Cryptocurrency is defined as a digital currency designed to work as a medium of exchange. It uses cryptography to secure and verify transactions, as well as to control the creation of new units of a particular digital currency. The most famous examples are Bitcoin and Ethereum.
The unique thing about these virtual assets is that unlike legal tender, they are generally not issued by any central authority. Instead, they exist on a decentralized technology called blockchains, a distributed database that stores information electronically in digital format.
To obtain the currencies, a process called crypto mining is done wherein high-powered computers, also known as nodes or mining rigs, validate blockchain transactions or solve complex mathematical problems to earn coins.
As for the already mined coins, users can purchase these currencies from brokers. Subsequently, these can then be stored with the use of encrypted wallets. Furthermore, they can also be spent or invested in other crypto ventures such as NFT projects.
Several individuals can be credited for the rise of the crypto industry. The most notable among them are currency creators such as Satoshi Nakamoto, who developed Bitcoin and whom many refer to as the “Father of Cryptocurrencies.” Vitalik Buterin, who is known for building Ethereum (ETH), is also an influential driving force in the industry.
There are numerous reasons why cryptocurrencies have become so popular, but primarily, it is due to the plethora of benefits and advantages it provides. For example, they are essentially immune to government interference or manipulation because of their decentralized nature.
Likewise, it is not tied to the financial status of any country, which makes it an ideal investment for many. On top of that, it offers an excellent source of potential profit due to its fluctuating price. As a result, a lot of people buy the coin at a low price and sell it once prices start to rise.
But perhaps what makes cryptocurrencies so in-demand now is that most people think it is the future. After all, crypto has created significant technological advancements and innovations.
On the flip side, interested individuals should still exercise caution when diving into cryptocurrencies. One important thing to note is that coin prices tend to be highly volatile as it is still a relatively new industry. In addition, it is influenced by several factors, such as its limited supply and the exponential increase in demand.