For a time, the world has halted to a standstill because of the massive disruption brought about by the COVID-19 pandemic. People and businesses are on the way to changing their day-to-day activities and operations whether they like it or not. Others, including those in the crypto industry, have learned to use cryptocurrencies to stay ahead of the competition.
So how do cryptocurrencies work amid the changing economic landscape? And how do these people make cryptocurrencies work? Let’s find out.
In nature, cryptocurrencies have different uses and purposes. Typical cryptocurrencies have the purpose of becoming an alternative money option, which can be used for trading and stores of value. Others function as utility assets, which means that they have an actual use or uses for people within a specific ecosystem or service. They use these utility assets to access products or services that are exclusive to a niche or market.
Even more so, many people who once showed animosity toward cryptocurrencies including Bitcoin have somehow become sober and are now opening their minds to the possibility of cryptocurrencies as a potential store of values. In fact, many people including banks are considering Bitcoin as digital gold. As a result, many cryptocurrencies today are increasing in valuation as many people are reconsidering their investment portfolio amid the pandemic.
In the near future, many countries are also expected to create their own version of cryptocurrency in the form of central bank digital currencies (CBDC). These will showcase blockchain technology's amazing properties, prompting more people to jump ship into cryptocurrencies.
In summation, how do cryptocurrencies work in today's situation? Firstly, they are now becoming stores of value, just like precious metals like gold and silver today. Secondly, they have specific use cases that enable people to access a particular product or service in a unique market or ecosystem. Finally, they are modeling a new class of money which could very well be adopted by governments and large groups in the future.
Cryptocurrencies use decentralized technology so that the users can have secure payment and also they can store the money without using their name and they do not also need to visit a bank for that. Cryptocurrencies run on a distributed public ledger that is called the blockchain. It records all transactions done by users and all the currencies that the holder has with him.
Mining is the process that creates the units of cryptocurrencies. Mining is used to solve many complicated maths problems that generate coins. These cryptocurrencies can be also purchased by the brokers and store or spend through cryptographic wallets.
What are the most common cryptocurrencies?
Bitcoin (BTC): Bitcoin is the first-ever cryptocurrency and is the most commonly treaded cryptocurrency. Bitcoin was developed by Satoshi Nakamoto in 2009.
Ethereum (ETH): Ethereum is a currency token that was developed in 2015 and is used for the Ethereum blockchain. It is the second most used and popular cryptocurrency after Bitcoin. It gained huge popularity in 2017.
Ripple (XRP): Ripple is a distributed ledger and was found in 2012. It is used to track different kinds of transactions other than cryptocurrencies.
Litecoin (LTC): Litecoin is a currency that is similar to bitcoin. It was launched in 2011. It is an open-source and global payment network.
Bitcoin Cash: Bitcoin Cash is a kind of digital currency that was created to improvise some specific features of Bitcoin. It increased the size of blocks that allowed more and faster transactions
Zcash (ZEC): Zcash is another digital currency that is built on the Bitcoin code. The main difference that Zcash has is that it is an emphasis on privacy.
Stellar Lumen (XLM): Stellar Lumen is a currency that allows you to exchange currencies. With the help of stellar, you can send any currency to someone who owns any other currency. It was founded by Jed McCaleb in 2014