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How Cryptocurrencies Actually Work, Explained

On December 17th, 2017, Bitcoin, a cryptocurrency, attained its highest price, reaching incredibly close to $20,000. While there was no way of predicting such a high value for this cryptocurrency, market trends pointed towards inevitable growth, especially since the Fall of 2017. See, from this time on, Bitcoin’s price rose and rose, reaching $5,000 in October, $10,000 in November, before eclipsing at nearly $20,000 in December. 

Bitcoin’s high price attracted global attention, and no media houses were left behind when it came to covering this wonder currency. However, what really shone the spotlight on Bitcoin were the millionaires who emerged quite from nowhere, thanks to savvy investments in the cryptocurrency. 

In light of these developments, interests in Bitcoin were piqued. Suddenly, people wanted to learn about Bitcoin and other cryptocurrencies. And thanks to the consistently high prices of these currencies, people still want to know about them to date. 

So, if you are one of the interested learners, this post is for you. By the end of this article, you will learn what cryptocurrency is and how it works. Let’s get you informed, shall we?

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What Is a Cryptocurrency?

A cryptocurrency is a digital/ virtual asset that is used as a medium of exchange. It is secured by strong cryptography to ensure that financial transactions are safeguarded, eliminating cases of counterfeiting or double-spending. Excellent cryptography is also used to manage the making of new units and approve transactions. 

According to Forbes, cryptocurrencies utilize decentralized controls based on blockchain technology [2]. But even with all this said, the standout feature of cryptocurrencies is that they are seldom availed by central authorities, case in point banks, and other financial establishments. For this reason, they are free of government meddling. 

Bitcoin, availed as an open-source software back in 2009, is widely considered to be the pioneer of cryptocurrencies. Today, it is the most popular and most valuable amid over six thousand altcoins (other variations of Bitcoin, or new cryptocurrencies.) As of November 2019, over eighteen million Bitcoins were circulating in the world, and their value equals a whooping USD 146 bn. 

As people continue to embrace cryptocurrencies, more of them have since emerged. Examples include Ripple, Ethereum, Stellar, Monero, Dash, Zcash, Vertcoin, Verge, and Titcoin. As of 2019, the cumulative market capitalization of cryptocurrencies was USD 237.1 bn.

How Cryptocurrencies Work

To know how cryptocurrencies work, it is necessary to learn a few key concepts. These are:

Examples of Where Crypto Is Used

After acquiring a cryptocurrency, there will come a time for you to spend it. But where exactly can you use it to pay for a service or product? Below are examples of instances when cryptocurrencies can be used. 

Online Casinos

Long gone are the days when you had to go to a physical casino to play poker, roulette, keno, or baccarat. See, thanks to technology, more specifically the internet, you can now play any casino game from the comfort of your location. And the best part of all is that you can now use cryptocurrencies on these platforms.

Ignition, an online casino established back in 2016, is one of the platforms that allow you to use cryptocurrencies, in this case, Bitcoin or Bitcoin Cash. But even with that said, it helps to know that you only have to provide a Bitcoin or Bitcoin Cash equivalent of the required dollar amount. With that cleared out, if you want to know more about Ignition Casino, feel free to check out this review [4] from OnlineCasinoGems. 

Travel

The cryptocurrency world has witnessed significant growth in the past years, and the number of businesses that accept it as a form of payment has significantly increased. When it comes to travel, agents such as CheapAir and Destinia now accept Bitcoin payments for flight booking, car rentals, and even hotel reservations. 

Do you want to live in an apartment when you get to your travel destination? CryptoCribs can come in handy in this regard if you happen to have Bitcoin or Ethereum in your digital wallet. 

Food Delivery

The next time you are hungry, be sure to use your cryptocurrency to order your favorite meal. According to bitcoin.com [5], you get the opportunity to order any meal from pizzerias within your locale. The best thing of all is that you can use any coin from among the fifty accepted. 

Noble Causes

Believe it or not, you can now help your favorite organization when it comes to running various initiatives. Today, the Red Cross, WikiLeaks, and Save the Children are but some of the several organizations that accept cryptocurrency donations. 

Final Thoughts

Now that you know how cryptocurrencies work and where you can use them, it is time to think about investing in this opportunity. We can count on significant returns, given that people are always out to embrace secure technologies in a bid to counter cases of fraud and hacking. But even with all said, remember, wherever there’s a potential for high returns, it always helps to be extra keen.

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