Cryptocurrencies and their technology
Cryptocurrencies and their technology – blockchain, are completely changing the world. They get involved in all spheres, starting from financial to educational industries. Nevertheless, most mainly use cryptocurrencies as investment tools.
However, managing crypto investments is not that easy because of the crypto market being relatively new, yet not completely developed which results to the prices being highly volatile. Thus, to properly manage crypto investments you can use coin tracker.
Being back to the subject of the topic, let’s cover cryptocurrencies and the technology behind them.
Blocks are permanently recorded data packages. When transactions happen, each transaction information is collected and validated by the network. In the end, the data reaches a predetermined size and then combined into a block. After the creation, these blocks get linked with other blocks, and this is called blockchain.
Blockchain is a ledger of transactions, acting like a historical record of them – from the first to the latest block in the chain. As blockchain is public and everyone can inspect it, no one can control it. It is cryptographically secured from being tampered with.
Cryptocurrency, also called digital tokens or just tokens, digital assets, digital currency, virtual currency, is a type of digital asset which is used as a medium of exchange. Cryptocurrencies are stored in a blockchain. The term cryptocurrency is from the combination of cryptography which is the practice of techniques for secure communication and currency which is money in any form.
The first cryptocurrency is Bitcoin. It was founded by Satoshi Nakamoto, in 2009. It was initially created to ease global transactions, making them much faster and with low transaction fees. Nowadays, Bitcoin has become the most popular cryptocurrency with the highest market value.
Cryptocurrency Trading Fundamentals
Transactions with cryptocurrencies have some specifics.
First of all, they are irreversible. This means that once a transaction has been confirmed, it cannot be changed. If you sent your funds by accident, to the wrong person or someone who has scammed you, there is no way to get your money back.
Second, the speed of transactions. Transactions happen within minutes and there is no need to wait for hours, no matter where you are in the world and how far or close you are to the person you are sending a cryptocurrency.
Third, the privacy and anonymousness. This means that when you send cryptocurrencies, the recipient does not get any additional information.
Moreover, with cryptocurrencies, your funds are safer than in a bank, as they are locked in a public key cryptography system. This means that only the owner of the private key can send the money. What’s more, as cryptocurrency trading happens outside of any direct control or bank, banks cannot control your money, freeze or seize it.
Next specific is that the supply of most cryptocurrencies is limited and this means they cannot result in inflation, as over time their supply will only decrease, and they will become more valuable.
Another plus are lower fees, as during the transactions there are no third-party payment processors.
To summarize, at present, cryptocurrencies are used to buy goods, services or trade, or even pay for your college. In investing or trading remember about aforementioned crypto portfolio trackers and if you are not familiar with them, you can check this cryptocurrency portfolio tracker guide.