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Over the past few years, cryptocurrency has gained tremendous momentum across the world. It is stealing headlines and has emerged as a prominent point in conversations. What was once popular among a select group of people has now become a common topic for discussions. But why is everyone paying so much attention to cryptocurrency these days? What exactly is it?
While it might be difficult to explain this cutting-edge technology in simple words, we'll give it a shot:
What is cryptocurrency?
Let's begin by putting the two pieces together - crypto and currency. While currency is a medium of exchange of goods and other services, crypto means something which is protected/secured and cant be altered. An amalgamation of these two becomes cryptocurrency, a medium of exchange value that lies in the digital world. It is dependent on encryption which makes it secure. Cryptocurrency is basically a new way of paying that makes transactions not only safe but also without any third-party (banks, for example) involvement.
Security provided by Blockchain technology
The main feature of cryptocurrency lies in the security provided by Blockchain technology, which is a system of recording/storing information in a way that makes it impossible to change, hack or cheat. The easiest way to understand blockchain is that it is a series of blocks that store data. Each block holds a unique hash number and a link that is connected to the previous block. Each block is important in the sequence, and if there is any change, the total of these unique numbers will alter, and the block will no longer be valid.
Cryptocurrency vs regular money
Unlike regular money, cryptocurrencies are not regulated by financial institutions and central authorities. Cryptocurrency transactions are verified through blockchain technology, which enables permanent recording of all trading activities, enhancing the security of every exchange. People dealing in cryptocurrency see it as the 'currency of the future' and believe it'll become increasingly valuable with time. The technology behind cryptocurrency -- Blockchain, that is -- is decentralised, allowing for secure processing and recording of transactions.
Types of cryptocurrency
There are several cryptocurrencies in the market for both long- and short-term investments. While Bitcoin is one of the most popular, there are other options too, like Ethereum, Dogecoin, Ripple, and Safemoon. Cryptocurrencies and their market value is a global phenomenon. However, trading volumes (how much of a particular cryptocurrency is being bought and sold) vary across countries and exchanges.
How can you purchase cryptocurrency?
Some cryptocurrencies are available for purchase; others require that you pay with Bitcoins or another cryptocurrency. To buy cryptocurrencies, you'll need a 'wallet,' an online app that can store your currency. Generally, you can create an account on an exchange and then transfer the real money to buy cryptocurrencies.
Cryptocurrency is a highly volatile and speculative market, just like the stock exchange. So please do your research before investing.
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