A new era has arrived â€“ if before we had credit cards and debit cards that drew upon our cash accounts, now itâ€™s as though someone took those actual banknotes and coins from under our mattress â€“ the ones we didnâ€™t want anyone to know about â€“ and uploaded them to the cloudâ€¦ no more plastic intervention. And now that the money is in the cloud, we can access it immediately and itâ€™s safe â€“ even without requiring a bank vault. In fact, no more plastic OR banker middlemen to lose it for us.
Cryptocurrencies arenâ€™t money assisted by code â€“ they are monied code, digital assets that have been created as, are transacted as, and continue to be data only. Their existence is based in and closely monitored by an ever-growing decentralized network of computers â€“ a guarantee of online, redundancy-backed security and transparency. A bank robber can rob a bank â€“ he canâ€™t rob ALL the banks at once. On the other hand, no more underhanded payments, black markets and fraud. The hopes of anti-corruptionists are hugely dependant upon this new technology.
So what are these cryptocurrencies?
Cryptocoins are sequences of encrypted code that are transferred between peers. Their existence and transactions are recorded in public ledgers, which are maintained by everybody who cares to donate his/her computer to the effort. Get paid for a job, pay for a new card: the transaction is immediately recorded in several places at once.
At present, there are a growing number of cryptocurrencies, each with its own technology and goals; and none of them are regulated by a government or para-governmental institution. The result is volatility in dollar-worth, aided and abetted by growing demand, growing concern of the bursting bubble and the near-hysterical news cycle.
Meanwhile, the technologies cryptocurrencies are riding upon are slowly making their way into the institutional fiscal environment, as central banks begin to consider the technology and governments â€“ the pros and cons of a cloud-based digital currency.
Cryptocurrencies are created by â€œminersâ€, who act as record keepers. They are the ones who write the code that then becomes a cryptocoin and manage the ledgers that verify the blockchain â€“ a master ledger that stores all coins, validates ownership thereof, and transactions. Users download â€œwalletsâ€ that confirm them as owners of a coin, acts as a personal ledger and enables transactions. Wallets can be stored on any digital device or in the cloud.
Each cryptocurrency created, incorporates a limited number of coins by definition. The result is that, as demand increases, the value of each coin increases. Users are attracted by the transparency and security, on one hand, but also the privacy and anonymity of ownership and transactions. They are free of government and banking interventions and form an independent financial environment. Soon after their advent, their valuesÂ shot up, proving them to be a highly volatile but worthwhile investment.
Recently, more and more investment platforms are incorporating them as either commodities or forex pairs, enabling traders to invest in options and contracts that cover their value.