Rapid technological advancements coupled with digitization have transformed almost every aspect of modern-day human lives. People interact with technology as the first thing they wake up to every morning.
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Rapid technological advancements coupled with digitization have transformed almost every aspect of modern-day human lives. People interact with technology as the first thing they wake up to every morning. But this is not all that technology is changing today because it is also transforming how we manage our finances.
The advent of the first cryptocurrency, Bitcoin, in 2009 has transformed the finance world extensively. Transactions have now become cheaper and more efficient while enabling people to leverage the perks of decentralization. As a result, cryptocurrencies have become very popular in the past couple of years.
Despite this popularity, there still remains widespread confusion about the basics of cryptocurrencies and blockchain. So let's try and address some of those confusions with a better insight into cryptocurrencies.
Before we dive into the nuances of cryptocurrencies, it is first important to understand blockchain, the technology that supports cryptocurrencies. Blockchain has proved to be one of the most significant technological revolutions in recent times. It is the technology that allows you to share information safely and securely.
This means the tech will store your data on a database, and record all your transactions in a digital accounts book called a ledger. This has made blockchain one of the most popular technological trends of modern times. The best thing about blockchain is a single centralized authority does not manage it.
Instead, the power of updating a blockchain is distributed between participants called nodes within a public or private computing network. This is known as the DLT or distributed ledger technology. Participants within a blockchain network can then earn incentives in the form of digital currencies called cryptocurrencies.
Now that you clearly understand blockchain technology, it is time to wrap your head around cryptocurrencies. Cryptocurrencies are digital currencies running on the blockchain network. This means they do not rely on any bank or centralized authorities such as the government to regulate them. Instead, the participants within the blockchain network verify transactions and create blocks to facilitate cryptocurrencies.
These currencies are excellent for sending and receiving peer-to-peer payments in any location around the globe. Every crypto transaction is recorded on the blockchain's digital ledger, and you can store your crypto assets in digital wallets. Accessing your crypto assets will require you to have a unique private key for every participant.
Bitcoin was the first cryptocurrency launched in 2009 and still remains the largest crypto to this day. Most people are interested in crypto assets for the earning potential they offer. But this is changing as crypto projects are now more focused on providing users with something new and unique instead of mere financial gains.
All your crypto assets are digital, which means you cannot store them in a vault or wallet as you do with your conventional fiat currencies. Instead, you will need to store your crypto assets in a digitized crypto wallet. These wallets can be physical devices or online software designed to store your private keys.
Certain crypto exchanges might provide dedicated wallet services to make things more convenient. But this is not the case with all crypto exchanges, so there might be cases where you need to use your own wallet service from a third party. Conventionally, you can store your assets in two different types of crypto wallets.
The first is the hot wallet which means crypto storage that leverages the internet to secure your assets. The other is the cold wallet, also known as the hardware wallet, which is not connected to the internet. This means storing your private keys in offline electronic or other devices to store your assets safely. In most cases, cold wallets are known for being more secure since there is no way hackers can access them.
The world is still adjusting to the idea of cryptocurrencies, but this adjustment is happening much faster than one would imagine. With each passing year, more businesses are warming up to the idea of accepting cryptocurrencies as a legal tender.
Some of the most popular things you can buy using crypto assets include luxury goods such as watches, cars, and much more; popular brands such as Rolex accept Bitcoin in exchange for their products. Besides that, you can even buy insurance policies with your crypto assets.
Prominent insurance provider AXA has also started accepting Bitcoin as a payment mode. These are just a few of the many ways you can spend your crypto assets and derive value from them.
Tip:
If you’re a new business you needn’t spend behind creating a payment gateway. Instead, you could be accepting crypto payments via Coingate plugin at no extra cost.
Bottom Line
Technology is changing this world at a breakneck pace and humans need to make the most of this advancement. Cryptocurrencies are an excellent example of how technological advancements can change human life for good. So, keep this in mind and make the most of all that crypto assets offer.
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