Money has been around in one form or another for millennia. From the olden days of bartering to the current fiat currency dominated world, we have always had a form of payment for goods and services. Back in the day gold and silver coins were the currency of choice and today we use our cash and copper and other metal-based coins to buy and sell. These days there is a new form of currency that exists only on the internet called cryptocurrencies. These digital forms of money are new and slowly taking over the global economy.


What Exactly Is It?

Cryptocurrencies are a solely digital currency that has no physical representation. From the most famous Bitcoin to thousands of lesser-known cryptocurrencies, people are spoilt for choice when deciding to invest in the crypto market. Created, sold, bought, traded, and stored online, you will never see someone with a cryptocurrency in their hands. These complex codes became a hit with the forefather of crypto, Bitcoin.

When Bitcoin launched in early 2009, people, as they are even today, were doubtful of cryptocurrencies. People that were willing to take the risk were rewarded monstrously when Bitcoin rose in value from being worth cents to being worth nearly $20,000. Being an early investor of Bitcoin at even $1, resulted in incredible returns. Ironically the first transaction ever concluded with Bitcoin was a purchase of two Papa John’s pizzas for 10,000 Bitcoin.

Today, cryptocurrencies are traded regularly on countless exchanges across the globe. You can find several websites and applications from your mobile phone for buying, selling and trading. Three of the major online exchanges are: BTC-E, Bitstamp.net, and Coinbase.com. By simply building a profile you are ready in minutes to buying your first digital coin.

Cryptocurrencies have grown beyond just Bitcoin through the last half of the decade. There are now multiple recognizable cryptocurrencies in the market such as Ethereum, XRP, Tether, Litecoin and EOS. In fact, several countries and world giants like Facebook are pushing out their own cryptocurrencies, which are all expected to gather a lot of attention, investment, and use. Several other companies are also working on introducing their own cryptocurrencies.


But, How Does It Work?

Now that we know the what of it, let’s talk about the how. Cryptocurrencies are traded online through a “Blockchain” system. A blockchain is the public online storage system for all the transactions done on a specific cryptocurrency client. These ‘chains’ of information made of ‘blocks’ which store up to 1MB of information. This is the base of cryptocurrencies anonymity and ease of use.

You make your purchase or trade and your transaction is stored inside the blocks without any identifying information using a digital signature. Blocks are identified by a unique code called ‘hash’, so no two boxes are the same. Cryptocurrencies allow people to escape the centralized system of managing their finances, via blockchain technology.

Cryptocurrencies are not only accepted as payment options for purchases, but they are also used widely as trade pieces, long-term and short-term investments. Much like forex trading, crypto trading is commonly done by the buying of a cryptocurrency for one fiat currency (USD, Euro) and sell it for another. Some exchanges even allow crypto for crypto trading, these trades are ones where your trade x number of bitcoins for an x amount of another cryptocurrency like Ripple. Whatever reason or purpose you decide to use cryptocurrencies, it is clear that they are going to be around for a long time. The world is always changing and cryptocurrencies might just be the next step in the evolution of economics.