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The rise of cryptopcurrency

in Market & Currency by

In 2010, my wife-to-be wanted to invest before we married. She thought we should buy a dollar house in Detroit, while I suggested investing in currency, both old and new.

Along with gold and silver, I mentioned a digital currency I had been reading up on called Bitcoin. At the time, it was about $15 for a digital token. She scrunched her nose and said, “What’s that?”

READ MORE ABOUT THE BITCOIN BUMP

I attempted to explain, but she did not understand. In truth, I was still learning the mechanics of digitized currency, but I knew it was worth investing. Yet, I did not trust my gut.

If I did, and just invested $100, we would be Bitcoin multimillionaires.

Now cryptocurrency is buzzing and people who want to invest are wrapping their heads around the explosion of digital currency like I have been doing for the last nine years.

After the 2008 economic crisis in the United States, ideas around currency changed profoundly. Photo/Credit: Tim Evans

Cryptocurrency is an internet-based currency and payment that do not require banks to process payments. Unlike other traditional currency, the central bank does not hold cryptocurrency because it is developed and given value online through what is called cryptograph algorithms.

Here is how it works: Online transactions are recorded through something called Blockchain Technology which is a global network of computers jointly managing the database that records online exchanges. Through Blockchain, online users operate as virtual miners who verify transactions.

After transactions are verified, those who provided a service or exchanged a product or good are paid via digital tokens. The transactions, how much is paid and who is paid was designed to be anonymous; however, you can cash out your cryptocurrency for traditional currency, as in most cases, it takes non-digital currency to acquire cryptocurrency, but at a lower value of the dollar. Several marketplaces called “bitcoin exchanges” allow people to buy or sell bitcoins using different currencies. Mt. Gox is the largest bitcoin exchange.

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