Have you ever heard about crypto? How does cryptocurrency work? How much a bitcoin is worth? Is cryptocurrency the future?
These are questions that we find often and with increasing frequency in the modern-day Digital World, and while it has been around for almost 14 years now, it has undoubtedly gained vital importance in the last few years with a rising wave of small and medium investors attracted to the possibility of great ROI in this -now not so- unexplored market. And also very much due to the novelty and halo of mystery that has somewhat surrounded it in the eyes of the general public, mostly because it is the first monetary system based not on material goods, nor speculations, not even a financial institution such as banks or governments, but on something way more accountable: Math.
How do cryptocurrencies work?
A cryptocurrency coin or any of its fractions is generated via a data binding process called “mining“, which basically means validation of transactions. For this effort, successful miners obtain new cryptocurrency as a reward. The reward decreases transaction fees by creating a complementary incentive to contribute to the processing power of the network.
The network generates a Blockchain that secures the transactions and generates encrypted data logs, which makes it possible to assure that they cannot be counterfeit or stolen. Additionally, the perks of having it existing only in the digital world like not having to physically allocate them or carry them with you are great; but the most important aspect is their growing value on the market.
How much does a cryptocurrency cost?
It depends, like any other type of currency, on its value on the market. The more people acquire and use digital assets, the more they are worth. There are many apps and websites to exchange, buy, and track the fluctuations of any crypto, and a global tendency to invest in them, mainly due to the exploding phenomenon of Bitcoin, the first cryptocurrency launched in 2010. It went from $0 to $68,000 worth in just 10 years, and while it has had its ups and downs, it is still one of the most attractive assets, especially for new investors.
What can I buy with cryptocurrency?
It is foreseen that, well, pretty much anything.
While some experts declare that it is very unlikely that crypto replaces cash in the near future, many others consider that by the next 20 years, it will be a common means of purchase. New technologies like Purse allow you to use your crypto to buy on sites like Amazon, and there are many new marketplaces that are testing crypto payments, including Meta, with Facebook Marketplace and WhatsApp beginning to implement crypto wallet services.
Some countries like Nigeria, Vietnam, and Perú famously have relied on these new technologies to amortize their economy with exceptional results, at least in general terms. In Nigeria specifically, there are whole communities using crypto as the main means of exchange in places where the economy remains very local.
So, what do you think? Is cryptocurrency in your future?