Cryptocurrency – what, where, why, how?
You’ve probably hear of Bitcoin and Cryptocurrency, but like many you might not be clear on exactly what it is, where it came from and how it works. Well, that’s why were here, let us answer 4 key questions we get asked about Crypto all the time…
What is Cryptocurrency?
In it’s simplicity a cryptocurrency is a medium of exchange created and stored electronically in the blockchain. It uses
encryption techniques to control the creation of monetary units and to verify the transfer of funds.
The interesting part about cryptocurrency is it’s supply is not determined by a central bank or entity and the network is
Why and who created it?
Cryptocurrencies emerged as a side product of another invention. Satoshi Nakamoto, the unknown inventor of Bitcoin,
the first cryptocurrency, never intended to invent a currency.
In his announcement of Bitcoin in late 2008, Satoshi said he developed “A Peer-to-Peer Electronic Cash System.“
His goal was to invent something; many people failed to create before digital cash.
The single most important part of Satoshi‘s invention was that he found a way to build a decentralized digital cash
system. After seeing all the centralized attempts fail, Satoshi tried to build a digital cash system without a central entity.
Like a Peer-to-Peer network for file sharing. This decision became the birth of cryptocurrency.
What is the blockchain?
The blockchain is a digital ledger that holds all the transactions taking place on a peer to peer cash system/network. All
information transferred via the blockchain is encrypted and can not be altered. Interestingly it can be used for much
more than just currency and recently we have seen a move to ‘smart contracts’, records and other forms of data that
can be shared. The one reason it has become so important is that it is ‘decentralised’ meaning not one person or entity
can control it.
How do we take advantage of it?
Cryptocurrencies hold value very similar to that of stocks and have been related to penny stocks in particular due to
their volatility. The only difference between stocks and cryptocurrencies is that you don’t get a dividend at the end of
every month/quarter although 1 cryptocurrency called ‘Neo’ has started to distribute dividends.
We must look at cryptocurrencies as stocks as many of them have companies behind them trying to solve specific
problems in the peer to peer cash system, whether that be costs of transaction’s or some focusing on the speed of
We hope this info blog helps on your quest to understand Cryptocurrency – For more articles and much more, don’t forget to become a FREE CITA Member.
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