The Cryptocurrency Phenomenon

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The Cryptocurrency Phenomenon

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The cryptocurrency Bitcoin was created in 2009 and its slow increase in price went mostly unnoticed until 2016. During this year, Bitcoin and other cryptocurrency investors predicted a major spike in price in 2017.

 

This prediction came true in December of 2017 when Bitcoin reached a peak value of $19,783.06 per bitcoin. This sudden boom in price and popularity brought this cryptocurrency to center of American media.

 

This price, of course, has declined rapidly since this peak and as of March 2019, the price per Bitcoin rests at around 4,016 U.S. dollars, but the interest from this peak still exists.

 

The explosive increase in value has everyone interested in the world of cryptocurrency, even if they are clueless about how investing in it works opening the question of what is cryptocurrency?

 

According to Jake Frankenfield of Investopedia, cryptocurrency, at its base level, is a digital currency that uses cryptography (a set of mathematical codes that only the buyer and seller can read) to protect transactions.

 

This Crypto security is reinforced by the organic nature of this digital currency. This means that the government has no control over any aspects of it.

 

Cryptocurrencies and their cryptographies are built on a foundation of blockchain technology. Blockchain technology is a system that stores information about previous transactions and expands over a peer-to-peer network of computers.

 

The blockchain system follows a series of steps when new transaction data is added to it. Luke Fortney of Investopedia outlines the steps as 1. The transaction occurs, 2. The transaction becomes verified, 3. The transaction is then stored in a “block” on the chain with others like it, and 4. The block is given a hash (identification code) that creates a unique addition to the chain.

 

Once the transaction information becomes part of the blockchain, it is made public. Anyone can view these transactions if they navigate through the chain. This chain is maintained with identical copies that span over several networks (peer-to-peer) preventing any major forms of buyer/seller manipulation.

 

Another important factor about cryptocurrency is how tokens are created and who receives them.

 

This creation of token is controlled by cryptocurrency miners. Miners gain new tokens by assisting in the verification step of adding a transaction block to the chain. Miners are rewarded with cryptocurrency tokens for helping and monitoring the blockchain process.

 

Without these miners, the blockchain and the cryptocurrency’s market could be abused by one body of power.

 

Mining cryptocurrency does not come without a price. A powerful computer rig or setup is required to efficiently mine. The rise in popularity of mining has inadvertently caused computer part prices to rise, such as GPUs (graphics processing units).

 

The uses of Bitcoin, security of its transactions, and its place away from political or governmental influence is causing a constant growth in appeal and the creation of other forms of cryptocurrency.

 

A few examples of other popular cryptocurrencies include Ethereum, Monero, and Litecoin. These currencies have not gained the level of popularity showcased by Bitcoin, but they do offer certain aspects that it lacks.

 

The growth of cryptocurrency shows no signs of slowing down and has the potential to become common use when participating in online transactions and investments.

 

For more detailed information about cryptocurrency and the mining process visit: https://blockgeeks.com/guides/what-is-cryptocurrency/#What_is_Cryptocurrency_Monetary_properties

 

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