because of the blockchain system. This is a technology that is decentralized. Thus, it is spread throughout numerous computers in order to manage as well as record every single online transaction that has been made.
Because of its thorough recording as well as effective management of online transactions and crypto trading, people with ill intent, such as hackers, can be easily traced. This adds more appeal for most people to use cryptocurrency in their online transactions.
Reasons Why Cryptocurrency are Popular
Aside from the blockchain, which assures the user’s security and anonymity of use, cryptocurrencies are also popular for several reasons which is why this overview of cryptocurrencies is important.
One of these reasons is its fluctuating value. The value of cryptocurrencies such as bitcoin can sometimes reach high value, and sometimes it can drop into a very low value. For example, in the year 2017, bitcoins’ trading value skyrocketed up to $20,000. However, its value dropped to as low as $3,200 in the following years. It is because of these fluctuations in value that most people believed cryptocurrency to be the currency of the future.
As mentioned before, cryptocurrencies are beyond the control of banks. Thus, it removes the central banks to manage its supply. As we all know, central banks typically lower the value of real money if fluctuations occur. This will not apply to cryptocurrencies.
Lastly, it is the very ease of online transactions that makes cryptocurrencies appealing to most people. This is especially the case if you are going to use online trading platforms that are intended for beginners as well as expert traders.