Cryptocurrency is increasingly mentioned as a real alternative to conventional means of payment. Someone considers it a product of the future and almost a cure-all for the domination of public financial systems. Someone predicts that the idea of completely virtual “money out of nowhere” will soon die. So what is it – evil or the only prospect of virtual payment market development? Let’s try to study the cryptocurrency and its phenomenon in a little more detail.
Cryptocurrency: history and details
Cryptocurrencies are the means of payment that exist in digital format and are created on the basis of cryptographic methods, in other words, data encryption
The main features of cryptocurrencies are
- Decentralization of the currency system. All transactions, including the release of a new currency, are recorded in the total history available to each user. If desired, you can trace the path of each unit until it appears. That’s why it’s impossible to forge a cryptocurrency, and it’s impossible to completely delete the transaction history, as it’s stored on millions of computers and servers around the world at the same time;
- the anonymity of the operations. All other users know about you is a set of symbols, a number of the purse registered by a certain anonymous person;
- limited in volume. Cryptocurrencies are finite. For example, Bitcoins are given a life expectancy of up to 2131 years. This determines the limitations on the speed of their production and the significant resource intensity of creating new currency units;
- minimum commission for conducting operations due to the absence of an intermediary mechanism within the framework of circulation of cryptocurrency.
(For a complete list of proven Bitcoin brokers, please go to the Bitcoin Brokers section.)
How did the history of the cryptocurrencies begin?
The story began with Bitcoin, the most popular and the first of the cryptocurrencies. He was created by Satoshi Nakamoto, an anonymous person who supposedly hides an entire team of developers. The first Bitcoin was published in 2009, and with it new terms appeared – mining (extraction of cryptocurrency), miner (actually, the one who extracts). Well, the very notion of cryptocurrency was also derived by the founding father of Bitcoin.
The pioneer was followed by others. Today, there are also lightcoins, DogeCoin, NameCoin, Ripples as an alternative to bitcoins. The difference between the cryptocurrencies lies only in the encryption algorithms used, the emission rate and the maximum volume of the “money supply”. And, of course, we should not forget about the degree of security – the Bitcoins, by virtue of superiority, still have a number of advantages that other cryptocurrencies find it difficult to challenge on an equal footing.
Actually, the main driving force behind the spread of Bitcoin was the mechanism of its production itself. That is, Bitcoin was the price to connect a computer to a single network of users willing to provide the capacity of their PCs to perform global tasks. Running the program automatically started the mining process and the bitcoins that were eventually obtained became the property of their producer.
It is worth noting that between 2009 and 2014, Bitcoin has managed to increase its price 20,000 times – from 5 cents to $1,000. And analysts think that’s not the limit.
Today, Bitcoin production requires significant computing power – home PCs can no longer handle operations. But that’s no reason not to go mining. It is possible to pay attention to the cryptocurrencies, which have not yet gained such a global spread. They may have lower capacity requirements, and the prospects for speculative growth of quotations are much higher than those of Bitcoins.
Bitcoins and any other cryptocurrencies are traded in a simple way: either through exchanges and exchanges, or hand-to-hand, from one individual to another, as payment for goods/services, or in the process of acquiring the monetary units themselves
Cryptocurrencies are stored on special virtual wallets, which can be accessed via the global network or the client installed on the PC.
Recently, due to high volatility, the popularity of crypotools among traders has increased significantly. Many brokers offer cryptocurrencies among the already familiar trading instruments, such as currencies, CFDs and binary options.
Learn more about cryptocurrency trading in the article Cryptocurrency – as a Forex trading tool
One of the most ardent supporters of cryptocurrencies is FXOpen, which offers several types of cryptocurrencies in its trading arsenal.