What is cryptocurrency and its effects on the current economy?

Cryptocurrency has been gaining traction in the current economy over the past few years and most people do not even know what it is, how it works, or why we even need it.

However, with recent events such as Jamie Dimon’s claims that bitcoin is a fraud and worse than tulip bulbs, people are starting to look into cryptocurrency more and it seems many have started to convert some of their money into this relatively new form of currency.

So then why should you be worried about cryptocurrency? Is it bad or good? Is it sustainable?

 

If you have time, I highly recommend reading it

In an increasingly technological world, using cryptocurrency to make purchases has been a controversial, yet popular choice for those who can afford it.

Cryptocurrency makes financial transactions extremely fast; some platforms have transaction times as low as ten seconds or less. You also don’t need to provide any personal information when buying something with digital currency, meaning you can be completely anonymous.

All you need to do is create a Bitcoin wallet, purchase coins and send them to someone else with a different type of wallet, or address. It’s really that simple!

 

If you do not have time, this article is a nice introduction

What Is Cryptocurrency? It’s Worth $1,000,000! (Or Maybe Not?) The word cryptocurrency can be confusing to people who are new to it.

After all, if you break it down into syllables it becomes something like crypto-currency. This leads some people to believe that cryptocurrencies are not currencies at all but rather a form of encrypted data or code.

In reality, however, a cryptocurrency is exactly what it sounds like: a currency whose value comes from cryptography. As a matter of fact, bitcoin was first introduced as a peer-to-peer electronic cash system—essentially making it digital cash.

Bitcoin was designed by an anonymous developer or group of developers under the name Satoshi Nakamoto and released in 2009 as open-source software.

 

I will try to cover everything in 1,000 words or less

Just because something isn’t produced by a government doesn’t mean it can’t be used as currency. Cryptocurrencies, such as Bitcoin, are independent of governments and banks.

That means transactions made in cryptocurrencies aren’t taxed or overseen by any organization. This makes them an attractive option for people looking to do business on an international scale without regulation or oversight.

One downside of using cryptocurrencies to transact with others is that there’s no insurance against fraud—if someone gets your bitcoin address, they have access to your account forever.

 

Why everyone should know about cryptocurrencies

Cryptocurrencies aren’t getting as much attention from economists and investors as they deserve. To understand why you need to know a little bit about how they work.

Here’s a (very) simplified overview of how cryptocurrencies like Bitcoin work: when someone wants to buy something using Bitcoin or another crypto, that purchase gets added to what are called blocks.

The block adds a number every time someone purchases something using crypto, and that number increases every time there’s a new transaction; it also slows down by half after every 210,000 transactions have been processed.

The combination of these two factors has led some economists to suggest that there will only ever be 21 million Bitcoins in existence at any given point in time.

 

The basics of cryptocurrencies

Cryptocurrencies are not issued by a government or central bank. Cryptocurrencies also use decentralized control, meaning they are operated via peer-to-peer networks rather than a central bank.

This means that transactions processed through cryptocurrencies don’t have to go through a third party—like a bank or payment processor—and instead, get handled by the network of computers that run cryptocurrencies. (For more, read What is Bitcoin?)

In terms of their impact on our economy, cryptocurrencies can be considered both assets and currencies: Assets because they have value like any other asset; currencies because they can be used to buy things.

But it's important to note that neither are true money in their purest sense: Currencies need stability in order for us to trust them as a store of value, while assets should produce income or value over time.

For example, gold has historically been used as money because it doesn't corrode over time as paper currency does; meanwhile, stock markets often generate returns greater than what we could expect from holding cash.

 

How cryptocurrencies are mined

Each virtual coin is called a coin or a token. The names are pretty similar, but they’re different. A Bitcoin token (or coin) refers to one unit of currency from one provider, like US dollars from Bank of America.

In most cases, you can substitute one for another as long as you have an account with that provider. However, cryptocurrencies aren’t usually pegged to a single national currency—they are more like foreign currencies that people trade internationally between providers and users.

This makes them very easy to send anywhere in the world almost instantly, with little chance of interference from outside sources like banks or governments. They’re free of centralized control and virtually impervious to hacking or theft (at least in theory).

 

How cryptocurrency transactions are completed

One unique feature of cryptocurrencies is that transactions are processed without a central authority, such as a bank or payment processor. The peer-to-peer network architecture of a cryptocurrency makes transactions more efficient by eliminating some of these centralized intermediaries.

Some cryptocurrencies use a combined proof-of-work/proof-of-stake scheme and have created algorithms to verify transactions (such as bitcoin's Hashcash).

Others rely on simple trust between participants (for example, Peercoin). Yet others are backed by nothing other than pure speculation due to their inability to sustain value at any objective level.

 

The different types of Cryptocurrencies available today

1.       Bitcoin - There are a lot of people who have heard about Bitcoin, but are not really sure what it actually is.

To put it as simple as possible, Bitcoin is essentially a digital currency that has no physical form and exists only in electronic form.

It has been around since 2009 and because of that, there are several individuals who believe it to be nothing more than just a bubble with no future ahead of itself.

However, while there may be some truth to that statement when you look at it from a certain perspective, there are also several factors why you can say otherwise.

 

Can I make money with Bitcoin mining?

One of the most common questions I get asked about Bitcoin mining is, can I make money with it? The simple answer: probably not. At least not anymore.

As more people have started mining over recent years, competition has increased considerably. Today, you need to be at least somewhat serious to mine profitably; if you don't understand what difficulty or a halving is then you'll probably want to avoid it altogether.

 (And then there are things like hardware costs). However, if you're serious about making money in Bitcoin or cryptocurrency generally, read on. We'll walk through some of the steps involved in getting your hardware up and running!

 

The differences between coins such as Bitcoin vs. Litecoin

Cryptocurrency scams are a sad fact of life in 2017. There’s so much noise about Bitcoin and other cryptocurrencies that it’s easy to become confused about what cryptocurrencies are actually worth, which ones have value, which ones are fads, and which ones will ultimately be remembered as one of history’s greatest scams.

In an age where people can make money (sometimes lots of money) in mere seconds with just a few clicks, it only makes sense that there would be con artists out there trying to take advantage of people who want to get rich quickly.

But how do you know if you’re being scammed or not? And how do you know if something like Litecoin has any value at all? Here are some tips for identifying good coins from bad coins.

 

Cryptocurrency scams and how to protect yourself from them.

If you’re interested in investing in cryptocurrencies, do your homework to avoid getting ripped off. There are lots of stories of people who were conned out of their hard-earned money by scammers pretending to sell bitcoin.

Scammers often try to target new investors, since they might not be aware that ICO scams exist. If someone tries to convince you that a particular company’s ICO is worth investing in, do some independent research on it first before handing over any money.

It’s also important to understand how an ICO works—not all companies going through one actually need capital at all.

 

Conclusion

Cryptocurrency has been prevalent in headlines over the past couple of years, but most of us still don’t know what it actually is. Does that make us dummies or just unaware?

We’re not quite sure yet, but we’re willing to guess it might be a bit of both. To shed some light on why you should care about digital currencies such as Bitcoin (and understand what those rambling geeks are talking about), here are six things you need to know about crypto.

1) What is cryptocurrency?

2) How does it work?

3) Who invented it?

4) What makes it valuable?

5) Is there an intrinsic value to cryptocurrencies, like gold or silver?

6) How do I get started investing in cryptocurrencies myself?