- On June 9, 2018
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The global financial system as we know it could drastically change in a few years if the popularity of cryptocurrency increases among the millions of internet users.
As its global usage increments, lots of interests might be affected. It could attract both enthusiastic advocates and staunch enemies. The thing is that any world citizen can obtain cryptocurrency as long as they have a computer connected to the internet. Of course, this must probably be forcing traditional banking entities to thoroughly study the matter because they do not want to be left behind.
In fact, there are online platforms dedicated to informing about the updated price quote of the bitcoin, which is the most popular cryptocurrency. There are economic groups interested in taking part in this process of virtual value exchange.
How to obtain cryptocurrency?
You can buy cryptocurrency from online providers by using your local currency as a form of investment, meaning that you will be waiting for its value to increase as one would do when investing in Wall Street shares. You can alternatively “earn” it by using software and hardware designed to do cryptocurrency mining, which puts your equipment to work in favor of blockchain that can turn the digital asset into a reality.
We are talking about an incentive that reaches your digital wallet once your equipment generates blockchain that helps create new exchange values or cryptocurrency units. Moreover, there are several new companies out there focused on exchanging digital assets for traditional money, which represents one of the main business areas related to cryptocurrency.
Is cryptocurrency real money?
Cryptocurrency cannot be compared to traditional currencies such as the dollar, euro, yen or any other that is certified and guaranteed by a country and its central bank, according to the most orthodox economists. Digital assets are not regulated by any country, financial system or central bank.
Should they get lost in the network, the affected individuals could not claim their loss since there is no entity in charge of regulating the use of cryptocurrency. This might be the main concern that prevents potential investors and the general public from taking the risk.
Nevertheless, each transaction is saved in the network of networks, which makes it extremely difficult for hackers to steal digital assets. The transaction records are kept by millions of users who contribute – and charge commission fees – to the free software use so it can be in the public domain.
As for the discussion about cryptocurrency being real money or not, it is just a problem of terms and concepts related to the characteristics of a currency.
There are products that can be bought and services like web hosting that can be paid for through the use of digital assets. People anonymously exchange cryptocurrency for traditional money once they have gained profits. They first buy it and decide to sell it after its value has increased. The individuals who first bought bitcoin were able to pay just a few U.S. dollar cents but the most popular digital asset is already worth more than $7.600 per unit.
Transactions in the public domain
There are no secrets here, except for the fact that users are anonymous and their IP address serves as their only identity, meaning that their computers can still be found once they have made a transaction. In other words, hackers would have to interfere with millions of computers that have confirmed the transaction in order to hack it.
Nonetheless, there have been some cases of security breaches. Some online service providers have had problems that have cost them their place in the network. But there have been just a few security incidents so far. Cryptocurrency advocates claim that there is no such thing as perfection in this field, adding that there have been countless cases of fraud involving traditional money regardless of the many regulations by central banks and governments.
Although this technological system exists since several years ago, it has not reached the maturity needed to offer security guarantees.
As time goes by, new security measures emerge to avoid cases like the one involving Japan’s Mt. Gox, the former global leading bitcoin exchange before a mass bitcoin theft led it to bankruptcy. The experts choose the exchanges with the largest trajectory and they might stop working with them to choose new ones as long as their technology offers more features.
You may have noticed that there are and there will be developers working on new platforms in order to attract more users whose increasing needs can be satisfied by cryptocurrency investment.
How many cryptocurrencies are there?
The number of cryptocurrencies increases every day. Bitcoin has more and more competitors. There are more than 1650 cryptocurrencies out there. Each one of them has a unique characteristic that makes it more attractive compared to others.
They are also created to attract skilled individuals who will work on the network to mine them, as well as to offer their equipment to those willing to record transactions in their computers and obtain incentives. Incentives include the creation of a new block in the process of new currency unit generation.
The challenge is to make them more popular than Bitcoin and even start replacing it. Bitcoin still is the one with the highest security benefits due to its trajectory in the market, which is simple but complex at the same time given the number of operations that take place behind the scenes. Although informatics engineers have a better understanding of this system, the average consumer does not need a deep comprehension to be able to play the game.
We will soon clear up more doubts regarding this exciting topic and we look forward to reading your comments. Engage in the conversation and tell us if you have taken part in the cryptocurrency dynamics.