What’s Going On With Crypto?

A blog about the current state of cryptocurrency and where it’s headed.

Checkout this video:

Introduction

The global crypto markets have seen a resurgence in 2020, with the total market capitalization hitting $1 trillion for the first time ever in January 2021.

This market rally has been driven by a number of factors, including increased institutional investment, corporate adoption, and positive regulatory developments.

In this article, we’ll give an overview of what’s been going on in the crypto world and touch on some of the key developments that have been driving the market.

What is Cryptocurrency?

Cryptocurrency is a digital or virtual currency that is designed to work as a medium of exchange. Cryptocurrencies are decentralized, which means they are not subject to government or financial institution control. Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Cryptocurrencies are often traded on decentralized exchanges and can also be used to purchase goods and services.

Bitcoin

Bitcoin is a digital asset and a payment system invented by Satoshi Nakamoto. Transactions are verified by network nodes through cryptography and recorded in a public dispersed ledger called a blockchain. Bitcoin is unique in that there are a finite number of them: 21 million.

Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services. As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment.

Ethereum

Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of fraud or third party interference.

Ethereum is used as a platform to run decentralized applications (dApps) and create new tokens. Ether (ETH) is the native currency of Ethereum, and it is used to pay for gas fees when running transactions or executing smart contracts on the Ethereum blockchain.

Ethereum co-founder Vitalik Buterin created ETH in 2015 as a way to powering the Ethereum network. ETH is mined through a Proof-of-Work (PoW) consensus mechanism, and it can also be bought and sold on cryptocurrency exchanges.

Litecoin

Litecoin is a cryptocurrency that was created in 2011 as a fork of the Bitcoin protocol. It is similar to Bitcoin in many ways, but it has a faster block generation rate and uses a different hashing algorithm.

Litecoin is often said to be the silver to Bitcoin’s gold. It is one of the most popular cryptocurrencies and has been one of the top 10 cryptocurrencies by market cap for several years.

Bitcoin Cash

Bitcoin Cash (BCH) is a cryptocurrency that was created as a result of a fork of the Bitcoin blockchain on August 1, 2017. The new currency resulted from a disagreement among Bitcoin developers about the best way to scale Bitcoin to accommodate increasing transaction volume.

Bitcoin Cash is different from Bitcoin in that it has an increased block size of 8 MB, allowing it to process more transactions per block than Bitcoin. This makes Bitcoin Cash suitable for applications such as point-of-sale systems, which need to process large numbers of small transactions quickly.

Bitcoin and Bitcoin Cash share a transaction history up until the point of the fork, after which they become separate currencies. This means that if you owned Bitcoin before August 1, 2017, you will also own an equivalent amount of Bitcoin Cash.

How do Cryptocurrencies Work?

Cryptocurrencies are digital or virtual tokens that use cryptography to secure their transactions and to control the creation of new units. Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution control. Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Cryptocurrencies are often traded on decentralized exchanges and can also be used to purchase goods and services.

Blockchain

A blockchain is a digital ledger of all cryptocurrency transactions. It is constantly growing as “completed” blocks are added to it with a new set of recordings. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. Bitcoin nodes use the block chain to differentiate legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.

Mining

Mining is how new Bitcoin and other cryptocurrencies get created. But it’s not as simple as it sounds.

Here’s a quick rundown: Miners are rewarded with cryptocurrency for verifying and committing transactions to the blockchain digital ledger. Essentially, they do the work of verifying transactions, ensuring that no double spending occurs, and then packaging those transactions into blocks. Miners then race to solve complex mathematical problems in order to verify the digital signature attached to each block (this is where the “mining” comes from). The first miner to verify a block is rewarded with cryptocurrency.

It’s important to note that mining is resource-intensive, and it often requires powerful hardware and lots of electricity. So, it’s not surprising that many miners band together in so-called mining pools, sharing their processing power over a network in order to increase their chances of being rewarded.

What are the Benefits of Cryptocurrency?

Cryptocurrency is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets. Cryptocurrencies are decentralized, which means they are not subject to government or financial institution control. Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Let’s explore the benefits of cryptocurrency.

Decentralization

Cryptocurrencies are digital or virtual tokens that use cryptography for security. Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution control. Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Cryptocurrencies are often held in a digital wallet and can be used to purchase goods and services, but can also be traded on financial markets.

Security

Cryptocurrency offers a high level of security. Transactions are recorded on a decentralized, public ledger called a blockchain. Each transaction is verified by multiple computers on the network, making it nearly impossible to tamper with or fake a transaction.

This security is important because it protects users from fraud and theft. With traditional currencies, it is easy for criminals to counterfeit bills or steal credit card information. With cryptocurrency, users can be sure that their transactions are secure and their money is safe.

Cryptocurrency also offers a high level of anonymity. Users can send and receive payments without revealing their personal information. This makes it difficult for government agencies or other institutions to track or interfere with cryptocurrency transactions.

Anonymity

One of the benefits of cryptocurrency is that it allows for anonymous transactions. This means that you can send and receive payments without having to disclose your personal identity. This is different from traditional payment systems, which require you to share your personal and financial information with the company or institution handling the transaction.

Cryptocurrency also offers a degree of privacy, as your transactions are not visible to the public like they would be if you were using a traditional banking system. However, it is important to note that this anonymity comes with a trade-off, as it can make it difficult to track down thieves or recover lost funds if your wallet is stolen or hacked.

Lower Fees

One of the benefits of cryptocurrency is that it typically has lower fees than traditional methods like credit cards or PayPal. For example, Coinbase, one of the most popular cryptocurrency exchanges, charges a 1.49% fee for bank account transfers and a 3.99% fee for credit/debit card purchases. In contrast, PayPal charges 2.9% + $0.30 for each domestic transaction and 4.4% + a fixed fee for each international transaction.

Are there any Risks with Cryptocurrency?

Cryptocurrency has been gaining a lot of attention lately. However, there are still some risks associated with it. Let’s explore the risks of cryptocurrency and see if it’s something you should be investing in.

Volatility

Cryptocurrency is a digital or virtual asset designed to work as a medium of exchange. It uses cryptography to secure and verify transactions as well as to control the creation of new units of a particular cryptocurrency. Essentially, cryptocurrencies are limited entries in a database that no one can change unless specific conditions are fulfilled.

Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution control. The prices of cryptocurrencies are extremely volatile, meaning they can rise and fall a great deal in price in a short period of time. Due to this volatility, there is always the potential for loss when investing in cryptocurrency.

Regulation

When it comes to investing in cryptocurrency, one of the biggest concerns is regulation. Cryptocurrency is still a relatively new asset class, and it’s not yet clear how governments will choose to regulate it. In some cases, government regulation could be a good thing – for example, it could help to bring more legitimacy to the asset class and help to protect investors. However, heavy-handed regulation could also stifle innovation and make it difficult for new projects to get off the ground. So far, we’ve seen a mixed bag when it comes to government regulation of cryptocurrency – in some cases, governments have taken a hands-off approach, while in others, they’ve taken a more active role. It’s still too early to say what the long-term effect of government regulation will be on cryptocurrency, but it’s something that investors should keep an eye on.

Hackers

Hackers are one of the biggest risks associated with cryptocurrency. They are constantly looking for ways to exploit vulnerable systems and steal people’s money. One of the most famous hacks was the Mt. Gox hack, which resulted in the loss of 850,000 Bitcoin (worth $450 million at the time).

Hacks can also happen at the exchanges where you buy and sell cryptocurrency. In 2014, one of the largest Bitcoin exchanges, Bitstamp, was hacked and 19,000 Bitcoin were stolen (worth $5 million at the time).

You can protect yourself from hackers by storing your cryptocurrency in a wallet that is not connected to the internet (known as a “cold storage” wallet).

Conclusion

In conclusion, the cryptocurrency market is still in its early stages of development, and it is important to remember that just because the market has been experiencing some volatility recently does not mean that it is any less promising in the long term. The key to success in investing in cryptocurrencies is to do your research and develop a well-thought-out investment strategy.

Scroll to Top