For a lot of people, cryptocurrencies still remain a mystery. They are something that, although very present in today’s digital world, make little to no-sense for many, and I was a part of this group for a long time.
How could a single Bitcoin, for example, be worth more than $10,000 at some point in its story, and how can it possibly be worth more than $19,000 in the current market?
Are cryptocurrencies actually so valuable? In which way do they affect the market to be valued in such a fancy matter? And… How do you obtain them?
If you want these questions answered, this article is for you.
What is Cryptocurrency, in the First Place?
A cryptocurrency is a form of digital currency that was created through a process known as cryptography, which is directly linked to what we know as a blockchain. Before we go into more details about the way they are created, let’s briefly talk a little about how they are valued in the current market. If you want more detailed information, you can check this article.
The reason why cryptocurrencies have an actual value in the market is because of their level of safety when it comes to paying for services, products, and goods, as well as their efficiency and confidentiality. Because of the nature of the way they are created, and also because they are not owned by any country or government, they are very hard to track.
They’ve also been accepted as a form of payment in many places around the world and some websites even encourage their use. If you own a wallet, you can also exchange them for actual money.
With that said, many factors decide the actual value of a cryptocurrency, and some of these cryptocurrencies are well known for being too volatile, like Bitcoin itself. Some other currencies, like Ether, are also volatile, but if you understand how they work and how they are used in the market, they can be more predictable and easier to manage.
LTC; also known as Litecoin, is similar to Bitcoin, but because it is much easier to create, its value is much lower, with one Litcoin costing around $80, so one of the most important factors deciding the value of a cryptocurrency its is accessibility and how easy it is to obtain.
They are perceived as good forms of investment because of the way their value increases over the years, too, but it depends entirely. A good example is how Bitcoin managed to raise its value from $100 to $19,000, but it was known at some point to decrease its value from $17,000 to $9,000.
How They are Created
As mentioned earlier, a cryptocurrency is born through a process known as cryptography, which is used to deal with blockchains. By solving these blockchains, people are rewarded with a form of cryptocurrency.
Blockchains, simply explained, are blocks of encrypted information that can only be processed through computers, and some computers are better than others at dealing with the encrypted information, which is why people often decide to invest in devices for the sole purpose of creating more cryptocurrencies through cryptography. This process is also referred to as mining.
Normally, you would need to understand how coding works to properly engage the mining process, but thanks to it being open-source (free for everyone to use and download) you can actually obtain the algorithms to mine in websites for sharing code just like GitHub.
You can check even more information about it over here: https://www.newsbtc.com/news/how-a-cryptocurrency-is-created/.
Wallets and Trading Sites
To use cryptocurrencies, you’ll have to own what is known as a digital wallet: a place where you can store your cryptocurrency, for the sake of transactions and spendings.
Ideally, a digital wallet should be able to manage multiple forms of cryptocurrency, but there is some form of services that only focus on one, instead of allowing multiple coins in its storage.
Most wallets are digital and can be accessed through the internet, but nowadays you can even find physical forms of cryptocurrency wallets that can be used in many places around the world that allow the use of cryptocurrencies to access their products and services.
Other websites allow the use of both, and they also work as trading and exchange sites. A good example of a site like this is this LTC exchange platform known as Rubix, which also works as a wallet that allows multiple forms of cryptocurrencies.
Trading sites are the ones allowing you to perform transactions to exchange the currency you own for other forms of currencies that are more present in the market, such as USD, ASD, COP, YEN, and more.