A beginner’s guide to how cryptocurrency works and if you should consider investing
As an entrepreneur or business owner, it’s essential that you stay up to date with the newest trends in emerging tech. If you’ve been following the latest finance and digital currency news, you’ve probably heard a lot of talk about Bitcoin. Chances are, you’ve also heard of Litecoin, Ethereum and maybe even some of the other numerous cryptocurrencies that exist.
Presented as the latest great investment idea, cryptocurrency is undoubtedly fascinating — but for many, it’s also incredibly confusing. Keep reading to help demystify the mechanics of cryptocurrency, and learn whether you should consider investing.
What is cryptocurrency?
Cryptocurrency is any encrypted, decentralized digital currency. It’s generally created by ‘miners’ who use computers and specialized hardware to process transactions and then collect the currency in exchange. Cryptocurrency is not controlled by any central authority such as a government or bank. Transactions are secured by the blockchain, a technology that records cryptocurrency transactions chronologically in a public digital ledger, which is then linked and secured using cryptography.[1]
There are currently over 1,000 different cryptocurrencies.[2] Bitcoin is probably the most well-known of these but there are other digital currencies also making waves, such as Litecoin, Ripple, Ethereum and Zcash. At the present time, Bitcoin is the cryptocurrency that is most widely accepted and can be used in numerous real-world transactions.[3]
Should I think about investing in cryptocurrency?
The rapid growth and mass adoption of cryptocurrency by technology entrepreneurs and leading global companies — including Microsoft, Shopify and Tesla — has led to its strengthening in today’s fiscal markets.[4] As with any investment it’s a highly speculative venture, and you should make sure you do your homework first. Don’t part with any money until you have thoroughly researched the investment service you will be using. Coinbase is currently the most widely used platform for buying and selling cryptocurrency, but there are many other ways to invest.
What’s the future of cryptocurrency?
If you’ve been following the latest cryptocurrency news, you’ll know that they can be incredibly volatile. This is partly because virtual currency trading occurs on various cryptocurrency exchanges rather than a central exchange. However, its growth in popularity and adoption by big-name companies means that cryptocurrency could soon start to give other payment methods a run for their money. Large firms, including some of the biggest banks in the world like JPMorgan Chase, are also looking to incorporate blockchain technology into the way they do business.
It’s an exciting time in the world of emerging tech, and the rise of cryptocurrency is no exception. And while financial experts can’t agree on whether digital currencies are going to continue to increase in value, one thing’s for sure: they’re certainly an interesting prospect to consider investing in.
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Sources:
- https://www.entrepreneur.com/slideshow/299425
- https://coinmarketcap.com/all/views/all/
- https://99bitcoins.com/who-accepts-bitcoins-payment-companies-stores-take-bitcoins/
- http://www.businessinsider.com/list-top-cryptocurrencies-analysis-comparison-2017-10
