WTF is a Cryptocurrency?

Just like there are pounds, dollars, euros and yen, there are quite a number of cryptocurrencies around now. Although, Bitcoin which originated in Australia back in 2009, remains one of the best known.  But let’s start with some basic information about these ‘virtual’ coins, because we know it can be difficult to explain your investment to friends and family who may be understandably concerned about what you’re getting into.

Definition of a cryptocurrency

It is a currency in a digital form. It has no physical form, but it does have an exchange rate with physical currencies. A digital currency is more efficient than a physical currency in terms of usage and transaction costs because governments, or the traditional banking sector don’t control it. Several banks are even to starting to invest in crypto currencies on big scale. Why ? It is clear that the economy will be ruled by crypto currencies x years from now. How long x will be ? Nobody knows. But the day is coming, and signing is on the wall already … Each currency has its own algorithm, which is a formula that creates it, and these are evolving all the time to suit changes in economic development. Yes, it all sounds very sci-fi, but it is remarkably easy to use Octacoin.

 Why use Cryptocurrency?

Crypto currency enthusiasts fervently believe that using digital currencies will prove to be a way that opens up the world economy to everyone and not just to the privileged few. There’s a democracy about crypto currencies, and perhaps a touch of romantic rebellion that makes it attractive to anyone who believes that the individual should have more control over the economy than the shady forces behind national banks and those in control of our economy. The world is a village, and many, if not the majority of companies is working international. So why would currencies stay local as is the case today ?Stop kidding yourself you believe that Crypto currencies are just a hype. They are here to stay and even rule the economy of tomorrow. As Crypto Junction says:

To neglect the idea of currency protected by cryptography on a decentralized network today is like neglecting the idea of Internet and the Hypertext Transfer Protocol (http) back in the early 90s.”

And we all know what happened with that one …

What’s the technology?

In the world of banking all transaction are recorded in a ledger. That has been the way since banking began, although the ‘ledger’ itself is now computerized. This ledger is not accessible to you or me, or at least only for our own accounts. So it is hidden and private which makes it anonymous and that makes it extremely attractive.

In terms of the technology that creates a Cryptocurrency, it uses software that allows a network of computers to maintain a collective ‘ledger’ via the internet. This bookkeeping isn’t closed, nor does a central authority control it. Instead, it is public, and available in one digital ledger, which is distributed across the network. This is called the blockchain; in the blockchain every transaction is logged, including information on the time, date, participants and amount of the transaction.

Mining creates Cryptocurrency

In the world of crypto currencies, ‘miners’ create the coins by solving mathematical problems using special software and computing power. A lot of computing power. In return for this ‘work’ they are issued with coins. This is the incentive for more people to join the network and start mining. You can start mining Cryptocurrency just by going to a cryptocurrency website now and downloading a wallet for Windows, Apple Mac or Linux. There are step-by-step guides to the mining procedure found online so you can get started straight away creating your blocks of Cryptocurrency if you would want to do that. But it takes time and resources as explained. So a great alternative is to participate in a mining pool if you can !

It’s part of an exciting new world economy and by joining some of the best cryptocurrencies, you’re part of it. And now you can answer the person who goes “WTF is a cryptocurrency?”