With the advent of Bitcoin in 2009, the long journey of building a decentralized digital cash system finally took a huge step. Virtual currencies surely caught the imagination of many players, instilled fear among others and confused the most in the market. Since then, the media has turned its focus to Bitcoin and other cryptocurrencies. Technology experts and financial specialists have fully immersed their thoughts in the cryptocurrency wave. Today, there are seminars, meetups and Blockchain conferences regarding cryptocurrency virtually in every city by the day. Not many have cracked and understood the operation of cryptocurrencies.
Cryptocurrency is simply a form of digital or virtual money, designed majorly for the security of transactions and in other cases, the anonymity of the holder. Cryptocurrency is designed using cryptography for the security purposes. The security benefit of cryptocurrency is that it is difficult to counterfeit. What makes cryptocurrency unique in its way is that no central bank or authority is endowed with the power of issuing the currency. This, therefore, makes cryptocurrency safe from government manipulation and interference.
Onto the basics of cryptocurrency, just about all confirmed transactions since the creation of cryptocurrency are contained in an open public ledger. The identities regarding the coin owners are usually encrypted, and the system makes use of other cryptographic processes to ensure the legitimacy regarding record keeping. This very ledger ensures that corresponding “digital wallets” can calculate a precise spendable balance.
A transfer of funds between two wallets is known as a transaction. The transaction is instantly submitted to the public ledger, awaiting confirmation. Wallets use encrypted electronic signatures any time a transaction occurs. Typically, the signature is a protected piece of data referred to as a cryptographic signature, and it is important in that it acts as a proof that the transaction originated from the wallet’s owner. The affirmation process takes a little time, say ten minutes, as mining takes place. Mining is the process of confirming transactions and sums them up in the public ledger. TradeFxAsia
Cryptocurrency is of different types. When we talk of cryptocurrency, the first thing that rings is Bitcoin. It is the oldest in the financial world of cryptocurrency since it was the first to emerge. Based on the SHA-256 algorithm, Bitcoin was conceptualized by Satoshi Nakamoto. Over its first four decades of existence, the cost of a Bitcoin has risen from under $0. 01USD to way over $250USD. This recent cost has generated Bitcoin a trendy investment choice for traders seeking to benefit from this market speculation. On the other hand, this volatility has fended long-term investors away, who are shying from participating in Bitcoin trading for a long time.
Litecoin (LTC) is another form of cryptocurrency that makes use of the Script encryption protocol. One of the targets of Litecoin is having to transact at a faster rate as compared to the Bitcoin network, as well as benefit from a good algorithm that has been resistant to accelerated mining technologies such as ASIC. Litecoin’s entire amount accessible for mining and circulation is currently four times the quantity of Bitcoin.
Ethereum (ETH) is another type of cryptocurrency that allows for smart contracts and distributed applications to be built and function without downtime, disturbance, fraud or control from any third party.
With these cryptocurrencies, the only certainty found in the market is the process of uncertainty. AT one point, the market experienced a sudden spike in cryptocurrency value, leading to a market capitalization of well over $830 billion. At the time, investors seemed to have it all, but it did not last long. Since then, the value has tremendously come down, with cryptocurrency market capitalization boasting of just over $260 billion. Now, the question that begs in the cryptocurrency market is, are we experiencing a market correction by the cryptocurrency or will it all end up in a collapse?