The most famous cryptocurrency is Bitcoin, but there are others out there. If you’re thinking about starting to use Bitcoin, you should learn a bit more about the whole cryptocurrency scene first of all. It’s not too difficult to understand. You just need to know the basics and a bit about the background and risks. One of the key reasons why people choose to use these currencies is that they offer top security, meaning you can’t be defrauded. Here’s what you need to know if you want to understand cryptocurrencies.
There is No Centralised Institution
One of the most important features of cryptocurrencies is the fact that there’s no centralised institution behind them. Unlike central banks that control interest rates and currencies, there is no such bank behind cryptocurrencies such as Bitcoin. Cryptography controls the creation of new coin, so their value is determined by demand. The coins have no physical presence either. They’re entirely digital and are stored in the cloud, where users can access them use them during transactions. This all means that the value of the coins fluctuates continually.
It Started in 2009 and Grew from There
In 2009, the very first cryptocurrency was born, and it was known as Bitcoin. This is still the most well known and widely used cryptocurrency out there. Since then, there have been ups and downs, but the idea has not gone away, and many people are still using Bitcoin to pay for things online. Users have two keys that are used; one is private and the other is public. They are long codes that are created by encryption algorithms. These allow transactions to be carried out safely. It’s the private key that is used to authorise each transaction that takes place.
You Need a Wallet to Access the Block Chain
When you download a download a wallet, you can buy bitcoin. This is important because it enables you to make purchases. And you have to do it in order to access the block chain. So, what is the block chain? This is where every transaction is recorded to, and it registers how many bitcoins an individual has. You can’t start to use Bitcoins unless you have a wallet, so this is something that you will have to do if you want to get started. It’s pretty simple, so you shouldn’t have any issues with this.
Volatility Has Been an Issue
The major problem with Bitcoin is that it is known to be very volatile. It’s not a flat currency, and that can sometimes cause problems for users. But because there is no organising institution behind the cryptocurrency, there is no way of keeping it completely steady. It’s one of those issues that just has to be dealt with. There are some ways around the issue if you can instantly convert the currency into a flat currency when you receive payment via Bitcoin. Volatility can also have an impact on how people buy and spend their bitcoins, so this has to be taken into account by sellers.