The popularity of bitcoin has increased rapidly. It becomes a hot topic for many people. Bitcoin is an example of cryptocurrency or digital money. In this digital era, using digital money in some virtual transactions is something familiar. Many people get interested in investing in cryptocurrency. Though this investment is promising, it still has rules that you consider before buying this digital currency.
The Definition of Cryptocurrency
Cryptocurrency is digital money and currency used for virtual transactions in the internet network. The secret keys are complicatedly functioning to protect and keep the security of this digital currency. The word cryptocurrency is coming from two words. Those are cryptography meaning to be a secret code and currency being the currency. The cryptography concept is famous since World War II. It is different from the conventional currency centering feature.
This digital currency is featured to be decentralized. It has no sides present and taking a role in a medium in a transaction. The payment with this digital currency is sending the sender to the receiver or peer to peer. However, all conducted transactions are still noted and controlled in the cryptocurrency network system. Mining cryptocurrency is noting this transaction and getting a commission of the used digital currency.
Types of Cryptocurrency
Though it has developed since the 1990s, it has been popular 10 years ago. Some types of used cryptocurrency can be found such as Litecoin, Monero, Ethereum, ripple, and of course bitcoin. Today, it has more than 1.000 cryptocurrency types spread in the world. However, bitcoin becomes the top list of digital currency mostly used. It was created by Satoshi Nakamoto in which he only created 21 million coins based on the appropriate protocols. Furthermore, it has a blockchain system making a transaction of this digital currency. It lasts safely. The blockchain is similar to a big book doing notes on every transaction activity in a working system. It is working decentralized, valid, and a few mistakes. This schema is occurring in the value in which the digital transaction currency is safer, more practical, and easier than a conventional banking system.
Advantages and Disadvantages of Cryptocurrency
Is it safe for investing in cryptocurrency? Before you value them, these are some advantages and disadvantages of cryptocurrency investment. You can make a deal with it.
- It has the potential of a high price increase in the future.
- The blockchain technology makes a payment process of digital currency running safely, quickly, and easily.
- It prevents a crime of fake money because a blockchain system is blocking possibilities to do two different transactions.
- It saves personal data safely in which you can do financial transactions without showing original identity.
- The risks of law violence possibly happen because a governmental regulation is banned the existence of cryptocurrency
- It has high volatility, the changing of the price suddenly
- It is difficult to predict currency in the future so that you must be careful to estimate the loss.