We understand that cryptocurrency can be a confusing concept to grasp for a beginner. Oftentimes you leave feeling more bewildered than when you first started researching the topic. That’s why we’re going to go through the basics of what cryptocurrency is, how it works and the benefits of it.
What is a cryptocurrency?
As mentioned above, it is a digital currency that originated in 2009 and only exists on computers. Cryptocurrency is also decentralised – this means it’s regulated by users and algorithms rather than government-controlled currency, such as the pound sterling. Bitcoin will be the most familiar term you’ve heard of as it was the first decentralised cryptocurrency in 2009.
Since then, many altcoins (alternative variants of bitcoin and other cryptocurrencies) have been created and risen in popularity with the value of 1 Bitcoin equating to £8.4K as of this date.
It can somewhat be compared to Paypal and Debits Cards which represent fiat currency i.e. GBP or USD. But the figures you see online are a cryptocurrency (such as Bitcoin) and is created and managed through advanced encryption techniques known as cryptology.
It’s important to understand that cryptocurrency is not tangible and only exists electronically. Whereas Paypal and Debit Cards do use electronic methods and transactions, you can still hold that currency in your hands and see it beyond numbers on a screen – the same can’t be said for cryptocurrency.
That being said, cryptocurrency can be spent online and items can be purchased wherever cryptocurrency is accepted. You can use the search engine spendabit to find online retailers that accept Bitcoins specifically. There are other online options and retailers that accept altcoins.
To understand Blockchain, let’s run through the process of cryptocurrency to understand where Blockchains come in.
We mentioned that it’s regulated by users and algorithms and works as a peer-to-peer system. Each user has a wallet that stores public and private keys that interact with blockchains, and enables users to easily send or receive cryptocurrency person to person without it having to go through a bank.
The keys are a set of numbers paired together, one of which (the public key) can be shared with everyone however, the private key is to be kept secret. You can use either key (number) to encrypt information. To decrypt, use the opposite key you didn’t initially use to encrypt.
This brings us to Blockchains – this is a public ledger that records all the transactions and is stored by an algorithm. This data and ledger are encrypted using cryptography (a code). Since there is no bank or government to regulate these transactions and balances, this public ledger is open to all the users.
There are types of users called ‘Miners’ and their job is to use software to decrypt the code when a transaction is made. They can then add a ‘block’ of transactional information to the ledger once it’s solved. There are rewards in the form of new coins for miners that solve the code first but all in all, the algorithm relies on miners all submitting the same transaction data which confirms that the transaction is correct.
In summary, a blockchain is a public record of transactions that relies on users and computer algorithms to regulate transactional data.
What are the benefits of cryptocurrency?
- Unlike fiat currency, it is very difficult to counterfeit cryptocurrency because of the aforementioned cryptography – an encrypted code that acts as a security measure.
- There are fewer risks of fraud as cryptocurrency is irreversible. The person making the payment cannot unexpectedly reverse the transaction for whatever reason – but you can get a refund from the person they sent it to.
- Cryptocurrency is not bound by exchange rates. While the rates of cryptocurrency do fluctuate on a regular basis, when transferring from person to person, the transaction is instantaneous regardless of where the sender/recipient is located.
- Because it’s user-controlled and relies on algorithms, the peer-to-peer system means users have full control and transparency with the transactions and the public blockchain (ledger).
- Businesses can take advantage of the growing popularity and use of cryptocurrency and attract new customers that are looking to spend their cryptocurrency online.
UKEX is a digital assets exchange platform where you can buy or sell cryptocurrency and keep an eye on the changing fiat and crypto markets. Their transactional services are available for fiat currencies as well as six cryptocurrencies that are supported.
SPARK has plans to start accepting cryptocurrency as a form of payment and work alongside UKEX to provide that service to customers.
SPARK will be at Magna Carta Innovation Forum
In addition to SPARK’s plans to accept cryptocurrency, we will be attending the 2nd Magna Carta Innovation Forum this year in order to integrate cryptocurrency with SPARK.
After a very well-received initial Innovation Forum, this second event has come earlier with blockchain and cryptocurrency as a growing market and new developments ready to discuss. SPARK is pleased to announce that we’ll be part of this event and growing crypto market.
We’ve gone through the basics of cryptocurrency and largely what it consists of, but it’s fundamental to understand the concept of cryptocurrency and the process of buying and selling before investing in the crypto market. We’ve introduced SPARK’s involvement with cryptocurrency and plans to accept it as payment by collaborating with UKEX.
We want to know your thoughts on cryptocurrency and whether you think it’s the future of payment? Is cryptocurrency something you want to look into for yourself or your business?
Make sure to visit www.sparkepos.com to stay updated with the newest developments!