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You may have heard people saying using the name Bitcoin, or maybe you have read somewhere about a trend called cryptocurrency. The name has been used a lot recently, but the history of cryptocurrency is over ten years old. There is much to learn about how cryptocurrency works, and why it has been talked about and bought by millions of people across the world.
A cryptocurrency is a digital asset that is distributed across a network that is secured by cryptography and blockchain technology, which makes it almost impossible for the coins to be counterfeit or double-spent. Many of the cryptocurrencies are decentralized, meaning these virtual coins are harder for governments to control, but we have seen governments such as China and Turkey try to limit the purchase of cryptocurrencies. China has been cracking down on the purchase of crypto due to the highly volatile market, which has recently caused the price of many top coins to fall.
Bitcoin has taken the center stage as the most profitable and well-recognised coin, with the value rising almost 20,000% since 2009, and it has an enormous market cap of $927 million. There seemed to be countless news articles about people who had invested in Bitcoin years prior, only to find their investment had grown by millions. Bitcoin was launched by a mysterious figure called, “Satoshi Nakamoto”. It is still not known if the name refers to a group or an individual. There is a paper that was published in 2008 that gives us an insight into the creation of Bitcoin.
Titled, Bitcoin: A Peer-To-Peer Electronic Cash System, aimed to create a solution to double-spending, which is a problem that digital currency could face and is unique. Previously, the solution to double-spending would be with the help of trusted third-party mediators that would be capable of verifying if any coins had already been spent by its owner. The risk is still there with this solution, as trusting a third-party mediator can bring its troubles. There had to be another solution, which eventually led to the creation of blockchain, which leaves a timestamp on the transaction, making a record that cannot be changed. This helps to build the security around Bitcoin, and other popular cryptocurrencies.
Cryptocurrencies can be purchased simply through secure exchanges, such as Coinbase, Binance and Robinhood. Once an account is created, you have to verify your identity, and then use your bank card to purchase whichever coin you prefer. Bitcoin is not the only popular cryptocurrency available, there are over 4000 available as of January 2021. All these coins have their functions and show massive potentials, such as Ethereum, Ripple and Litecoin. Some coins exist just to make money and jump onto the popularity that cryptocurrency has, and have no real purpose or function like Bitcoin, and these are called meme coins.
Meme coins are cryptocurrencies that have gained a large amount of popularity in a short amount of time. This can be due to influencers promoting the coin, the best example of this would be with Elon Musk’s promotion of Dogecoin, the first and most popular meme coin. Dogecoin is now one of the most popular coins available and is changing its reputation to a cryptocurrency with much respect, and after the large amounts of the profit people have made from Dogecoin, it is seen as a real competitor.
Cryptocurrency will continue to grow into the near future as its technology advances. There are many hurdles in the growth of cryptocurrency, but it appears as if coins such as Bitcoin are going to continue to grow. Many believe in the potential advantages of cryptocurrency, such as its capabilities of preserving value against inflation, its fast transfer time, and its ability to be divided without having central banks or a governments influence. If coins such as Bitcoin continue to advance and make overnight millionaires, it will be very difficult for anyone to ignore the potential cryptocurrency has.
Saffron Invoice Finance is part of FCA regulated Saffron Asset Finance.
It specialises in offering securitised working cash injections to viable SMEs businesses. Invoice Finance enables you to release the cash tied up in outstanding customer invoices, so you don’t have to wait weeks or months for payment.