A cryptocurrency, as defined by Wikipedia, is “a virtual currency that functions like a currency in that it is backed by a promise of future repayment”. It is an entirely new system of money and banking, which have not yet caught on globally. Most cryptosystems use block chain technology, where all transactions are made between networks of computers instead of between actual currency machines. With its use, one can have all the privacy he wants without worrying about his financial background.
Many critics however, deride paid crypto signals Cryptocurrency as “fiat money”, arguing that no economic activity will take place without the use of money and this is the reason why many economies crumble every time there is a financial crisis. The latter may be true to a certain extent, but as Cryptocurrency is neither a fiat money nor a bank loan, there is no inherent risk in its use. Its main disadvantage lies in the fact that most governments around the world are wary of getting involved in the Cryptocurrency market, for fear of it becoming a victim of cyber criminals.
In spite of this, more people are starting to use Cryptocurrency and as such more people want to know how Cryptocurrency works. Some may be aware of Monero, the most popular of the cryptosystems, and may have heard of its recent surge in popularity (its previous name was Bitumen). Other popular Cryptocurrency out there include Namecoin, Peercoin, Dogecoin, and Featherstone.
One major advantage of Cryptocurrency compared to traditional money systems is that the supply of Cryptocurrencies never ends, unlike conventional money. This is a major advantage for the economy because it means that prices will always be able to fluctuate according to demand and supply. Another advantage of Cryptocurrency is that it is entirely computer based, unlike fiat money which has to be backed up by real physical assets like gold, silver, and other metals. So unlike fiat money, Cryptocurrency never runs out and is constantly being created out of thin air. One major disadvantage of Cryptocurrency is that it has a much smaller advantage when compared to centralized government currencies, mainly due to the fact that there are not enough centralised Cryptocurrency minting factories, thus the supply remains unstable.
The last disadvantage of Cryptocurrency is that it lacks the ability to be printed like conventional money, which is why another advantage of it is that there is not need for it in our current economy. For example, if you wanted to buy a hundred thousand pounds of Umbro, the Bank of England would not be able to mint it and set the price for you, therefore you would have to trade with another person for the product. Another example would be with the Forex market; if you wanted to exchange one currency for another currency, then you would need to have the right information available first before you can make a transaction. If you are trying to do this with a Cryptocurrency, then you will have to rely on the information you receive from your broker or perhaps you will need to pay a fee for their service.
As you can see, there are many different types of Cryptocurrency out there. Which ones you choose is entirely up to you, and what fits your lifestyle or goals best. Although some people are saying that there will never be another type of Cryptocurrency because there are so many bad examples of them already out there. Some of the most popular examples of Cryptocurrecties that were considered bad were the ones associated with organized crime, like the ones in the old Robocop movie or the original arcade game called CryptStrike. Even though those examples of Cryptocurrency were not as good as they could have been, they still served their purpose of being an example to deter other individuals from trying to create their own counterfeit coins. If you are looking for a Cryptocurrency that is easy to get started with, then probably the best choice for you would be Litecoin, although there are other good choices as well.