Cryptocurrency has been in the news more and more lately, but what exactly is it? Is it simply the new form of money we’ve all been waiting for? Or does it have hidden dangers? In this article, we’ll explain how cryptocurrency works, why you should use it, and how to get started. Read on to learn more about how cryptocurrency could shape the future of money!
The technology that underpins crypto is called a blockchain. Simply put, it’s a way to store and verify transactions without centralized control. Transactions are verified by miners—people who own powerful computers that solve complex math problems in exchange for cryptocurrency rewards.
Blockchain is decentralized, so there isn’t one single computer or entity controlling everything. Instead, there are thousands (or more) of computers all over the world working together to ensure everyone stays honest. To learn more about how cryptocurrency works check out our guide here.
With cryptocurrency, there is no central organization that keeps track of transactions. Rather, all exchanges are stored on a shared public ledger called a blockchain and verified by a network of peer computers.
This process makes cryptocurrencies much less vulnerable to hackers or bank failures than traditional payment methods like debit cards or credit cards, which fall under a centralized company. This also means transactions are verified by everyone using them—no single entity has control over your money—and they’re more difficult to tax and regulate.
A common misconception about cryptocurrencies is that they’re entirely anonymous. While it’s true that cryptocurrency users can hide behind pseudonyms when trading coins, blockchain transactions are still recorded on a public ledger, so they can be traced.
Users have found ways to obscure identity by using an intermediary or mixer like CoinJoin and TumbleBit (anonymization strategies built into Bitcoin) to break up transactions and make them more difficult to trace.
One of cryptocurrency’s greatest features is that transactions are irreversible. Once a transaction has been verified by a network, it can’t be taken back. There is no need to worry about exchanges potentially losing your funds or scammers getting your credit card number and taking off with all your cash—you are protected. This is one of cryptocurrency’s greatest perks and an important reason why people have come to trust it so much in recent years.
Bitcoin and other cryptocurrencies are inherently immutable. This means that once a transaction has been verified, it cannot be changed. Once a block has been added to the blockchain, it’s permanent, unchangeable—for everyone involved. In addition to security and trust issues, immutability is another key benefit cryptocurrency can offer over traditional money.
One notable feature of cryptocurrencies is their ability to be audited by anyone. Through blockchain technology, every transaction that occurs on a cryptocurrency platform can be seen in real-time and verified as authentic.
Some cryptocurrencies are even more transparent than traditional platforms because they give users access to information such as mining fees, the number of coins in circulation, and purchase history. This makes it easy for investors and others with an interest in cryptocurrencies to see where funds are going at all times.