What’s The Real Deal With Cryptocurrency?
Traders these days have plenty of new technologies to work with, including trading turrets and dealer board options from Market Communications and other providers. While the basic economic concepts of trading in the financial markets haven’t changed, advancements in technology are ever-evolving. Savvy traders and financial companies need to stay on top of changes in technology in order to have an advantage, but it can be hard to do this when confusing technologies like cryptocurrency enter the fray.
Cryptocurrency, often shortened to just “crypto”, is a digital currency that is gained through mining. It can be spent like fiat currency, but not at retail stores. It has a limited supply like fiat currency, but it can’t be printed like currency. Cryptocurrency has exchanges that allow for trading using cloud-hosted trader voice solutions and hosted trader platform providers just like fiat, but cryptocurrencies aren’t traded like fiat in the stock market where trading turrets abound. Sound confusing? That’s because it is.
The History Of Cryptocurrency
Before getting into the truth behind crypto, it’s first important to understand how crypto came to be. People have toyed with the idea of alternative digital currencies for decades. In the 1980s, cryptographer David Chaum created a digital cash solution, but it wasn’t until 2008 when Bitcoin hit the scene that people really began to get behind the crypto movement.
Today, crypto has moved beyond Bitcoin, although Bitcoin is still a major cryptocurrency option that has seen a massive growth in value. People can create their own cryptocurrencies, often referred to as “coins”, and these can be traded among adherents of the principles of crypto.
How Does Cryptocurrency Work?
If you’re used to working with newer trading technologies like turret as a service and hosted trader voice protocols, you may find yourself right at home with crypto since it relies on digital networks to record transactions. The way that crypto is created is that it must be mined. This is done using computers which are required to put in long hours of service solving complex math problems. Serious miners will set up entire mining operations in which dozens of computers work day and night to liquidity provider constantly solve these problems in order to mine bits of crypto.
Cryptocurrency coins can be split. This means that you don’t have to have a full coin in order to have value in crypto. You also do not need to spend a full coin in order to use crypto. One way to think about the value of cryptocurrency is like a dollar bill. You can break a dollar down into 100 pennies, but you can also break it down into four quarters, ten dimes or 20 nickels. You can also further break these fractions down into different configurations of coins. Crypto can be broken down in the same manner.
Ok, So How Do You Spend Cryptocurrencies?
The really confusing thing about investing in crypto is that you can’t withdraw funds against the investment as easily as fiat. You can spend your cryptocurrency with vendors who accept it, but how does this translate into real-world goods and services?
Most transactions involving crypto take place in the digital realm. This makes sense since crypto is a digital currency. If you want to go down to the corner store and buy a pack of gum with your crypto, however, this isn’t going to be so simple. Solutions do exist whereby you connect your crypto wallet to a Visa or Mastercard debit card. This allows you to spend your crypto like cash. You can also sell your crypto on a digital exchange for cash which is then transferred into a traditional bank account.
There are many other complexities involved in investing in crypto, so it would be advisable to speak with a financial planner or investment professional if you want to get in on the action. What the future holds for crypto is anyone’s guess, but for the moment, it does seem to be a tantalizing investment opportunity.