Saving Money, Technology

Cryptocurrency 101: Introduction to BitCoin

ItbiA cryptocurrency consists of digital data chunks used as money, rather than bills of legal tender. Among these, the most popular is BitCoin. Starting in 2008, BitCoin used a revolutionary technology known as blockchain to create data that cannot be altered. These blockchains have enabled a whole range of cryptocurrencies onto the market. Monetary units of this kind have grown and proliferated since then, breeding many pretenders and scams. To say nothing of causing mass confusion over understanding exactly what cryptocurrencies are. Cutting through the noise is difficult, but our plain English introduction to BitCoin and cryptocurrencies can help.

What Cryptocurrency is

Bitcoin Cryptocurrency atop dollars

Though it’s easy to say a cryptocurrency is a form of digital money, that doesn’t mean anything. To clarify, we’re going to use BitCoins. They work best, as they’re the most popular cryptocurrency and the easiest place to start.

A BitCoin is a unique, unalterable string of data. This data contains blockchain encryption, so it’s tracked online and cannot be altered without creating a record. Since the blockchain data shows the history of every BitCoin, BitCoins are as trustworthy as cash. In some cases, more trustworthy than cash, since a copy, or a counterfeit BitCoin would create a block of data in the chain. Anyone viewing the chain of data would then know to ignore the falsified data. The blockchain is the same as being able to see the entire history of a bill from the moment it was minted.

Every cryptocurrency works the same way as BitCoin. They are each a piece of data with blockchain encryption that tracks where they are, when they move, and everything that happens to them. The blockchain encryption also keeps a record. Anyone who wishes can see the whole history of any BitCoin, all the way back to the beginning, known as the Genesis Block. This constant monitoring and data-updating arrangement creates a state where each BitCoin is totally verifiable. It’s as if you could see the history of a bill all the way back to the moment it was minted. That’s how blockchain encryption makes BitCoins so trustworthy. Attached to it a ledger that cannot be changed.

Where Cryptocurrency is

cryptocurrency on circuit board

Storage is what makes cryptocurrency so attractive. It doesn’t require a bank. Each piece of cryptocurrency data is already verified and recorded digitally. It’s not waiting in a vault or stuffed under a mattress, like ordinary currency. It floats in the cloud. If you have BitCoins in your account, it’s the same as dollar, dollar bills, y’all. Or Euro, Euro bills, mon amie. Except, they don’t have physical analogs.

Creating Cryptocurrency

GPUs mining cryptocurrency bitcoin

Making cryptocurrency requires “mining”. In reality, it’s about as far from actual mining as you can get. The “mining” consists of is a network of computers solving an incredibly difficult equation. Each equation takes long periods of time to solve, requiring massive amounts of calculations. Those calculations then must be verified, creating the cryptocurrency.

It might be simpler to avoid the term “mining” as to think of the computers as having to undergo exhaustive calculations to “print” money.

The “miner” then spends the money, distributing it into the market like ordinary currency.

What Cryptocurrency is Worth

cryptocurrency and other currencies

A dollar is a dollar, but how much a BitCoin is worth is different. The number of BitCoins in existence, wideness of BitCoin trading, and a thousand other factors change BitCoins values. Since a cryptocurrency is like any other currency, it’s worth what the market says. The same way the Australian dollar or the English Pound Sterling might be worth different dollar amounts, so is the case with BitCoin and cryptocurrencies. To learn more about that, you’ll want to comprehend currency trading and the Forex market.

If you’d like to buy a bit of Cryptocurrency, you can do so for a few dollars and see it appreciate. Here’s a quick guide to buying your first BitCoin. Though, we’re investing in Ethereum and feel that’s going to show more growth down the line. But talk to your broker before you do anything.

Since this topic is complex, we encourage questions, comments, and links to helpful information in the comments. This is important for everyone in the market to comprehend.

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