What are cryptocurrencies?
A cryptocurrency a digital currency that is not backed by any central bank like fiat currency would and is instead decentralized and global. An algorithm controls the supply of cryptocurrency and blockchain-backed encryption techniques are used to regulate the generation and verify any action on the system, such as fund transfer between the parties as well as update of any data.
How do you use cryptocurrencies?
A lot of cryptocurrencies were issued and designed as financial securities, or a form of investment. However, there are several popular cryptocurrencies, such as Bitcoin, that are accepted online as payment for various products and services. There are also so-called utility tokens or cryptocurrencies used by certain communities as a part of a system that were set up as independent ecosystems in which the token can be used to pay for certain goods or services. The rules of currency generation are outlined in a whitepaper, a document issued before a so-called Initial Coin Offering (ICO) which generates the initial amount of coins; the coin will continue its generation subject to the mechanism set out in the initial whitepaper.
Are cryptocurrencies secure?
There have been many instances of theft of cryptocurrencies. There are ways to protect cryptocurrency assets, such as storing them in a so-called cold storage wallet that’s kept on your computer and isn’t connected to the internet preventing hacking attempts.
What is the future of cryptocurrency?
This remains to be seen. The regulation around cryptocurrency tightens every day. Most experts agree that utility tokens will play a role in the future economy; however, most also agree that cryptocurrencies will not replace fiat currencies and that the case of replacing financial intermediaries with all their security measures isn’t even the most interesting use of blockchain-based technologies, and cryptocurrencies in particular.
What are some leading cryptocurrencies companies?
Bitcoin, of course, is a major one.
Besides Bitcoin, the second largest one is Ethereum.
Then there are other so-called Altcoins, alternative coins issued after the success of Bitcoin, by such companies as R3, Ripple, Litecoin, Zcash and others.