Cryptocurrency: What’s It All About?

The world of the Matrix is real. So, do you want the red pill or the blue one? Cryptocurrency or the idea of the end of paper money has been around since the 80s and the 90s. We still have the use of paper money but, cryptocurrency is starting to get popular as a sort of asset management. Still, at its early ages, Cryptocurrency is not really storming the world. Yet, as our lifestyle is becoming more and more digitized, it would not be an exaggeration to say that newer and better technology will slowly change the way we think about paper money.

Early History of Cryptocurrency

The first-ever crypto technology was ecash by David Chaum in 1983. It took him 12 years; in 1995 He availed transaction services through his innovation under the name Digicash. It required you to use designated software to be able to withdraw from the bank or pay a recipient. A paper entitled “How to Make a Mint: the Cryptography of Anonymous Electronic Cash” describing a Cryptocurrency system was published in an MIT mailing list in1996 and in The American Law Review (Vol. 46, Issue 4) the following year by National Security Agency. was registered as a domain in October 2008. The same month a paper authored by Satoshi Nakamoto titled “Bitcoin: A Peer-to-Peer Electronic Cash System” showed up in the cryptography mailing list. The seed was about to sprout. Long ago, Nick Szabo was describing bit gold in 1998. Inspired by such, Bitcoin, the first decentralized cryptocurrency would hit the internet in 2009 followed by Litecoin in 2011. Right now there are more than 4000 cryptocurrencies available today. As of 6th August 2014, the UK announced that its Treasury had commissioned a study of cryptocurrencies and to see if it should be regulated. Somehow, Bitcoin is supposedly more expensive than gold. So, don’t you want to know how it works?

How Does Cryptocurrency Work?

It’s basically a peer-to-peer currency system that is evaluated through Block-chains and fueled by miners. What happens is, you are allowed to use crypto coins for transactions but these transactions are recorded in online ledgers with strong cryptography. The plan was to establish wide-spread use of cryptocurrency. But, it sort of found its own sort of business. Use of Cryptocurrency for transactions is rather limited. Instead, what is happening is that the price of such currency is going up. You can buy some and sell them at a higher price later and make a profit.

There is criticism against trusting this system. Some say, it can end up becoming an economic bubble. It would not be that big of a surprise. Price of shares can go down. If the technology should prosper in the future, the technology must evolve or find alternative and better ways to popularize digital currency systems.

What Is a Blockchain?

Every transaction done by you is recorded in a “Block”. Then, when all the blocks are linked together, it’s called a “Chain” of previous cryptocurrency transactions. The exchange records are deeply encrypted in your computer devices. Once you are connected with the internet, your blockchains are traced by other ones and your transactions will go through inspection to discourage fraudulence. Then, the operation will run like peer to peer systems. That’s the most simply it can be said how cryptocurrency works.

What Is Cryptocurrency Mining?

Mining is the process of deciphering complex computational problems or puzzles. Through the process, the ledgers of transaction blocks are maintained. As a result, more units of the currency are produced. Miners are people who create a station to allow the blockchains to do their job. Nowadays, miners have been upping the game substantially; they are using high end mechanisms to make the procedure more efficient and safe.

There are a handful of methods applied to mine for Cryptocurrency. Cloud mining, CPU mining, GPU mining, ASIC mining is the most common amongst them. Cloud mining is the most popular and relatively easier way to mine for cryptocurrency. You’ll probably be provided a rig by a company under arrangements and conditions. On the contrary, CPU mining is the least popular method because it is rather slow. That doesn’t mean people don’t use the method. GPU is where the pro level begins. These rigs are actually the key players for mining.

Should You Start Investing in Cryptocurrency Right Away?

Well, you can. But first, know this. Cryptocurrency had been around for long enough. It had not been able to completely replace the use of paper money. Instead, it is just another form at the end of the day. It is encrypted enough to keep it protected. Still, there had been a myriad of fraudulent cryptocurrency cases.

Bitcoin is the most commonly popular thing among all the variety out there. So, the first idea people get is to convert their cash into Bitcoins. It will not be as simple. Besides, it’s not even wise. Think of it like investing in shares. Putting all your money on one company means maximum risk. Thus, you should invest in various other currencies. Before you start giving away your money, do ample research on the companies you’ll be investing in. Cryptocurrency rates fluctuate everyday and aren’t governed by an official authority.

When you have your crypto-money, you will start using it for transactions. But, unlike most banking systems, you cannot use such digital money anywhere. You need to transfer them into your bank account or the like before you can cash it out or make a transaction. There are a handful of online organizations that approve of direct cryptocurrency transactions. But, things are perhaps taking turns to their favor in a world that can now no longer function without the internet.

Future of Cryptocurrency

The future of Cryptocurrency has already been solidified. Bitcoins have cult-like followings and people think you’re smart or nerd if you have them. It is certain that they are not leaving anytime soon. Furthermore, there might be optimistic prospects for this platform.

People don’t really trust digital money like paper money. Although, recently this sort of mindset is starting to shift as we see more and more online banking initiatives like Paypal or Nerd-wallet etc. There is indication that crypto will float on the Nasdaq. This might grow the shared investment of cryptocurrency substantially as people can trust the digital platform more.

There had been ample reports of stolen money and identity by hackers. But, we live in a changing world. Phones are becoming bullet-proof, so to speak. With a myriad of new companies trying to join the game, most corporations would favor switching to cryptocurrency as the way to go. Why wouldn’t they? It’s the easiest way to compete globally beyond national currency limitations. It’s the Matrix.

Cryptocurrency is Becoming More Popular Day by Day

The world is moving toward digitalization. You have smartphones and smartwatches. What do you even bother to ask? People hardly wish to keep money on them. They are messy, smelly, and insecure. You can get mugged safely with crypto money on you. The muggers might think of you as poor and be fooled. Smart is the new cool. So it is obvious why they are becoming so popular. Rumor has it that Elon Musk made more money from buying bitcoins with the money made from selling his e-cars. The price is growing steadily for some brands. Competition is high as is demand.

The Bottom Line

Cryptocurrency has been around for long enough that now people are aware of something going on under the table. Rates of popular crypto-monies are sky-rocketing. There is still skepticism as there should be to perfect anything new. The system is still complicated enough that most ordinary people cannot completely comprehend it. Regardless, it’s better, faster and more efficient than any other way. Thus as more and more investments flock in and the industry grows, there will perhaps be a time when we will no longer need paper money.

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Kazi MD Arafat Rahaman

Arafat is a tech aficionado with a passion for all things technology, AI, and gadgets. With expertise in tech and how-to guides, he explores the digital world's complexities. Beyond tech, he finds solace in music and photography, blending creativity with his tech-savvy pursuits.