Crypto Currency

CRYPTO-CURRENCY AN INFOGRAPHIC GUIDE TO THIS MODERN FINANCIAL REVOLUTION WHAT IS CRYPTO-CURRENCY? Crypto-currency is an attempt to replace standard monetary transactions with a digital medium of exchange using peer-to-peer networking. There are numerous different cryptocurrencies, usually ending in the word 'coin'. They have no physical form, instead existing in a purely digital format. They can be used to purchase goods or services and are one of the currencies of choice for black market regulars. This is because they're decentralised, meaning there's no single governing body overseeing the transactions. BITCOIN - THE START OF THE REVOLUTION The Bitcoin (BTC) was the first cryptocurrency, developed in 2009 by Satoshi Nakamoto (a pseudonym). Bitcoins are created by a relatively slow computer process referred to as 'mining'. We'll cover this in more detail a little later. Since the introduction of Bitcoin, numerous other cryptocurrencies have popped up, using Bitcoin as their basis - a peer-to-peer system that relies on users to keep working. Here are some of the most well known: IP Litecoin Peercoin Gridcoin Blackcoin Dogecoin 2013 Namecoin 2011 2012 2011 2013 2014 HOW ARE BITCOINS MINED? There are a finite number of Bitcoins available, and for new Bitcoins to be introduced they must be 'mined' by people around the world. Currently, users are rewarded every time they add a 'block' (we'll explain this below), with the reward halving every four years. Eventually, the reward will be removed entirely when an arbitary limit of 21 million bitcoins is reached, which is expected to happen around the year 2140. Let's have a look at what's involved in mining Bitcoins: Bitcoin Client In order to receive Bitcoins, as well as download the blockchain, users must Mining Options Users must then decide whether to mine individually, or to mine as part of a 'pool' - a team of computers all mining coins together. first download a client - software used to send and receive Bitcoins. Confirming Transactions The job of the miners is to take all the information in a block and put it through a process designed to confirm the transactions. The Blockchain The Bitcoin network collects all transactions made during a set period into a list, called a block. These blocks make up the blockchain. The Hash Secure Records %23 Each block hash is unique, and is generated in part using the hash of the previous block. This creates a digital 'wax seaľ, keeping it secure. Miners turn the information in the block into a sequence of letters and numbers - via a mathematical formula - and this is known as the Hash. Private Key Once Bitcoins are successfully mined, a hidden secret key is generated to permit access to the Bitcoins. If this is lost, the Bitcoins are gone forever. Rewards Miners compete with each other to seal off a block, using specially designed software. Everytime someone creates a hash, they are rewarded with Bitcoins. THE VALUE OF CRYPTOCURRENCY Like any currency, the value of any given cryptocurrency can fluctuate dependent on several market conditions. Although cryptocurrencies are decentralised, elements such as market confidence and available applications (for example how many places they can be spent), as well as scarcity and security play a key role in how much any unit of a given cryptocurrency is worth. Let's have a look at the number of Bitcoins in existence and their value over time as an example: Bitcoins in existence (2009-2015) Value of Bitcoins (2009-2015) 15,000,000 $1250 12,000,000 $1000 9,000,000 $750 6,000,000 $500 3,000,000 $250 $0 SHOULD YOU INVEST IN CRYPTOCURRENCY? Many people have been treating cryptocurrencies like Bitcoin and Litecoin as investment vehicles, hoping to make a profit if and when the value of their currency increases. Like other assets such as gold, cryptocurrencies can offer a form of portfolio insurance, due to their decentralised nature. But should they be seriously considered for investment? How to they compare to precious metals such as gold and silver? Let's compare a currency like Bitcoin to gold: Gold Bitcoin Gold has long been utilised as a means of exchange, but it is not easy to carry and generally not suitable for small exhanges. On the other hand, gold is far more stable and has a value in Bitcoin is easy to carry and store, and can be used for both small and large transactions. Its volatile value also leaves room for large profits. However, it's very young and isn't accepted in many places. all areas of the world. Gold is probably a safer investment at the moment, but as merchant acceptance & use of Bitcoin increases, it may become a genuinely strong long term investment Sources: BBC.co.uk | Bitforum.info | Coindesk.com Blockchain.info | Cryptocoinsnews.com Startbitcoin.com | Techradar.com | Wikipedia.org Computerworld.com | Engadget.com | Heavy.com Thebitcointrader.com | NYMag.com BUNY loans