Cryptocurrency
Cryptocurrency has become one of the hottest topics since the first digital currency was launched in 2009. The advancements that have been made in the field of information technology have made some ideas that hitherto seemed farfetched to become a reality. It is now possible to conduct online transactions using a digital currency. In other words, a cryptocurrency can be understood as a digital currency. The key point here is that it is “virtual”. It is not possible to have physical or tangible cryptocurrencies. Going in line with this, a cryptocurrency is a digital token that allows the user to pay for products online. It therefore serves as both a medium of exchange and a store of value.
Cryptocurrencies are based on Blockchain Technology
Notably, the technology that is behind cryptocurrencies is blockchain. This technology makes it possible for a network of computers to keep a distributed ledger. The information in that ledger can only be altered through an agreement of all the computers that are in the same network. This means that such a ledger is only changed by a series of legitimate transactions. This is a key security feature that makes hacking cryptocurrencies to be extremely difficult.
In order to understand these types of currencies you should think of them as digital accounting systems. In other words, they operate in a system where all transactions are recorded. Such transactions are then grouped together in terms of blocks. Such blocks are secured through encryptions. Encryption is yet another key feature that has made cryptocurrencies to be a secure medium of exchange.
Bitcoin is the oldest Cryptocurrency launched about a decade ago
The first known cryptocurrency was launched in 2009 and it is known as bitcoin. This is to date one of the most popular digital currencies that we have. Interestingly, the person behind its creation is still anonymous and goes by the pseudo name Satoshi Nakamoto. Similar to other cruprocurrencies, bitcoin uses block chain technology. Stated differently, it is based on an encrypted public ledger that is kept in decentralized network of computers.
In order to make a transaction with this digital currency one has to have both a public and a private key. These “keys” are in essence a series of letters and numbers that are used to verify a certain online transaction that uses bitcoin. In order to make a transaction the encrypted public and private key must match. You can therefore think of a private key as a series of numbers and letters. That series is used to authorize transaction of bitcoin in a certain account identified by the public key.
The fact that Facebook is a social networking giant means that it is most likely going to achieve what bitcoin has failed to achieve.
Libra (Facebook’s Crytocurrency) might be Future of Cryptocurrencies
The future of cryptocurrencies appears to be brighter than what most skeptics would like to admit. Last month, Facebook announced that it will be launching a digital currency or a cryptocurrency in the year 2020. This currency is known as Libra. The fact that Facebook is a social networking giant means that it is most likely going to achieve what bitcoin has failed to achieve. Unlike Bitcon, Libra will be used for both online as well as offline transactions. Libra will be backed by assets. This is unlike majority of cryptocurrencies that are nothing more but blocks of digital tokens produced through legitimate transactions. This means that its prices will be less likely to fluctuate as compared to that of other digital currencies.
Opportunities Created by Libra
Notably, the group that is most likely to benefit most from Libra appears to be people from developing countries who might not have access to traditional banking systems due to one reason or the other. This cryptocurrency also promises to significantly lower the transaction costs. Moreover, Libra will based on blockchain technology and this means that no single entity such government or a banking institution will be able to manipulate it. It is therefore a high time that we realized that the future of money is cryptocurrencies as an idea whose time has come cannot be stopped.
Unfortunately, majority of people do not have the slightest idea of how to take advantage of the aforementioned opportunities created by cryptocurrencies. We will be sure to keep you posted on how you can buy and transact with a cryptocurrency in our subsequent articles.