What is it..?
Simply put, cryptocurrency is a new kind of money that takes the form of digital coins or tokens. It is a digital medium of exchange between parties. Because of its simplicity, many experts theorize it will become a standard alternative to paying cash, check or credit card. Because it is typically handled through blockchain or other highly secure platforms, transactions are anonymous, but still transparent and secure. The most common form of Cryptocurrency is Bitcoin. Other alternate cryptocurrencies are often referred to as altcoins.
There are currently somewhere between 1,600 and 2,300 different cryptocurrencies in use or development today, depending on which source you go by. It is difficult to keep up with an exact number, as they are mostly unregulated and the industry is still very young. Cryptocurrencies are often announced and abandoned to little publicity or fanfare. The number of failed cryptocurrencies are estimated to be between 800 and 1,000 to date. Bitcoin is the gold standard, but there are some successful altcoins, as well as some promising cryptocurrencies who have recently opened trading with successful initial coin offerings (ICO’s). Investors sometimes rush to buy up as much cryptocurrency as they can so as not to miss out on potential gains. The opening prices are typically small, so they are an affordable purchase, but the risk can be high. Cryptocurrencies can be volatile. Most people who made a fortune on Bitcoin did so by getting in on it early, however, and so goes the hope of many investors for new ICO’s.
Where do you get it..?
The first step in purchasing cryptocurrency is to determine which type of cryptocurrency you wish to use. Once you have established your currency of choice, you will need to download a cryptocurrency wallet from the appropriate source. A short list of links to cryptocurrency wallets is listed at the end of this page.
After you determine the currency you want to use and download the wallet, you will need to visit a cryptocurrency exchange. There are several of these sites. Basically, you purchase cryptocurrency using fiat currency. In other words, you exchange your government-backed, legal tender for cryptocurrency, just as if you were exchanging dollars for euros. The top cryptocurrency exchanges of 2019 include:
Coinbase
This is good for people who are new to cryptocurrency, like low fees, plan on paying by credit or debit card, bank transfer or bank wire. Check to make sure your country is supported by Coinbase (U.S., Europe, Australia and others are currently supported).
Coinmama
This is a beginner-friendly brokerage that relies mostly on credit and debit card purchases. Delivery of Bitcoin, Ethereum, Ripple and Litecoin is instant in most U.S. states and many nations. Coinmama does not provide a wallet, so make sure you have downloaded the appropriate wallet for the currency you wish to trade. Fees are a little higher than Coinbase, but still very reasonable.
Bitpanda
Bitpanda offers an easy-to-use site and supports a variety of payment methods. It also trades in a wide variety of altcoins. Transaction fees are very competitive.
Kraken
Kraken is a well-established brokerage that has been operating since 2011. It offers low fees, and a wider variety of trade options, including margin trade (up to 5x) and trades in a wide variety of cryptocurrencies.
LocalBitcoins
LocalBitcoins is a trustworthy and secure escrow service that allows you to enjoy a more private method of purchasing cryptocurrency, including cash payment.
BITCOIN ATM
The Bitcoin ATM is becoming more widespread. Currently, there are over 4,000 cryptocurrency ATM’s in almost 80 countries worldwide. These can also be used to purchase Bitcoin and send it to your cryptocurrency wallet.
MINING
Bitcoin and other cryptocurrencies are most often created and verified through a process called mining. For their efforts and contributions to the cause, miners are paid in cryptocurrencies. Miners are the backbone of the system. Mining is discussed in more detail under the MINING tab .
How do you use it..?
Basically, you use it just like you would use fiat currency. You can spend altcoins/cryptocurrency at several online retailers. In some areas, shop owners are accepting cryptocurrencies in-store. Look for the specific logo near where you would typically find the logos for accepted credit cards both online and in-store. A little research will tell you if your favorite retailer accepts your choice of currency. If they do not, many retailers are open to suggestions from customers.
Outside of normal shopping, cryptocurrency can also be invested in Bitcoin and altcoins. Companies like Abra allow you to purchase stocks with cryptocurrency, though the process is detailed and complicated to understand. This part of the market is still in its infancy.
Where do you keep it..?
The most important part of cryptocurrency may well be the wallet. This stores the public and private keys that are used to spend or receive cryptocurrencies. The private key enables data to be written in the public ledger (basically it allows cryptocurrency to be spent via authenticated transactions). The public key makes it possible for others to send money to another party’s wallet. Not all wallets are the same. Some are altcoin-specific, while others will allow you to trade in multiple currencies. There are mobile wallets, software-based wallets, and hardware wallets. Do your research before choosing a wallet, as this list offers only a few examples of commonly-used wallets.
If you would like to trade in Bitcoin, you may obtain a free bitcoin wallet from https://blockchain.info/wallet/.
If Etherium is more your thing, you can get a free Etherium wallet from https://www.myetherwallet.com/.
For a wallet that stores multiple cryptocurrencies, consider Trustwallet. It can be downloaded at https://trustwallet.com/binance-coin-wallet/.
History Of Cryptocurrency
To understand cryptocurrency, you must really understand what traditional money is and how it works. Most people keep their money in a bank. To get more money out of the bank, there must be a transfer from the bank to the owner, so that the owner can then transfer that money to a store or another individual. This happens by both digital transfer and by physically handing dollars or coins over during these transactions. This type of currency is referred to as fiat currency, and is issued and backed by a government - it has value because that government says it does.
Although the use cryptocurrency is not as widespread as paying digitally with fiat currency, it is a growing phenomenon. This is not surprising or unnatural, considering the evolution of money. Long ago (and still in some areas of the world) civilizations didn’t trade money, they traded goods, or bartered. Over time, coins and gold bars came into play. Gold is heavy and inconvenient to transport, thus paper money became the standard. PayPal and Venmo and other similar companies got in on the game, allowing us to purchase things from across the world without wire transfers or other forms of payment that require exorbitant fees. Cryptocurrency is the latest evolution of money and convenience.
In the years between 1998 and 2009, the idea of cryptocurrency was new, but the development and execution was lacking. Bitgold and B-Money were ideas that were conceptualized but never fully developed. In 2009 a mysterious developer who called himself Satoshi Nakamoto released the first fully-developed cryptocurrency software - Bitcoin.
By 2017, the price of one bitcoin reached $10,000. Though the price fluctuates, it remains the highest in the cryptocurrency market. Bitcoin is the gold standard of cryptocurrency, but other competitors have come on the scene, as well. As Bitcoin prices fell earlier in 2019, some altcoin stocks showed large gains, perhaps signaling the dawn of a more competitive and diverse cryptocurrency market. There are currently somewhere between 1,600 and 3000 altcoins on the crypto market. Etherium, Ripple, Litecoin, and Bitcoin Cash all perform well and offer more affordable alternatives to Bitcoin. Etherium currently trades around $130 for one ether (unit of Etherium cryptocurrency).
Since its beginning, the cryptocurrency market has evolved rapidly. With growth, however, comes growing pains. Once thought to be fraud-proof, hackers have proven able to attack even the most secure of systems, and flaws in the blockchain software have been exploited. Most thefts have occurred from and even by cryptocurrency exchanges, and the holes are typically found and plugged quickly. Despite the realization that blockchain and cryptocurrency are not completely fraud-proof, the technology is still one of the most secure ways to trade data, be it financial or otherwise. It isn’t likely that blockchain or cryptocurrency will be going away any time soon. The evolutionary path of cryptocurrency remains to be seen, but it certainly looks promising.