A cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange wherein individual coin ownership records are stored in a digital ledger or computerized database using strong cryptography to secure transaction record entries, to control the creation of additional digital coin records, and to verify the transfer of coin ownership.

Cryptocurrency Investment 2020


It typically does not exist in physical form (like paper money) and is typically not issued by a central authority. Some cryptocurrencies use decentralized control as opposed to centralized digital currency and central banking systems.


When a cryptocurrency is minted or created prior to issuance or held on a centralized exchange, it is generally considered centralized. When implemented with decentralized control, each cryptocurrency works through distributed ledger technology, typically a blockchain, that serves as a public financial transaction database. (Wikipedia, the free encyclopedia).

Cryptocurrency is a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.

A cryptocurrency is in other words, a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology which is a distributed ledger enforced by a disparate network of computers. A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation.

The Salient Points here are:


A cryptocurrency is a new form of digital asset based on a network that is distributed across a large number of computers. This decentralized structure allows them to exist outside the control of governments and central authorities.
The word “cryptocurrency” is derived from the encryption techniques which are used to secure the network.

Blockchains, which are organizational methods for ensuring the integrity of transactional data, is an essential component of many cryptocurrencies.
Many experts believe that blockchain and related technology will disrupt many industries, including finance and law.

Cryptocurrencies face criticism for a number of reasons, including their use for illegal activities, exchange rate volatility, and vulnerabilities of the infrastructure underlying them. However, they also have been praised for their portability, divisibility, inflation resistance, and transparency.

Cryptocurrencies are systems that allow for the secure payments online which are denominated in terms of virtual "tokens," which are represented by ledger entries internal to the system.


A Jan Lansky Formal explanation

According to Jan Lansky, a cryptocurrency is a system that meets six conditions:

1. The system does not require a central authority, its state is maintained through distributed consensus.

2. The system keeps an overview of cryptocurrency units and their ownership.

3. The system defines whether new cryptocurrency units can be created. If new cryptocurrency units can be created, the system defines the circumstances of their origin and how to determine the ownership of these new units.

4. Ownership of cryptocurrency units can be proved exclusively cryptographically.

5. The system allows transactions to be performed in which ownership of the cryptographic units is changed. A transaction statement can only be issued by an entity proving the current ownership of these units.

6. If two different instructions for changing the ownership of the same cryptographic units are simultaneously entered, the system performs at most one of them.

 

Types of Cryptocurrency

Central to the appeal and functionality of Bitcoin and other cryptocurrencies is blockchain technology, which is used to keep an online ledger of all the transactions that have ever been conducted, thus providing a data structure for this ledger that is quite secure and is shared and agreed upon by the entire network of individual node, or computer maintaining a copy of the ledger. Every new block generated must be verified by each node before being confirmed, making it almost impossible to forge transaction histories.

The first blockchain-based cryptocurrency was Bitcoin, which still remains the most popular and most valuable. Today, there are thousands of alternate cryptocurrencies with various functions and specifications. Some of these are clones or forks of Bitcoin, while others are new currencies that were built from scratch.

Bitcoin was launched as open-source software in 2009 by an individual or group known by the pseudonym "Satoshi Nakamoto. As of Nov. 2019, there were over 18 million bitcoins in circulation with a total market value of around $146 billion.

Some of the competing cryptocurrencies spawned by Bitcoin’s success, known as "altcoins," include Litecoin, Peercoin, and Namecoin, as well as Ethereum, Cardano, and EOS. Today, the aggregate value of all the cryptocurrencies in existence is around $214 billion and Bitcoin currently represents more than 68% of the total value.

 

How to buy cryptocurrency

To buy cryptocurrency, you need to buy and sell via an exchange. This means you need to create an exchange account and store the cryptocurrency in your digital 'wallet'.
However, if you simply want to trade cryptocurrency you just need a brokerage account, rather than accessing the underlying exchange directly.

 

Benefits of cryptocurrency

Cryptocurrency is a secure payment method, and has some distinct advantages over more traditional forms of payment. Transaction fees are lower with bitcoin than with credit cards, and when cryptocurrency is not exchanged, it also eliminates the need for bank charges

 

Advantages of Investing in Bitcoin

1. Eliminates the risk of fraud.

2. Bitcoin is a deflationary currency.

3. Low transaction fees.

4. Easy to use in any situation.

5. No involvement of third parties.

6. Unbreachable and anonymous wallets.

7. Simplified International Payments For Merchants.

8. Smart contracts.

However, there are some inherent disadvantages or drawback

1. Scalability.

2. Cyber-security issues.

3. Price volatility and lack of inherent value.

4. Regulations.

Cryptocurrency as a profitable investment

Investing in cryptocurrency could be a good investment, or it could not. That is true for cryptocurrency in general and likely for you as a person as well. With cryptocurrency being young, and the market being historically volatile, there is no yes or no answer about the wisdom of investing in cryptocurrency.

You can easily trade bitcoin for cash or assets like gold instantly with incredibly low fees. The high liquidity associated with bitcoin makes it a great investment vessel if you are looking for short-term profit. Digital currencies may also be a long-term investment due to their high market demand.