Cryptocurrency has been slowly making advances and rising in popularity each year. Today, it has a pretty numerous following of people that are committed to the evolution of this new currency. But what is cryptocurrency exactly? That’s what we’re here to find out, as today’s best FCA UK brokers often have to deal with cryptocurrency more and more.
The basics of cryptocurrency
There’s an easy way to put it and then there’s definitely a hard way to explain what cryptocurrency is. We’re going to go with the easy way today simply because it would take pages to go over all the aspects of what cryptocurrency is. That being said, you can think of it as a tool or resource used to make exchanges. It is an electronic alternative to more traditional currencies. One of the most popular cryptocurrencies is Bitcoin which holds the distinction of being the first one accepted in conventional online trade. Since that moment, more and more currencies have made their way to the trading table and are now accepted methods of payment for anything from services to goods and even other currencies.
How do people get Bitcoins?
It’s quite an intriguing process, and most people that aren’t into cryptocurrencies fail to understand how they are produced in the first place. It’s both an easy and complicated answer. The simple part is that the coins are excavated through a process called mining. In the aftermath of solving complicated computer processes and equations through mathematical formulas, the computers get Bitcoins as a reward.
The complicated part is that these equations get harder and harder and getting Bitcoins becomes extremely hard after a certain threshold. However, it’s easy enough that you can understand the basic idea of their creation. Unlike traditional currencies which are issued by governments, Bitcoins and other cryptocurrencies do not belong to any one state, and that brings us to our next point.
Who issues Bitcoins?
If you are looking for a central source that issues cryptocurrencies, like a state would issue their national coins and bills, there is none. Cryptocurrencies are a digital currency and as a result belong to the entirety of the digital spectrum, which is made up of thousands upon thousands of eager users, many among them being cryptocurrency miners.
What can a cryptocurrency be used for?
Despite what some people think, cryptocurrencies aren’t reserved for any type of special transaction or auction. These coins can be used to make purchases the same as any other currency. Thanks to pioneers like Bitcoin, many big time stores and organisations have started offering cryptocurrency options as a method of payment. We are getting closer and closer to a reality where we can buy stuff online or pay for services using nothing but a digital currency. Even tech giants like Microsoft have allowed the use of cryptocurrency for purchasing goods off of their platform.
Benefits of using a cryptocurrency
Ok, we’ve been over what these currencies are about, but are they really worth investing in? The answer is yes, thanks to a couple of reasons. One of them is the fact that there is no exchange fee for cryptocurrency transactions. Another one is safety. Since it’s a digital currency it remains protected by an online encryption key, so it’s virtually impossible to lose your cryptocurrency.