How does bitcoin work and what is it?
For since last few years this has been the most trending topic ever on the internet. Many people want to invest, few want to trade. and the rest of all still thinking. What is this all about? Well, crypto is nothing but the same as our currency.
Before we get into crypto there is a disclaimer : we are not a financial advisor and anything you read or see in this post is intended purely for entertainment, demonstrational and educational purposes only.
Today we have three forms of currency.
Number one fiat currency is issued by the government. Most modern paper currencies are backed by the central bank. fiat money, in a broad sense, is all kinds of money that are made legal tender by a government decree or fiat. The term is, however, usually reserved for legal-tender paper money or coins that have face values far exceeding their commodity values and are not redeemable in gold or silver.
Number two is a digital currency, to make our transactions digitally by using third-party payment apps like google pay is known as digital currency which is the same as dollars but can be transferred using mobile phones. and the third one is cryptocurrency.
A digital currency in which transactions are verified and records maintained by a decentralized system using cryptography, rather than by a centralized authority. Cryptocurrency is the underlying technology. Digital currency is a digital format of fiat money whereas cryptocurrencies are built on the blockchain. Blockchain technology is the tech behind Bitcoin and other cryptocurrencies. Let’s find out what is blockchain and how it works:
Bitcoin is the name of the best-known cryptocurrency, the one for which blockchain technology was invented. A cryptocurrency is a medium of exchange, such as the US dollar, but is digital and uses encryption techniques to control the creation of monetary units and to verify the transfer of funds.
Blockchain, also known as distributed ledger technology (DLT), can be seen as a public ledger that has copies spread out over multiple locations that are called nodes.
A distributed ledger (also called a shared ledger or distributed ledger technology or DLT) is a consensus of replicated, shared, and synchronized digital data geographically spread across multiple sites, countries, or institutions. Unlike with a centralized database, there is no central administrator.
Each node usually refers to individual computers with copies of the ledger. To sum up the basic definition: a blockchain is essentially a digital ledger that is duplicated and distributed among all the computer systems on the blockchain.
When somebody adds new information to the ledger, it’s recorded in a group called a block. These blocks make up a chain of records, giving it the name blockchain. Once the data is recorded, it can’t be changed—you just have to keep adding new blocks.
Some great uses of cryptocurrency are low-cost money transfers, which implies there’s no physical coin or bill used and all the transactions take place online. It used an online ledger with strong cryptography to ensure that online transactions are completely secure.
you can also use your cryptocurrency to buy a Lamborghini. Due to the explosive growth of the cryptocurrency ecosystem in the past nine years, it is now possible to travel the world by spending on cryptocurrency.
The growth of the bitcoin ATM market also means travelers are now able to convert their cryptocurrency into local currency in most major cities around the world.
Some major problems that cryptocurrency is facing today
Government regulation Government reactions to cryptocurrencies have ranged from aggressive to indifferent, with investors and speculators cautiously monitoring international developments. Just recently, the Head of the International Monetary Fund, Christine Lagarde, stated that regulatory action from the international community on cryptocurrencies is “inevitable“.
Bitcoin exchanges are digital and therefore vulnerable to hackers, operational glitches, and malware. By targeting and hacking a cryptocurrency exchange, hackers can gain access to thousands of accounts and digital wallets where the cryptocurrencies are stored. One infamous example was the Mt. Gox hacking incident in 2014, which saw the Japanese exchange close down after millions of dollars in bitcoin were stolen. And the one everyone is talking about:
Within their short time, they’ve seen fierce swings in value and extreme sensitivity to headlines, due to the high number of informal and amateur investors. The money you put into Bitcoin or in any coin is not safe from value fluctuations. Cryptocurrency is a volatile investment. If you’re looking for a “safe” investment with guaranteed returns, then don’t invest in Bitcoin — or any cryptocurrencies for that matter.
And that concludes my post on crypto, today folks. but I am sure you have plenty of questions, so please don’t hesitate to let me down below in the comment section. what do you think about crypto and gaming coins, are they the next big thing in investment after stocks?
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