It’s nearly impossible to read financial or tech news without coming across talk of virtual currencies –more specifically, Bitcoin or Ethereum. So we’re here to tell you what it’s all about, and why you should (if you haven’t already) join the movement.
What is virtual currency?
Virtual currency (also known as “cryptocurrency”) is a new form of purely-electronic money that acts as an alternative to the regular national currencies we’re all familiar with, such as Dollars or Euros. Virtual currency is not funded, regulated or backed by governments or central banks.
Why should I use virtual currencies?
Virtual currencies work much like regular money, allowing to purchase goods and services. Virtual currencies can be cheaper, easier, and faster than traditional banking or payment services, especially if sending money internationally. Virtual currencies offer you full control over your own money, as you don’t have to rely on a bank or company to manage them on your behalf. Another benefit of a major virtual currency like Bitcoin is that its value has increased significantly since it was launched in 2009.
What is Bitcoin?
Bitcoin is a virtual currency that enables you to immediately make payments to people around the world for a flat fee, meaning you can transfer millions or even billions of Dollars in value for a few bucks. The Bitcoin software is open source, meaning it’s free to download and its code is public for anyone to check. Since its creation and to this day, Bitcoin is the most popular and valuable cryptocurrency.
New bitcoins are created through a process known as “mining,” in which people run the Bitcoin software on specialized computer hardware, competing to solve computational “puzzles” that secure the Bitcoin network while also verifying and recording all transactions sent over the network.
Bitcoin is quite a complicated subject. While it serves the same functions as regular money – sending and storing value – the way it works is very different to national currencies. Still, the fact that Bitcoin has become so valuable and has been running without any serious interruptions since 2009 is reason enough to take it seriously as a new form of money.
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What is Litecoin or Ethereum?
Litecoin and Ethereum are cryptocurrencies, just like Bitcoin. They function in a similar manner as they’re based on the same technology as Bitcoin, with some modifications. Litecoin and Ethereum can also be used to store or transfer value. Being code-based forms of money, all virtual currencies allow people or companies to create new financial applications, and Ethereum is specialized to allow for the easy creation of such apps.