What Is Cryptocurrency: Types, Benefits, History and More

Cryptocurrencies have become increasingly popular over the past several years – as of 2018, there were more than 1,600 of them! And the number is constantly growing. With that has come to an increase in demand for developers of the blockchain (the underlying technology of cryptocurrencies such as bitcoin). The salaries blockchain developers earn show how much they are valued: According to Indeed, the average salary of a full-stack developer is more than $112,000. There’s even a dedicated website for cryptocurrency jobs.

Whether you’re interested in a career as a blockchain developer or you just want to keep up with the latest trends in tech, Simplilearn’s Cryptocurrency Explained video explains what cryptocurrency is and why it’s important will get you off to a good start. Here we’ll recap what’s covered in the video.
A Brief History of Cryptocurrency
In the caveman era, people used the barter system, in which goods and services are exchanged among two or more people. For instance, someone might exchange seven apples for seven oranges. The barter system fell out of popular use because it had some glaring flaws:

People’s requirements have to coincide—if you have something to trade, someone else has to want it, and you have to want what the other person is offering.
There’s no common measure of value—you have to decide how many of your items you are willing to trade for other items, and not all items can be divided. For example, you cannot divide a live animal into smaller units.

The goods cannot be transported easily, unlike our modern currency, which fits in a wallet or is stored on a mobile phone.
After people realized the barter system didn’t work very well, the currency went through a few iterations: In 110 B.C., an official currency was minted; in A.D. 1250, gold-plated florins were introduced and used across Europe; and from 1600 to 1900, the paper currency gained widespread popularity and ended up being used around the world. This is how modern currency as we know it came into existence.

Modern currency includes paper currency, coins, credit cards, and digital wallets—for example, Apple Pay, Amazon Pay, Paytm, PayPal, and so on. All of it is controlled by banks and governments, meaning that there is a centralized regulatory authority that limits how paper currency and credit cards work.

Traditional Currencies vs. Cryptocurrencies
Imagine a scenario in which you want to repay a friend who bought you lunch, by sending money online to his or her account. There are several ways in which this could go wrong, including:

The financial institution could have a technical issue, such as its systems are down or the machines aren’t working properly.
Your or your friend’s account could have been hacked—for example, there could be a denial-of-service attack or identity theft.
The transfer limits for your or your friend’s account could have been exceeded.
There is a central point of failure: the bank.

This is why the future of currency lies with cryptocurrency. Now imagine a similar transaction between two people using the bitcoin app. A notification appears asking whether the person is sure he or she is ready to transfer bitcoins. If yes, processing takes place: The system authenticates the user’s identity, checks whether the user has the required balance to make that transaction, and so on. After that’s done, the payment is transferred and the money lands in the receiver’s account. All of this happens in a matter of minutes.

Cryptocurrency, then, removes all the problems of modern banking: There are no limits to the funds you can transfer, your accounts cannot be hacked, and there is no central point of failure. As mentioned above, as of 2018 there are more than 1,600 cryptocurrencies available; some popular ones are Bitcoin, Litecoin, Ethereum, and Zcash. And a new cryptocurrency crops up every single day. Considering how much growth they’re experiencing at the moment, there’s a good chance that there are plenty more to come!

Moving forward, let us discuss what is cryptocurrency.

What is Cryptocurrency?
A cryptocurrency is a coded string of data representing a currency unit. Peer-to-peer networks called blockchains monitor and organize cryptocurrency transactions, such as buying, selling, and transferring, and also serve as secure ledgers of transactions. By utilizing encryption technology, cryptocurrencies can serve as both a currency and an accounting system.

A cryptocurrency is a digital or virtual currency that is meant to be a medium of exchange. It is quite similar to real-world currency, except it does not have any physical embodiment, and it uses cryptography to work.

Because cryptocurrencies operate independently and in a decentralized manner, without a bank or a central authority, new units can be added only after certain conditions are met. For example, with Bitcoin, only after a block has been added to the blockchain will the miner be rewarded with bitcoins, and this is the only way new bitcoins can be generated. The limit for bitcoins is 21 million; after this, no more bitcoins will be produced.

In the evolving landscape of finance and technology, the role of cybersecurity in the realm of cryptocurrency is paramount. A Cyber security BootCamp provides an ideal platform for individuals to delve into the intricacies of securing digital assets and transactions within the cryptocurrency domain. By gaining expertise in cryptographic principles, blockchain security, and risk management, participants are better equipped to address the unique challenges posed by digital currencies.
How Does Cryptocurrency Work?
Cryptocurrency is a digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of this security feature. Cryptocurrencies are decentralized and not subject to government or financial institution control.

And the decentralized control of each cryptocurrency works through distributed ledger technology, typically a blockchain, that serves as a public financial transaction database.
The most famous cryptocurrency is Bitcoin, which was created in 2009.
Cryptocurrencies are designed through mining, which uses computing power to solve complex math problems that verify transactions on the blockchain, the public ledger of all cryptocurrency transactions. And miners are rewarded with cryptocurrency for their efforts.
Cryptocurrency trading is speculative and complex, and it involves significant risks. Prices can fluctuate on any given day. Given the price volatility, cryptocurrency is only suitable for some investors. Therefore, cryptocurrency should be considered a high-risk investment. Before investing, understand the risks involved and consult a financial advisor.
Benefits of Cryptocurrency
With cryptocurrency, the transaction cost is low to nothing at all—unlike, for example, the fee for transferring money from a digital wallet to a bank account. You can make transactions at any time of the day or night, and there are no limits on purchases and withdrawals. And anyone is free to use cryptocurrency, unlike setting up a bank account, which requires documentation and other paperwork.

International cryptocurrency transactions are faster than wire transfers too. Wire transfers take about half a day for the money to be moved from one place to another. With cryptocurrencies, transactions take only a matter of minutes or even seconds.
How to Buy Cryptocurrency?
Cryptocurrencies are digital or virtual tokens that use cryptography to secure their transactions and control the creation of new units. And cryptocurrencies are often bought with “fiat” or traditional currency like US dollars or euros. However, they can also be bought with cryptocurrencies like Bitcoin or Ethereum. First, you must set up a digital wallet to store your coins to buy cryptocurrency. You can then buy coins on a cryptocurrency exchange using your fiat currency or another cryptocurrency.

There are a few different ways to buy cryptocurrency.

You can use an online cryptocurrency exchange such as Coinbase, Bitstamp, or Kraken to purchase cryptocurrency with a credit/debit card, bank transfer, or other payment methods.
You can use a peer-to-peer exchange such as LocalBitcoins or Bisq to purchase cryptocurrency directly from other users.
You can trade cryptocurrency for other types of assets, such as stocks, through cryptocurrency trading platforms.
How to Store Cryptocurrency?
Storing cryptocurrency securely is an integral part of investing in cryptocurrencies. Cryptocurrency can be stored in several ways, but the most common is through a digital wallet. A digital wallet can be software-based, web-based, or hardware-based.

Software-based wallets are installed on a computer or mobile device, while web-based wallets are accessed through a web browser.
Hardware-based wallets are physical devices that store cryptocurrency offline.
Digital wallets are used to store, send, and receive cryptocurrency. They are generally more secure than other wallets and not subject to hacking or malware. However, digital wallets can be recovered or stolen if adequately protected.

It is also essential to use strong passwords and two-factor authentication to protect the wallet. Additionally, using an address generated through a secure random number generator can help protect against address reuse and other security risks. And it would be best to keep your private key private, which can access your cryptocurrency.

What Can You Buy with Cryptocurrency?
You can buy various items with cryptocurrency, including digital assets such as domain names, gift cards, and software. You can also purchase physical objects such as electronics, furniture, artwork, and clothing. Additionally, some online retailers and physical stores accept cryptocurrency as payment. In addition, cryptocurrency can also help to invest in various businesses and projects. For example, you could use cryptocurrency to invest in a new start-up or to help fund a new product or service.

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