EFASAND: What is the crypto- monetary system? Starter Guide

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Tuesday, 9 October 2018

What is the crypto- monetary system? Starter Guide

What is the crypto- monetary system? Starter Guide

A digital or virtual currency is a cryptocurrency designed to act as a tool for exchange. It uses encryption to secure and check transactions and monitor the creation of a specific cryptocurrency 's new unit. Cryptocurrencies are essentially limited data entries, which nobody can change without fulfilling particular conditions.

History of the cyrptocurrency in the world

In the 1990s, numerous efforts have been made to create a digital currency, with systems such as Flooz, Beenz and DigiCash on the market, but inevitably failing. There were many causes, such as fraud, financial problems and even friction between employees and their bosses.
The concept closely resembles peer-to-peer networks for file sharing.
One of the most important problems that any payment network has to solve is double-spending. It is a fraudulent technique of spending the same amount twice. The traditional solution was a trusted third party - a central server - that kept records of the balances and transactions. However, this method always entailed an authority basically in control of your funds and with all your personal details on hand.

Notably, all those systems used a third- party trusted approach to verify and facilitate transactions from the companies behind them. The creation of a electronic cash system was considered for a long time a lost cause due to failures by these companies. Then an anonymous programmer or group of programmers launched Bitcoin in early 2009 under the name Satoshi Nakamoto. It is completely decentralized, so there are no server involved and no central control authority. Satoshi described it as a' peer- to- peer electronic cash system.'
Each participant has to do this work in a decentralized network like Bitcoin. The Blockchain is a public directory of all transactions that have ever taken place on the network that is now accessible to all. Everyone in the network can therefore see the balance of each account. Each transaction is a file consisting of public keys( wallet addresses) of the sender and the recipient, and the amount of money being transferred. The transaction must also be signed with a private key by the sender. It's all basic cryptography. The transaction will eventually be spread over the network, but it must first be confirmed.

Miners can confirm transactions only by solving a cryptographic puzzle within a cryptocurrency network. They transact, identify them as legitimate and distribute them throughout the network. Each network node is subsequently added to the database. Once the transaction is established, the reward of the miner plus transaction fees will become unforgettable and irreversible. 

Basically, each cryptocurrency network is based on absolute agreement on the legitimacy of balances and transactions by all participants. The system would basically break if nodes of the network disagree on one balance.
However, the network has many rules pre- built and programmed to prevent this. Cryptocurrencies are called because strong cryptography guarantees the consensus- keeping process. This, along with the above factors, makes a concept completely redundant for third parties and blind confidence.

What can be done by the cryptocurrency?

1. Buy goods

In the past it was extremely difficult, if not impossible, to try to find a trader who accepts cryptocurrency. But the situation is totally different these days. Multiple traders are accepting Bitcoin as their payment– both online and offline.
These include large online dealers such as Overstock and Newegg, as well as small local shops, bars and restaurants. You can use Bitcoins to pay for hotels, flights, gems, apps, computer equipment, and even college degrees. 

Other digital currencies such as Litecoin, Ripple, Ethereum etc. are not widely accepted yet. But things are better, with Apple approved as a viable method of payment on the App Store for at least 10 different cryptocurrencies.
Naturally, Bitcoin non- Bitcoin users can always exchange their coins for BTC 's. In addition, Gift Cards sell websites such as Gift Off that accept around 20 different cryptocurrencies. With gift cards, anything with cryptocurrency can essentially be purchased.

 Finally, markets such as Bitify and OpenBazaar accept cryptocurrencies only.

Where can be invested by cyrptocurrency?

Many think that the biggest investment opportunity available at the moment are cryptocurrencies. In fact, there are many stories about people being millionaires by investing in Bitcoin. Bitcoin is the digital currency most recognizable to date, with BTC being worth $ 800 only last year. The price of one Bitcoin was more than $ 7,000 in November 2017.
A digital currency has demonstrated the fastest rise ever, Ethereum, perhaps second largest encryption currency. The value has grown by at least 2.700 per cent since May 2016. As for every cryptocurrency combined, since mid-2013, their market cap has grown by more than 10,000 percent.
It should be noted, however, that cryptocurrencies are high risk investments. They fluctuate like no other asset's market value. In addition, there is partly no regulation, there is always the risk that in certain jurisdictions, they will be outlawed, and any exchange of cryptocurrency may be hacked.
Obviously, Bitcoin remains the dominant one if you choose to invest in cryptocurrencies. However, its share in the crypto- market fell significantly from 90% to only 40% in 2017. There are currently many options, with some coins focused on privacy, some less open and decentralized than Bitcoin and some simply copying it.
While Bitcoins are very easy to buy- BTC trade is numerous- it is also not so easy to buy other cryptocurrencies. However, with major trade like Kraken, BitFinex, BitStamp and many more, this situation slowly improved. Litecoin, Ethereum, Monero, Ripple and so forth are starting to be sold. For instance, you can trade face to face with a seller or use a Bitcoin ATM, as well as some different modalities of coinage.
You need a way to save it once you have purchased your cryptocurrency. There are wallet service on all major exchanges. But it may sound convenient, but the best thing is for you to store your assets on your hard drive in an offline wallet or even invest in your hardware. This is the safest way to store your coins and allows you to control your asset completely.
You have to pay close attention to the market value of cryptocurrencies and to any information related to them, as with any other investment. Coinmarketcap offers a unique solution for tracking most existing cryptocurrencies ' prices, volume, circulation deliveries and market caps.
You may have to include this in your tax report, depending on your jurisdiction in which you live, once you have made a profit or a loss investing in cryptocurrencies. Cryptocurrencies are treated in terms of taxation in many different countries. In the United States, the Internal Revenue Service has decided that Bitcoins and other digital currencies should be taxed as property rather than as money. 

This means that for investors the accumulated long- term gains and losses resulting from trading in cryptocurrencies are taxed at the appropriate capital gains rate of each investor at up to 15 percent.

How is investmenting in cryptocurrency is useful?

Miners are the most important element in any network of cryptocurrencies and mining is an investment, much like trade. Miners provide their respective communities essentially with a bookkeeping service. They help to solve complex cryptographic puzzles, which are required for the transaction to be confirmed and registered in a distributed public directory called the Blockchain.

The difficulty of mining is constantly increasing, in line with the amount of people who try to solve it. One of the most interesting aspects is that of mining. The more people try to reduce the popularity of a certain cryptocurrency, the more difficult the process becomes.
Many people made fortunes through Bitcoins mining. In the days before, you can make considerable profits from mining on your computer or even a laptop with sufficient power. Bitcoin mining can be profitable nowadays only if you are willing to invest in mining hardware of industrial quality. Of course, this creates enormous electricity bills above the price of all the equipment necessary.
Litecoins, Dogecoins and Feathercoins are currently said to be the most economical cryptocurrencies for beginners. For example, you may earn anything with consumer hardware at the current value of Litecoins, from 50 cents to 10 dollars a day.
But what benefits can miners make? The more computer power they accumulate, the more likely the puzzles are to be solved. Once a miner succeeds in resolving the puzzle, they get a fee and a reward.
With more interest in a cryptocurrency, mining gets harder and a reward declines the amounts of coins received. For instance the reward of successful mining was 50 BTC when Bitcoin first was created. Now, the prize is 12.5 Bitcoins. This is because the Bitcoin network has been designed to circulate only 21 million coins.
Almost 17 million Bitcoins were mined and distributed as of November 2017. As rewards become smaller and smaller, however, each bitcoin mined becomes increasingly valuable exponentially.

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