If you’re reading this, then chances are that you’ve heard of Bitcoin. But what about Ethereum? Litecoin? Ripple? These cryptocurrencies have been making headlines as their prices soar to unprecedented heights, but how do they work and why should you invest in them right now? In the following article, we’ll explore what cryptocurrency is and how it’s impacting our future.
Cryptocurrency is a digital currency that has no physical form and typically exists only on the internet. It can be exchanged online for other computer-generated currencies or real-world goods, services, or money. Each cryptocurrency is unique because of how it’s generated by its own network system (for example Bitcoin’s mining algorithm), which in turn sets a value for each unit of currency.
Cryptocurrency is generated by the network and distributed to miners, which are people that contribute their own hardware or time to generate more currency through solving complex math problems. The amount created in this way can then be sent between two parties without a need for an intermediary like PayPal or Visa because all transactions are recorded and protected by a consensus of the network.
Ethereum is different from Bitcoin because it’s not just one currency, but can also be used to run programs and store data on its own blockchain. It’s generated through mining like Bitcoin, however with Ethereum miners are rewarded for completing contracts instead of generating more coins like they do in other cryptocurrencies.
Litecoin and Ripple are also popular alternative cryptocurrencies that work in different ways than Bitcoin. Litecoins can be mined by anyone with a regular computer or laptop, which makes it more egalitarian to create new coins. Ripple relies on people who have money (known as “validators”) to oversee transactions and confirm them for the network. This gives a central power to Ripple’s network which is a departure from other cryptocurrencies.
Investing in cryptocurrency can be risky, but the potential for high returns makes it worth exploring if you know where and how to buy these assets. Bitcoin has been around since 2009 while Ethereum started trading at $0.31/ETH on August 30th 2017; those who bought into Ethereum in the early days are currently seeing massive gains.