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Bitcoin and other cryptocurrencies were always a topic of computer nerds until recently. Everybody talking about investment has mentioned cryptocurrency in one way or the other. Its fame must have been either from the incredible rise in 2017 or its extraordinary drop in 2018. Either way, it’s hard to find an investor who has not heard about cryptocurrency. Nowadays, cryptocurrency is discussed as speculative investments and as part of the general payment system. As a result, the economic literature of cryptocurrencies has grown significantly.
David Yermack is an American academic who serves as a professor of finance at the New York University stern school of business. In 2013, he investigated the extent to which Bitcoins fulfill the usual criteria of monetary currencies. In 2017, Ifo Schnelldienst contained a critical discussion on the need to regulate cryptocurrency.
The exponential growth and subsequent crash of Bitcoin price have led to more excellent debate over the spike in cryptocurrency value. But, unfortunately, academic and public debates have largely ignored the social costs of cryptocurrencies.
Some cryptocurrency supporters paint a perfect scene of decentralized currency created by volunteers as if Bitcoin was for the common good only. However, Bitcoin has been in existence for just a few years, yet it has cost society over 5 million dollars. Unlike the central bank that creates cash at meager rates because the resources used are very few, Bitcoin creation costs a fortune.
The grayest area of cryptocurrency with most people is the mining process. It has become one of the most popular jobs for those who want to engage with altcoins without paying for them.
Bitcoin miners
A bitcoin miner is a person who has a complete understanding of cryptocurrency. A miner knows the basics of the coding language. They also have access to specialized hardware that is capable of handling an enormous amount of data. A miner can be anyone savvy enough to tackle something as complicated as the process of auditing cryptocurrency transactions.
The process of mining Bitcoin is different from how the other cryptocurrencies are mined. For example, other cryptocurrencies like NEO, Ripple, and Stellar are not mined at all. Instead, the users themselves handle verification for these through something called a proof of stake concept.
Bitcoin mining
Bitcoin mining is creating new Bitcoin by solving computational math that is so complex it cannot be solved by hand. It is a process that maintains a ledger of transactions upon which Bitcoin is based. Bitcoin miners have become very sophisticated, using high-end and complex machinery to speed up the process. The miners make the Bitcoin payment network trustworthy and secure by verifying its transaction information by solving computational maths.
The transaction is a process where someone sends Bitcoin anywhere. Transactions made online and made in-store are documented by banks, point of sale systems, and physical receipts. Bitcoin miners also achieve the same by clumping the transactions together in blocks then adding them to a blockchain: a public record. The records of the blocks are then maintained by nodes so that they can be verified in the future.
Whenever a new blockchain block is added to the blockchain, the Bitcoin miner must ensure that the marketing is accurate. To be precise, miners make sure that Bitcoin is not duplicated by a unique quirk of digital currency called double-spending. But, of course, counterfeit is always an issue with printed money.
How Bitcoin Mining Helps Crypto Economics
In the real world, when you purchase something from a store with actual money, you hand over or transfer cash from a bank to the person who gives an item of value in return. Once the money has been debited from your account or once you have handed over the money, there is no way you can use that money again. However, with cryptocurrency, the user could use the same token multiple times as long as the private keys match their public address.
Miners prevent this by doing through each transaction to make sure that it does not include coins that have been used elsewhere. They solve a series of puzzles that are fundamental numerical problems. The problems are not hard to solve, but they require a lot of time to complete. This is because miners take a lot of time to guess the 64-digit hexadecimal number that applies to the transaction. This number is known as the hash.
The miner that guesses the equal or less than the targeted number will be considered to have solved the puzzle first. Therefore the miner will include them into a block and continue mining until the block is entire. Bitcoin mining is practically a race. The miners are trying to hash as fast as possible. For this to be, miners must have compelling computers thus will win.
Crypto Economics: Investing and Trading with Crypto
Investing in cryptocurrency is not as complicated as it seems. On the contrary, it is getting easier and easier every day. The best way to invest is to follow just a few steps.
Join a cryptocurrency exchange: you need to determine where you want to make the Bitcoin purchase. There is no official bitcoin company because it is an open-source technology. A cryptocurrency exchange allows one to buy, sell and hold cryptocurrency. It is advisable to use an exchange that allows users to withdraw their cryptocurrency to their own personal online wallet for safer keeping. Use safe internet practices while creating a cryptocurrency exchange.
Connect your exchange to a payment option: after choosing an exchange, gather your personal documents. Information needed depends on where you live and the laws within your region. The process is more like setting up a brokerage account. Once the exchange confirms your details and legitimacy, you connect to a payment option. It is always good to make sure that your bank allows deposits at your chosen exchange.
- Place an order: after the above is done, you are good to go. After that, you can Bitcoin and other cryptocurrencies.
- Safe storage: now, your Bitcoin and other crypto need to be securely stored. Bitcoin and cryptocurrency wallets are safe places to store them. In addition, storing your crypto outside the exchange means you have control over the private key to your funds.
Crypto trading across the world
Investing in cryptocurrency is not as complicated as it seems. On the contrary, it is getting easier and easier every day. The best way to support it is to follow just a few steps.
1. Join a cryptocurrency exchange: you need to determine where you want to make the Bitcoin purchase. There is no official bitcoin company because it is an open-source technology. A cryptocurrency exchange allows one to buy, sell and hold cryptocurrency. It is advisable to use a business to enable its users to withdraw their cryptocurrency to their online wallet for safer keeping. Use safe internet practices while creating a cryptocurrency exchange.
2. Connect your exchange to a payment option: after choosing an exchange, gather your documents. Information needed depends on where you live and the laws within your region. The process is more like setting up a brokerage account. Once the exchange confirms your details and legitimacy, you connect to a payment option. It is always good to make sure that your bank allows deposits at your chosen exchange.
3. Place an order: after the above is done, you are good to go. After that, you can Bitcoin and other cryptocurrencies.
4. Safe storage: now, your Bitcoin and other crypto need to be securely stored. Bitcoin and cryptocurrency wallets are safe places to keep them. In addition, storing your crypto outside the exchange means you have control over the private key to your funds.
Crypto trading across the world
1. Crypto trading is speculating on cryptocurrency price movement through a derivative that allows one to speculate without taking ownership of the underlying coins. There are a few steps to follow :
2. First, one needs to decide on how you want to trade. It either be by buying digital currency hoping they raise in value or speculating their prices using CFDs.
3. Learn how the market works: the crypto market operates differently from other financial markets. This makes it very important to know how it learns.
4. Open an account: you can now open an account.
5. Build a trading plan: a trading plan is a must-have for any trader. It is crucial, especially for a cryptocurrency trader, because of the volatility of the market.
6. Choose a trading platform: a trader should choose a trading platform that will provide you with a fast and innovative way to trade cryptocurrency CFDs.
Economic Viability of Bitcoin in the future
As institutional money enters the cryptocurrency market, economic analysts predict a significant change in crypto. Other analysts say that all cryptocurrency needs a verified exchange-traded fund that would make it easier for people to invest in Bitcoin.
Let’s keep the Bitcoin talk going, and you can join our community and understand more.
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