A cryptocurrency, otherwise known as digital currency, is an asset that is designed to function like a traditional currency but where the ledger and records used to track it are not physical. Rather, the assets’ records are held in a virtual online ledger called a “blockchain”. Transactions made with the help of this online virtual ledger are recorded and logged by a network of computers instead of by a particular physical computer system. The most common assets that are stored in such a system include stock, options, bank deposits, gold, and private currencies. Investing in cryptoshares has become a very hot trend, with more institutional investors joining the fray on a daily basis.
A distributed ledger refers to any ledger that is not centralized. Distributed ledgers are much like the database in your home computer. Your home computer would be the “head” of the chain in this case. A decentralized ledger, therefore, would be the equivalent of the Internet in the world of digital currency.
A lot of people are wary of investing in any sort of new technology for fear that it will not be secure enough to protect their funds and their private information. With the growing use of the Internet for day-to-day transactions, people are turning away from traditional institutions and opting for less regulated and safer Internet-based systems. One of the best ways to get into the market without having to worry about security issues is to invest in the currency of a decentralized nation state, such as that of the United States of America. The US dollar itself is the Fiat currency that powers the economy of the US.
In addition to being safe from hacking and fraud, using the US dollar as the major currency in Cryptocurrency transactions makes it easier to track past transactions and make sure that the money is properly credited in case of future transactions. Many governments around the world have begun issuing their own Cryptocurrency in an attempt to take control of the economy of their country. This has prompted many more private individuals to jump into the business and offer Cryptocurrency trading services.
Unlike the various forms of alternative currencies being offered by private investors, the government issued Cryptocurrency and is the sole legitimate owner of the valuable virtual asset. While most people associate Cryptocurrency with private investors and companies, the truth is that the government itself is involved in Cryptocurrency trading on a daily basis. All of the major central banks to print their own currency; however, it is the central banks of the world that dictate which virtual currency they wish to issue. Because of this, it is only natural that the value and worth of Cryptocurrency should be based on the general value of the US dollar.
There are two major types of Cryptocurrency that are used for day to day transactions. These types of Cryptocurrency include centralized Cryptocurrency such as the US dollar, and decentralized Cryptocurrency such as Litecoin and Bitcon. With regards to which Cryptocurrency is being used for transactions, both types are useful for conducting monetary transactions. However, there is currently not enough liquidity in centralized Cryptocurrency to make it worthwhile for most traders.