So, What exactly is a Bitcoin and Cryptocurrency? Cryptocurrency is a form of digital money which has no physical form. Unlike traditional fiat currencies (pound, euro, dollar, etc) true decentralised cyrptocurrencies are not issued by any government.
Instead, they are released as open source software that anyone with a computer, tablet, or smart phone can easily participate in.
Cryptocurrencies can be thought of as a ‘digital cash’. Bitcoin (BTC) was the original and still the most well known example of this. Like cash its peer-to-peer, it allows anyone to transact with anyone else but with the added benefit of being digital. This means transactions can take place across the world without any intermediary or third party to facilitate or give permission.
As there are no banks, or third party payment processors cryptocurrency transactions are very cheap and fast when compared to traditional means of money transfer. Sometimes free.
Since the first bitcoin was mined in January 2009 there has been some amazing innovation within the cryptocurrency space. Huge steps have been made to drive forward decentralisation.
Projects like Ethereum are becoming more than just a peer-to-peer digital payment system. Ethereum is a decentralised virtual machine capable of running code and executing digital contracts without any intervention from a trusted party.
Today, there are thousands of cryptocurrencies in circulation. These projects are known as alt coins. Alt coins are basically any project that isn’t bitcoin. A great resource to learn more about some of the major alt coin projects is upfolio.com.
Whilst some of these have real potential, genuine use case, and some fantastic developers and programmers working on them, others are scams and/or have no real purpose. Its important to do your own research before investing in any cryptocurrency.
The short video below explains in slightly more detail how the Bitcoin network works and how transactions are validated.
Buying cryptocurrency as a speculative investment is high risk, NEVER INVEST WHAT YOU CAN’T AFFORD TO LOSE.