5.1 What is Cryptocurrency
Our content has been following a very structured route and we have found ourselves at a very exciting topic that many (if not all) our readers will have heard about before. Cryptocurrencies are NOT new. And for anyone who has chosen to invest in Cryptocurrencies from the very early days you will already be aware of the following information we are going to share. However, we continue to believe that it is vital every section of Blockchain and related topics is covered, so anyone who is just opening their eyes to this futuristic world can comprehend the information one step at a time.
What is a Cryptocurrency?
A cryptocurrency is like any other currency in that you can use it to buy goods and services, but the difference lies with the fact it is digital/virtual, so you will never hold cash in the same way you currently do. Cryptocurrencies have no involvement from central authorities, so there shouldn’t be any interference from governing bodies, giving you more control.
Different Types of Cryptocurrency
If you haven’t heard of the term ‘Cryptocurrency’ before, you may have come across ‘Bitcoin’. Bitcoin was the first famous Blockchain-based cryptocurrency to really ignite fire in the Finance sector. Bitcoin continues to be the most popular and most valuable cryptocurrency, however that is heavily based on the length of time it has been around and the authority it has built over these years. But now 2021 offers thousands of cryptocurrencies, and Bitcoin is amongst a market full of competitors. Many of Bitcoin’s competitors have been built on a clone of Bitcoin itself, whilst others have been built from scratch.
Below we have created a list of other cryptocurrencies and linked to additional information for each one:
Over the next few years, we will see the launch of more cryptocurrencies as this market grows. Currently Bitcoin represents more than 68% of the total value of the market ($214 billion), but this will be seen to decrease as more competitors enter the market.
Cryptocurrency and Blockchain Technology
Blockchain technology has always been at the centre of everything we discuss, and cryptocurrencies are no different. A key fact to take from this article is that Cryptocurrencies would NOT be possible if we didn’t have Blockchain technology.
Majority cryptocurrencies are created through a decentralised network using Blockchain Technology, making it near impossible to counterfeit or double-spend. As with anything that utilises Blockchain there is a greater level of security protecting cryptocurrencies and this is due to cryptography.
Every cryptocurrency transaction that has ever been made is logged, creating an online ledger which is securely stored using Blockchain technology. All participants across the entire network store a copy of the online ledger on their own devices and together they must verify new transactions whenever a new block has been created.
Advantages and Disadvantages of Cryptocurrency
At BlockUno we always aim to share both sides of every story with you, which is why advantages and disadvantages are found in majority of our content. It is extremely important that as an individual you are aware of the potential drawbacks before getting involved, but equally we don’t want it to scare you because we strongly believe the advantages far outweigh the disadvantages shared below.
Advantages of Cryptocurrencies
Cryptocurrencies offer many advantages and if you get involved you could benefit from the following:
- Offers an easier process to transfer funds between two parties and you don’t need to involve any third parties such as a bank or other financial institution.
- All transfers are secured by your individual private keys making Cryptocurrencies extremely secure and at low risk of interference.
- Transfers don’t include the typical expensive fees that you would find at a bank, instead they charge minimal processing fees making it cheaper to manage your money.
- Cryptocurrencies are stored in your individual hardware wallet, and dependent on the wallet you choose your wallet can be secure from any risk of fraudulent behaviour.
Disadvantages of Cryptocurrencies
On the flip side, we also need to look at the disadvantages of Cryptocurrencies, which we have shared below:
- Due to the semi-anonymous nature of cryptocurrency transactions, it can be seen as the perfect location for a range of illegal activities.
- Without the most secure technology you could still put your funds at risk of being hacked, so you need to make sure you choose the safest hardware wallet on the market – always do your research!
Want to learn more about Cryptocurrencies?
If we have caught your attention with our first Cryptocurrency focussed blog post then we guarantee you will want to get involved with the next content pieces we are soon to launch! Over the next week, we will be launching four more blog posts solely focussed on Cryptocurrencies. We want to make sure you, our community, have all the information you need about Cryptocurrencies to confidently join the biggest revolution within the Finance and Technology industries. Head over to our Social Media channels to keep up to date with new content being launched.
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