Cryptocurrency is a financial term that has begun being used by a larger number of people. However, even with it being discussed more frequently, many individuals still do not know its basic concept or how it could apply to their financial life.
What is Cryptocurrency?
Cryptocurrency is a digital currency that uses cryptography, a type of encryption, to generate money and validate the transactions that are made. These transactions are then added to a chain of other transactions, called a blockchain, making it impossible for any source to gain access to or change your transaction after it’s been completed. Because of this secure method, cryptocurrency is one of the safest mediums of using your money, as it does not allow people to double-spend or for their money to be counterfeit. As credit card theft and other scams have continued to rise throughout the past few years, cryptocurrency has acted as a breakthrough method in securing your transactions and avoiding such theft.
Advantages of Cryptocurrency
As stated earlier, cryptocurrency has become one of the safest ways to manage your transactions. In addition to this large benefit, cryptocurrency also makes it easier for individuals to transfer funds to each other without the need for a middleman like a bank. These transfers instead use public keys and private keys when validating these transactions. Additionally, this eliminates the need for any annoying fees customarily charged by banks for this process.
How Do You Buy Cryptocurrency?
Obviously, to get into cryptocurrency, you need to purchase it in some way. Some cryptocurrencies, such as the well-known Bitcoin, can be purchased with cash, but others require you to pay with Bitcoins or other cryptocurrencies. To buy cryptocurrency, you’ll first need to set up an online wallet app that can hold your currency. You’ll typically create an account on a trading exchange and later transfer your real money onto that platform in order to purchase Bitcoin or another cryptocurrency.
Cryptocurrency has already made leaps and bounds since its first introduction to the financial field. It will undoubtedly continue to impact the ways people make transactions and secure their money. Cryptocurrency is by no means completely replacing physical cash or banking systems any time soon, but it is wise to stay updated on these digital currencies as technology continues to evolve. We’ve already seen cash transactions take a backseat in decades past, as credit cards and online banking have become the norm, and there could be a day in the future where cryptocurrency is the preferred method of transactions.