What is digital currency and how can it function?

The digital currency (DC) can be found in many forms such as online games, electronic cash or money apps, cryptocurrencies, and more. In this article we’re going to discuss how and why DC is useful and whether it’s relevant for the future economy and what’s in store for both governments and businesses in the new era of commerce.

Who Needs a Digital Currency If there are any advantages?

When used by consumers to exchange goods and services, digital currencies have several advantages over traditional, bank-issued, non-financial currencies like US dollars and Euro. First off, the amount that consumers can transfer is limitless. There are literally more transactions than you could possibly know about and those numbers multiply every day. For instance, on May 13th, 2020, a woman transferred $20,000 worth of Bitcoin to her boyfriend using PayPal. Second, if a customer has enough funds to buy 20 items with Bitcoin, they can do so without having to hold multiple bank accounts. Third, in places without physical banks on site, digital currencies are also not susceptible to robbery or theft.

How Does Money Work in a Crypto World?

There are two types of cryptocurrency known: general-purpose tokens, which are a type of cryptocoin or internet currency that allows us to send money globally and exchange value; and private currencies, the most common being bitcoin or Ethereum, where cryptocurrency can be sent, stored, given or given out, then returned through specific exchanges on a decentralized ledger system. A general purpose token is like PayPal, eBay, Google Play Store, Spotify, Uber, Apple Pay and other digital companies. People use these coins to pay for everything from services with Amazon to buying movie tickets with iTunes. Private currencies can be any crypto wallet, like some major financial institutions such as Wells Fargo, Bank of America, MasterCard and Visa, as well as global payments methods like Facebook Pay and Instacart. The total supply of all cryptocurrencies in circulation is around 21,000,000. This means that each individual person’s wallet holds roughly 21,000 Bitcoins. With billions in circulation, the average Bitcoin owner controls 2 percent of them. That means the user’s balance is worth between 3 and 6 percent of the world’s total digital currency. More recently, the price of bitcoin has fallen sharply by 50% in less than three weeks. However, the current market cap of $75 billion indicates that even 1 bitcoin currently is worth around 15 dollars. These cryptocurrency projects are mostly limited to people who want to send large amounts of money around or to transact online. They’re also often tied up with large financial institutions like Barclays or PWC who manage their own wallets.

 

How does Bitcoin work?

Bitcoin was created in 2009 by an unknown person or group of people under the name Satoshi Nakamoto. He later released a white paper explaining his vision for Blockchain technology and other similar concepts, such as how Bitcoin works. Although he didn’t publish full code until 2011, the first version of open software called “Bitcoin.org” allowed the public to generate bitcoin mining computers using free GPUs. At the time, these were considered expensive, but the community quickly learned that the hard-coded program is nearly identical to basic computer code, allowing anyone with no knowledge about coding to make a copy. As Bitcoin grows, so too will its popularity. We’ve seen hundreds of thousands of Bitcoin transactions since January 2018, the last official date of use, and we plan to end 2019 with over 100,000 daily transactions. Currently the Bitcoin network in existence contains approximately 12.5 million addresses and it’s expanding at an unprecedented rate. The top 10 addresses hold over 4.3 million Bitcoins while there are only about 7,000 to 10,000 addresses holding just a few thousand Bitcoins. Since the vast majority of Bitcoin users are based in China, Bitcoin transaction fees are fairly low in comparison with many international payment systems. Additionally, when trading cryptocurrency in your local area, small service providers like DoorDash, Uber and Zomato can also add Bitcoin into their platforms if needed. While the initial coin offering (ICO) for Bitcoin had raised only about $2 million in 2012, by December 2013, investors were making investments of more than $1 million. On October 5, 2014, Satoshi Nakamoto claimed his Bitcoin project had become “minable” after the hash rate of Bitcoin reached 21 million, and he successfully mined 51 Bitcoins in 2016. After this discovery, several people began talking about creating alternative cryptocurrencies that would replace the original Internet’s central nervous system, and after years of research and testing out different ideas, the Proof of Stake (PoS) consensus finally emerged as a reliable solution. To verify ownership of a digital asset, blockchain transactions record “blocks”, and Bitcoin enthusiasts now have one less thing to worry about.

How Much Do I Need?

Bitcoin is a cryptocurrency backed by a unique cryptography algorithm. You can spend unlimited amounts of BTC at merchants. But if you’re looking for something specific you need to check:

Bitcoins are divisible: you don’t necessarily need a whole Bitcoin to start your shopping spree. One Bitcoin equals 0.09071857 BTC and a purchase of $100 worth of Bitcoin equates to $1 USD. Also, you can purchase bitcoin using PayPal or another third party app. So if you purchase $10 USD using PayPal, you can receive BTC for $1 USD. Or if you use Apple Pay, you can withdraw $1 USD. Any other company that accepts bitcoin payments will accept BTC as payment and Bitcoin will never pay you back any commission. For example, to buy a pair of Nike AirDrops, you can send $10 USD to your Bitcoin wallet.

Bitcoin requires minimal storage: Bitcoin is made for online transfers and storing a single Bitcoin is very easy. Even if you’re planning to move Bitcoin offline, you won’t face problems finding a secure place and transferring a smaller portion of Bitcoin to your old account.

Bitcoin is a scarce resource, meaning anyone that wants to create it can also find a person willing to take it. Users have a right to mint Bitcoins, but once the system becomes saturated with Bitcoins, they can be sold on exchanges at lower prices or lost completely. If you do lose someone else’s Bitcoin, Bitcoin cannot be traced. Once Bitcoin reaches over 21 million worth of Bitcoins, it will eventually run out, but that doesn’t mean the existing Bitcoin network will vanish, nor will any future ones.

The Future Of Banking

As mentioned in our previous post, the Bitcoin Network runs on PoS. In November 2017, Proof of Stake started becoming increasingly popular among developers, mining pools, merchants, and others. Most banks around the globe are investing in developing PoS solutions, including HSBC, BNP Paribas, Standard Chartered and Lloyds Banking Group. Regardless of industry, Bitcoin can be a helpful tool whenever your banking relationship needs to change. Some examples include when you move from mobile phone carrier to credit card company, to when your medical records are updated or when you want to switch banks, you can easily transfer your Bitcoin to any number of providers on the network like American Express, Citigroup, HSBC, Santander, SBI etc. When using Bitcoin as an intermediary for trade, Bitcoin can help you avoid fees and reduce complexity, reducing the cost of doing business. Another example might be paying for air travel, like the airline company Southwest will offer passengers, you can transfer BTC from one airline to the next. This makes cryptocurrency accessible for everyone in almost any country. For anyone asking for advice about cryptocurrency, this is the answer, it’s the way to go! Who knows, maybe someday we’ll see a fully integrated cryptocurrency ecosystem such as Gumi, NEM and even the upcoming Tron. Bitcoin was developed for retail and entertainment use, so it seems very likely that retailers will soon have access to cryptocurrency in order to increase profit margins. This is especially important when dealing with big stores like Walmart, Adidas, Louis Vuitton and Coca cola but even big name stores like Walmarts and McDonald’s and Starbucks could also benefit. Either way, Bitcoin is definitely here to stay and is slowly replacing cash. Not only this is interesting for the future development of government finance and consumerism but it also creates a great opportunity for entrepreneurs and independent freelancers to monetize themselves. All this has resulted in new developments in industries like virtual currencies and digital assets beyond Bitcoin. This will continue to grow exponentially with the increasing demand for innovative products, so who knows how long it will take before one can buy a real dollar from Bitcoin!

In conclusion, what is a DC? Here we talk about how cryptocurrency functions as a medium of exchange. Next, we look into cryptocurrencies, the history of bitcoin, how much you should spend Bitcoin and more. Check your cryptocurrency balance and consider changing it to keep track of it so you always know where your coins are located. Finally, we’ve discussed where you can get Bitcoin to, where to use Bitcoin and where to sell Bitcoin if you want to exchange it. Are you ready to start sending Bitcoin or Litecoin or other cryptocurrencies in the near future or do you want to send Bitcoin a little bit to enjoy some holiday shopping? Just send Bitcoin to anyone on Reddit at r/Bitcoin to start getting started today. Get started with Littr, signup for my email list and I’ll email you in a couple of minutes. Thanks for reading! Keep playing nice and feel free to let me know what you think about writing that much content in 30 seconds and make sure to share your thoughts so others can learn.