Late in 2008, a mystery person or persons launched the world into a new age of digital currency exchange. No one really knew what was going on at the time, but from that first coded transaction, the world of cryptocurrency has exploded. So, what is digital currency and how could anyone make money using what appears to be a fictional monetary system? Here is the story behind the creation of digital currency, along with some pros and cons of mining coin to make money.
What Is Cryptocurrency?
Cryptocurrency also goes by the name of digital currency. It is a decentralized monetary exchange system to provide compensation for computerized projects. Most people are aware of the 2009 launch of Bitcoin, the first cryptocurrency that became a reality. Since the release of the genesis code, the number of cryptocurrencies has rocketed to over 700, with 112 of those digital currencies hitting the million-dollar benchmark for market capitalization value.
The History of Cryptocurrency
In October 2008 a person, or persons, who are still clouded in a shroud of a mystery whether such a real human exists, published a book entitled: Bitcoin: A Peer-to-Peer Electronic Cash System. The mystic of Satoshi Nakamoto has remained a mystery. Moreover, a couple of programmers claimed to be the mind behind the cyber coin.
Nobody knows the true identity of the creator of digital currency. The initial time stamped block of code was set at 18:15:05 GMT on January 3, 2009. The first blockchain created by Bitcoin connected with the Times article, ‘Chancellor on the brink of the Second Bailout for Banks.’ Since there are no recorded blocks before this event to use as a reference, it is logical that this was the birth of all digital currency.
The idea of a way to circumvent the conventional methods of payment ignited a steady growth in the number of attempts to create a digital currency exchange. A former Google employee, Charles Lee, used an open source software project under an MIT/X11 license. This way, Litecoin became the second true cryptocurrency in 2011.
With all the secrecy surrounding who actually launched the genesis block chain of digital currency, many people have difficulty accepting the reality that it even exists. Well, there are people in the world who have made a great deal of profit in the world of digital currencies.
The way to make actual money using digital currency is accomplished by generating a source attachment to a fixed global monetary unit – such as the US dollar or British pound – or mining crypto-coins. Using the first method, people have been able to generate funding for projects. A luger from India, who could not afford to attend the 2014 Winter Olympics in Sochi, Russia without help, accomplished one example of such endeavor.
The values of each cryptocurrency are based on the per dollar value attached to each coin. As the total market capitalization value increases, each single coin grows in value. As an example, someone who wanted a couple of pizza pies made one of the first Bitcoin purchases. This early user of digital currency paid a whopping 10,000 Bitcoins for this pair of pizzas. Today those coins are worth nearly 7 million US dollars.
Additional Cryptocurrency Mining Tips
The transfer of funds is called a transaction, with the actual identities of coin owners also encrypted. Each digital currency transaction banks in an account called a digital wallet. One can accomplish this entire process of posting a series of transactions with a high-speed computer processor calculating a series of increasingly more difficult mathematical problems.
Once you solve a problem, the company rewards it with a particular mined digital coin value. The process usually takes only a few minutes. Also, the person doing the mining sees growth in the value of his digital wallet. This might seem like a fabricated scheme to make money, but it is actually legitimate. There are some pros and cons to investing time and resources into mining cryptocurrency.
The Pros & Cons of Investing in Digital Currency
One of the biggest advantages of using digital currency is the opportunity for companies to execute new technology. This helps them achieve something that otherwise would require a unified commitment from a financial institution.
The emergence of digital currency has allowed business to operate entirely within the walls of cyberspace. Individuals who venture into the cryptocurrency market can do so without engaging with banks, loan companies, or credit card vendors.
- Since there is no longer a need for an intermediary to handle financial transactions, this reduces or eliminates fees.
- Users don’t need to physically transport fixed currency from one location to another.
- One can do all the accounting records using a computer, with the ability to store infinite amounts of data.
- Since users make payments directly from the payer to the payee, price negotiations will be easier to do.
- With no need for a financial infrastructure, businesses will be able to make time payments. This will increase the closing time and confirmation of business deals.
Anyone with limited computer knowledge may assume this is literally a gold mine of opportunity waiting for the next prospector to strike it rich. There are a couple of important things to consider before someone decides to quit their day job and invest in the digital currency market.
- Miners are people who run computer programs that specialize in completing increasingly difficult mathematical problems. The burden on processors and computer systems can be immense.
- Trying to generate a get-rich-quick profit scheme is not practical with cryptocurrency because the values can be highly volatile. Value can change in an hour depending on the scarcity of coins and how in demand they are.
Mining or investing in the digital currency has become potentially very profitable. While banks and financial entities work to navigate their way through the world of digital money, the present market is full of opportunities.
Individuals who have the computer knowledge should monitor the market values on an updated digital currency list. Moreover, they should be ready to act swiftly to take advantage of immediate opportunities.