Bitcoin and Ethereum have teamed for blockchain technology. For any currency to be both viable and usable, the people using it have to trust it. When making transactions online, this trust can be difficult.
The whole point of inventing cryptocurrencies, which started with Bitcoin, was to make a new model for this trust by effectively removing the middle man from a transaction. This means that the user no longer has to trust a third party, such as a bank or a government, and knows that their money is going where it needs to go.
Instead of using a third party, cryptocurrencies place their trust on a decentralized computer program, due to a technology called a blockchain, it is incapable of defrauding anyone.
Traditionally money is seen as something tangible, something that you can hold and see, like a coin or note. Even if the money is stored online, such as in an online bank, it can still be withdrawn in the form of physical cash if needed.
However, in 2008 this all changed with the development of Bitcoin, money that is by no means tangible, yet it does in many ways mimic the way that cash is used to make a transaction.
When cash is spent, you can spend it only once. It is transferred and there is no fee to do it. Now when you use a credit card or debit card, the bank – which is the third party – they knows the transaction that you have made and simply adjusts your balance accordingly.
No money has actually exchanged hands, but you are charged a fee for all this to happen. With Bitcoin technology, it allows anyone to transfer Bitcoins to someone else in a secure way, plus it removes the third party which also removes the transaction fee. Instead, adding the transaction to a blockchain of data.
There are so many benefits to using a cryptocurrency, that it would seem foolish to neglect such an invention. For example, it allows you to send money anywhere in the world in an instant, with basically no fees involved. Everyone can be included in the financial system, it will change the way we interact with money, it can prevent fraud, and much more.
Bitcoin was the first of these cryptocurrencies to come into play, but it is by no means the last. In 2015, there was a staggering 669 cryptocurrencies already in use and that number continues to grow. Some of the most well-known of these include Dogecoin, Ethereum, Litecoin, Peercoin, and Ripple to name a few. The appeal of these lies in the fact that the users have ultimate control over their money and how it is used. Slowly it will start to change our understanding of the concept of money and what it represents. The range of uses is growing, and this is well and truly the age of the cryptocurrency.
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