Cryptocurrencies – What Exactly are They?
Cryptocurrencies refer to digital assets that have been put in place to function as a means of exchange, adopting cryptography as the technique for securing transactions and controlling the design of more units of the currency. They are forms of digital currencies and are also known as alternative currencies.
The First Decentralized Cryptocurrency
Bitocoin, one of the most popular digital currencies, was the first cryptocurrency to be decentralized in 2009. Subsequently, tons of cryptocurrencies have come into existence.
It is almost impossible to counterfeit this alternative currency because of the notable security feature. A defining and probably the most desirable aspect of these currencies is their organic or natural form. In essence, there is no central authority in charge of issuing cryptocurrencies. So, it is not subject to government or political manipulation.
Suitable for Different Transactions and Activities
These currencies are suited for different kinds of transactions and would suit different purposes. But they can also be used by fraudsters, money launderers, and those who want to evade taxes, due to the anonymous nature of the currency.
The First Notable Cryptocurrency
Bitcoin is the first among cryptocurrencies that really got the attention of the public. It was launched by a group in 2009. This group operates under Satoshi Nakamoto (a pseudonym).
By September 2015, nearly 15 million bitcoins were already in circulation. These bitcoins are worth $3.4 billion. The success of this crypto-coin triggered other cryptocurrencies such as the PPCoin, Namecoin, and Litecoin.
Using these currencies, fund transfers between two parties is easier. For security purposes, fund transfers via this means is accomplished with private and public keys.
Only minimal fees are charged for the transfers, which in turn enables users to significantly cut back on the high fund transfer fees charged by banks and other conventional financial institutions that execute wire transfers.
In addition, the blochain feature that Bitcoin uses in storing an internet-based ledger of transactions done is another desirable element of the digital currency. Experts have commended this blockchain, adding that it offers essential uses in technologies – e.g. online voting and crowdfunding. It will interest you to know that JP Morgan Chase and other major financial institutions have spotted potential in cryptocurrencies in terms of reducing transaction costs, which stems from the more efficient payment processing with these alternative currencies.