Online Currency: Everything You Need to Know
Cryptocurrency is on the rise!
Cryptocurrency is on the rise. Which is why it is important to know what it is and how it works.
Did you know that Bitcoin is the first real cryptocurrency? Bitcoin kind of become a happy little accident in the world of online money. The sole purpose of the Bitcoin was to create a decentralization of digital currency. It was invented as a kind of a peer-to-peer system.
The main reason for decentralization was to prevent double-spending, which sometimes happens in banks. The other goal was to reduce a central entity. Other currencies require a third-party to ensure the transaction between two people went through. Digital currency reduces this likelihood. It is similar to how you share an online file from one party to another. There is no central entity that the file has to go through.
The Technical Definition:
I have a technical definition for you tech geeks and wonks out there. Cryptocurrency is an internet-based exchange between one or more entities. They also use blockchain methods to ensure there is complete transparency between the parties engaged in a financial transaction.
Blockchain and How It Relates to Cryptocurrencies
Confirming the status of the financial arrangement is very important to the transaction. When the order is pending, nothing has been confirmed. That means the one party can back out of it.
Once the transaction has gone through, you cannot erase it. The order has been made final. Which is why you better make sure you have the money to back it up if you are sending someone a cryptocurrency order.
That is why experts recommend you download accounting document management software to keep track of your finances.
Blockchain relies heavily on these documents.
What channels oversee the transactions when they occur?
The main party that oversees the transactions are the miners. Everything goes through the miners. They will look at each transaction. Once they are determined to be legit, they stamp time and date on the file. The miners play an important role in the blockchain.
Why is this so important?
A cryptocurrency rep was interviewed recently about it. Here is what he had to say on the subject.
"Our culture is moving towards a cashless society. I am sorry to say, but digital currency is becoming a more prominent fixture in our world. There will be people using the harder monies in the future too. That is why the digital world is working towards decentralization now. That way it is easier for people as our culture moves in this direction."
The Properties People Need To Concern Themselves With
- The first term you should concern yourself with is "irreversible." Once the file goes through, then nothing can be done. You can call the bank all you want, but there is nothing they can do about it. You could even call the crypto people behind the scenes. Did you send money to an online hacker without knowing it? You are out of luck. No one can help you. Take it this as "lesson learned."
- The next term is "Pseudonymous." That means you have received information from a party that does not exist, including the account. Experts suggest you make sure who you are doing business with before you wire the money. This is one situation where hackers try to take advantage.
- The third term is "permission-less." This is the software you can download for free. You do not need to ask permission to use anything attached to it. The gatekeeper is not there, but the security is.