As technology advances so does the way people conduct normal everyday business. A few years ago, a new concept known as cryptocurrencies came into being. It represents an innovative way to produce and distribute currency in the world today. This comes with many benefits and a few disadvantages, and here are the basics of the system.
A cryptocurrency is money minted digitally, and you never actually hold this currency in your hand. However, it is not printed nor is it released by a central minting authority, (like most countries mint and release their money). The process was first developed in 2009 when Bitcoin came into being. Since then, the system has spawned other cryptocurrencies.
Bitcoin was developed anonymously and is distributed in an “open source” manner. Like the term “cryptology” which is all about codes and security, cryptocurrency is designed to be transferred in a highly secure manner. It starts with the currency being broadcast to a network or block chain. The bitcoins are received by individuals known as miners.
Miners receive the currency. It is then verified and timestamped. The transactions are placed into a public database (at a constant rate) in groups called block chains. Miners are compensated for their work with payment for their transactions. They may receive payment for bitcoin mining in new bitcoins too. One can also receive bitcoins in exchange for products or services, or currency.
Selling and buying bitcoins can be done through bitcoin exchanges (like stock exchanges). Their values against other currencies are compared. Because it is a decentralized system, values vary significantly from one exchange to another and there is additional risk as an exchange may go out of business without notice.
In the beginning, it was easy to download the software and begin mining. However, difficulty levels have been introduced as things progress, and it becomes harder as more people enter the mining process. In fact, many people are turning to special bitcoin mining hardware to make the process easier and more profitable. This hardware operates in a manner similar to gaming hardware and crypto games.
To make mining even more lucrative, ASIC mining hardware was developed. ASIC stands for application specific integrated circuit. This was a huge step forward in mining technology. Also, a cryptocurrency called Litecoin has been introduced and includes the use of scrypt mining. Scrypt is a secure system that was designed to even the playing field for miners, since ASIC and other tools were developed. In fact, it is specifically designed to make the powerful ASIC mining less effective than it has been. Litecoin is growing significantly, having learned much from the trailblazer bitcoin.
Cryptocurrencies like bitcoin and litecoin are relatively new concepts. However, they offer some very lucrative opportunities for those with the vision and guts to take chances. Make sure that you completely familiarize yourself with these new and innovative systems so you can make an intelligent decision on your best course of action. Perhaps sometimes in the near future, you will be making most of your purchases and getting your paycheck in bitcoins or other cryptocurrencies. Only time will tell.