Cryptocurrency Explained in Simple Terms
Are you new to cryptocurrency? You're likely intimidated by all the technical mumbo-jumbo floating around. You want a simple explanation what cryptocurrency is and how to use it. In this brief primer, you'll understand the very basics. It's not as intimidating as you think!
How Miners Create Cryptocurrency
A miner is someone who uses their computer to solve complex math problems. The computer who answers the problem the most efficiently submits it to the network. The network will agree that the answer is the right one and reward that participant a block of coins.
When coins like Bitcoin were new, it was quite easy to find the right answer to the equation. Very early miners found Bitcoin blocks often and stockpiled a whole bunch with ease. But, as time passed, it became more difficult to find a block of Bitcoins. As more and more miners participated in the network, fewer people discovered Bitcoins.
This led to the creation of Bitcoin mining pools. Many different computers joined the same pool and sought to solve the same math problem. When any one computer in the pool found the next block, all computers connected to the network received part of the reward. This increased the excitement of Bitcoin mining, because the average miner was sure to discover a block of coins quite often. Mining pools were the start of the mining revolution. This opened up mining to the average end-user, increasing its popularity.
Bitcoin's Value Over Time
Early on, some people realized the potential of Bitcoin and held onto their stash. As the years passed, more eyes and ears tuned into the evolution of Bitcoin. The media began publishing more articles focusing on this emerging form of currency. Bitcoin became a valuable asset worthy of consideration. Yet very few people even knew what a Bitcoin was. It hadn't yet reached public knowledge. Talks about this digital currency were restricted to very niche circles.
Late 2013 Bitcoin earned widespread attention when its price breached four digits. Bitcoin achieved the unthinkable; it became a very valuable asset indeed.
After 2013 Bitcoin rested in a seemingly uneventful slumber as it experienced very few fluctuations in price. About three and a half years after entering its deep sleep, it spiked again. It has partook in the hustle and bustle of major attention ever since!
Integration Into Society
Moving beyond a geek's coin, businesses and organizations utilized Bitcoin in daily operations. It was now possible for the average person to find some use for their virtual wealth. This caused more and more entities to integrate Bitcoin into their operations. The general public began seeing this coin as a potential competitor to credit card companies themselves!
Some time in between 2013 and the present, alternate coins (known simply as “altcoins“) sprung up en masse. People realized the limitations of Bitcoin given a heavy demand and sought to fix them. These newer altcoins boasted faster transaction speed, cheaper transaction fees, and greater security. For the longest time, though, they hardly gleaned any attention from major investors. Bitcoin was too deeply rooted in the media's attention.
Later in the development of altcoins, they breached 50% total market cap of Bitcoin. This means that with the value of all other coins combined, they are worth more than the total value of all Bitcoins. This is significant because it resulted in people thinking about a future in which Bitcoin was not the primary focal point!
Bitcoin remained at the top ever since then, though more media headlines report Bitcoin's impending dethroning. Early adopters deny such a future. In fact, there have been several attempts to upgrade Bitcoin to meet the demands of the future. This resulted in the “hard fork” that created Bitcoin Cash (or “Bcash”) which is a coin with slightly faster transaction times and cheaper transfer fees. Likewise, Bitcoin Gold emerged from the dust as well, though its fate has been quite uneventful.
Coins emerged such as Ethereum, Ripple, Monero, and Dash. Each has its own devout following. Each claims to possess significant advantages over Bitcoin itself. Each of their futures remains undecided as this battle between cryptocurrencies is still under way.
Investing Methods and Cryptocurrency Exchanges
Each year the accessibility to invest in cryptocurrency improves. Exchanges appear several times per year, each offering a unique value proposition over other exchanges. It's becoming easier for the average person to put a sum of money in the world of cryptocurrency. This accessibility boosts the market cap of cryptocurrency as a whole as investors – as well as the Average Joes – place their vote that this virtual world of finance is here to stay.
Whether or not this is true has yet to finalize. This is going to be the unfolding story that is likely to last our lifetime. Whether or not you are a part of this unfolding history in the making is up to you. Experts recommend that, at the very least, you do your research and decide for yourself if this is something you think will happen. Some compare this to the Dot Com bubble, yet others compare this to the birth of the Internet. What do you think is more true?