While Bitcoin might be big news every day in the financial sector, not everyone who deals in the cryptocurrency really understands the technology behind it or any other cryptocurrency for that matter.
If you are planning to get into crypto exchange anytime soon, you should find the following introductory points very useful in getting an idea about the technology that makes everything possible.
What Does the Word “Cryptocurrency” Really Mean?
Cryptocurrency quite literally means a digital currency that is securely encrypted and that’s exactly what Bitcoin, Ethereum, Litecoin and all the others are. The currency is not tied to any government, bank or other central authorities and its digital nature, alongside the cryptographic protection makes traditional counterfeiting impossible.
How Does It Work Exactly?
In order to make things simpler, let’s compare the blockchain technology behind all cryptocurrencies to a Google Spreadsheet. Now, this spreadsheet is being updated continuously and simultaneously across millions of computers spread throughout the world, therefore, decentralizing the blockchain database and making it infinitely difficult for hacker groups to hack into. This also makes the data available to all users simultaneously as well, therefore, making it the most secure and democratic currency to ever come into existence.
There’s no other more private form of transaction at the moment than transactions made via blockchain technology because it doesn’t store any personal information. The record is still maintained as “blocks,” but there is no third-party involved here so the personal details of the two parties stay private and secure in the public ledger.
What is Cryptocurrency Mining?
Unlike the usual currencies like the Dollar, Euro or Pound, cryptocurrencies cannot be printed or made, but can only be mined by calculating and matching hashes. Complex mathematical algorithms are necessary to create a hash and by definition, a hash is responsible for the conversion of any transaction via cryptocurrencies into an encrypted block that becomes a part of the chain.
If you are into computer gaming, then you might be aware of the fact that the price of graphics cards has skyrocketed ever since crypto mining became popular as these GPUs are excellent for building powerful machines that can mine cryptocurrencies with speed.
A Few Important Details You Should Know
If you are new to the world of Cryptocurrencies, here are a few facts that you should know beforehand:
Wallet – You will need a Cryptocurrency wallet to store the currencies, whether you are accepting them as payments, mining or planning to withdraw from your exchange.
Exchange – Just like shares, there’s a lot of profit to be made by buying and selling these currencies and for that, you need an exchange, similar to the stock exchange. In Australia, CoinSpot happens to be a reliable and easy-to-use cryptocurrency exchange, so just check out this Coinspot review on Crypto Head to know the details.
Permanent Transactions – A transaction done via cryptocurrency is irreversible, so there are no refunds and all transactions are permanent.
Instant Transactions – Irrespective of your location, all transactions are instant.
Unstable – the volatile nature of the cryptocurrencies makes it profitable to exchange, provided you know what you are doing. However, the instability is also the reason as to why a lot of companies have stopped accepting payment in Bitcoin.
In spite of governments in certain sections of the world making it illegal, cryptocurrency is the future. Nevertheless, it cannot be denied that there’s a lot of problems that need to be ironed out of the technology before it can be adopted more widely. In the meanwhile, Bitcoin, Ethereum and other major currencies continue to be extremely profitable options for exchanging.