With technology taking over our day-to-day lives, it was a matter of time to have alternative digitalize money as well. And this happened back in 2009, when the first crypto-currency was created, namely the Bitcoin. It is an encrypted virtual currency that uses, as expected, cryptography in securing the transactions. They are not controlled by any government and seem less susceptible of manipulation. A group of people known as Satoshi Nakamoto created this type of decentralized currency, when they came up with bitcoin that became the reference in cryptocurrency creation. But we get ahead of ourselves.
First let’s see the advantages coming from using these cryptocurrencies. As explained, no government, bank or other financial supervising authority controls them, rendering them more independent. Second, the transactions costs are lower compared to regular currencies, one can make payments at any time using digital coins. However, being virtual money, there are some risks regarding its security. Not only that, but it being anonymous, it is susceptible to being used in money laundry tax evasion. The volatility of these cryptocurrencies is yet another concern, as it fluctuates widely.
All started with Bitcoin
As previously mentioned, Bitcoin (BTC) is the first cryptocurrency, and it was an alternative to digital payments, offering lower fees for transactions, and no central authority behind it. As there is no physical money, all transactions rely on computers, balances being associated with a private or a public key and being kept on a public journal. The public key serves as a banking account number where anyone can send bitcoins, while the private key is a code that authorizes the transaction (much like a code in online banking or a PIN for card payments). It can be used for bitcoin gambling, payments, investments or trading. But first of all, you need to have a bitcoin wallet. Here you need to beware of the solution you chose: the wallet can be on cloud server, or on your own computer. Either solution is not infallible, with the possibility of cyber theft depending on the security offered by the respective solution.
Now, a bitcoin values about 530 USD, up by close to 100 USD compared to the week before, but it is highly volatile, with values going from 0.3 USD to over 200 USD in a matter of days, a few years back.
Litecoin and DogeCoin, the new altcoins on the market
The popularity of the Bitcoin triggered the creation of other such cryptocurrencies, the second one being Litecoin (LTC) in 2011. It works more or less like the bitcoin, but being less popular and newer, it’s value is of about 4 USD, but it’s system allows for the production of more coins at a faster rate than the bitcoin. In its turn, DogeCoin, launched in 2013, bases its operations on peer-to-peer technology, has more coins and their value is lower. While BTC or LTC have a cap, there is virtually no limit to how many dogecoins can be created. Currently, it is valued at 0.000232 USD.
How to use Cryptocurrencies
Besides making virtual payments, with the advantage of much lower transaction fees, the cryptocurrencies are seen as investment opportunity or speculative trading solutions, or plain gambling. All of these have pros and cons, much like any other commodity, for instance. And you can buy the bitcoins or any other coins from specific markets and use them as you please.
Now, let’s take them one at a time. As investment opportunity, the advantages of cryptocurrencies come from their increase in value over quite a short period of time. While they seem to be highly volatile at this point, given the increase in popularity, and the fact that more businesses seem to adopt them, the future looks good in term of value increase and return on investment. On the other hand, there is not much data regarding crypto-currencies for investors to make informed decisions and longer term projections.
If you chose to make speculations with bitcoins, again, you need to be informed, check out the news on them, understand how the market works and follow through with buy or sell orders. Here comes the high volatility, as explained earlier. And the frenzy of the markets when it comes to the new altcoins. And like any other speculative trading, you need to monitor the market and sell as soon as your coin is up.
There are quite a few use cases for the crypto currencies as well. For example, bitcoin casino gaming is maybe the best-known activity. And there are quite a few online casinos that use bitcoins. With all the features real casinos have to offer: slots, dice, poker, but also sports betting. Various Bitcoin casino bonuses and incentives are part of what Bitcoin casinos offer, as well. It all depends on the information, again. Some sites are legit, others not so much. A potential sign of legitimacy would be the provably fair games, meaning a track-record showing the odds are not always against the player.
This is, in short, the cryptocurrency world: we are talking about a serial number used as a coin, highly volatile, with scam potential due to the internet-based solution, very interesting, however, for investors thanks to its strong increase over the years.