A cryptocurrency is a digital or virtual currency designed to work as a medium of exchange. It uses cryptography to secure and verify transactions as well as to control the creation of new units of a particular cryptocurrency. Essentially, cryptocurrencies are limited entries in a database that no one can change unless specific conditions are fulfilled.
There have been many attempts at creating a digital currency during the 90s tech boom, with systems like Flooz, Beenz and DigiCash emerging on the market but inevitably failing. There were many different reasons for their failures, such as fraud, financial problems and even frictions between companies’ employees and their bosses.
Notably, all of those systems utilized a Trusted Third Party approach, meaning that the companies behind them verified and facilitated the transactions. Due to the failures of these companies, the creation of a digital cash system was seen as a lost cause for a long while.
Then, in early 2009, an anonymous programmer or a group of programmers under an alias Satoshi Nakamoto introduced Bitcoin. Satoshi described it as a ‘peer-to-peer electronic cash system.’ It is completely decentralized, meaning there are no servers involved and no central controlling authority. The concept closely resembles peer-to-peer networks for file sharing.
Where to Buy Cryptocurrency
Cryptocurrency can be divided into 100 million identical segments, which can be traded as small as tens of dollars. Individual investors can trade cryptocurrency on crypto-exchanges. Currently, there are two types of trading methods: Over-The-Counter (OTC) trading and crypto-pairs trading. OTC trading is done directly between two parties, without the supervision of an exchange. Peer-to-peer OTC trading allows users to trade directly with each other, similar to eBay’s model, online payment can be realized through online banking and PayPal. Some users also prefer transferring cash via banks offline. The crypto-pairs trading is similar to the traditional stock trading (the difference is that the crypto-pairs trading is carried out 24h), with the real-time bidding method adopted. Usually, the price is expressed in form of the crypto-pairs trading, such as ETH/BTC, which means the price of ETH is indicated by BTC. Users can set up market price trading and limit price trading online.