Cryptocurrencies, the future of money?
Cryptocurrency is still quite a mysterious concept for most of us. However, it has the potential to revolutionize the way we pay and perform financial operations. Cryptocurrency can be compared to quantum computing or artificial intelligence. We are told they’re set to change the world, but few of us understand how that might work out.
Back to basics.
Cryptocurrencies are, in simple words, currencies secured by cryptography. The most famous and the first one is Bitcoin.
Blockchain is the technology at the core of any cryptocurrency. Computers solve sophisticated algorithms (‘blocks’) to agree on the validity of a transaction. If they reach a consensus, the trades are confirmed and added to the chain. The ‘blockchain’ is simply a ledger that contains all verified transactions. It is impossible to change transactions once they have been added unless most computers reach a consensus.
The next important term is “mining” which has nothing in common with tunnelling into the ground. It is a process of verifying the legitimacy of cryptocurrency transactions and entering new cryptocurrency into circulation.
Cloud Mining: sounds unusual but makes a lot of sense.
Cloud Mining is the process of cryptocurrency mining that utilizes a remote data centre with shared processing power. Cloud mining operations are mining farms — data centres dedicated to mining. The essence of the service is that a third party hosts mining equipment and provides access to the rewards associated with the equipment.
Cloud mining has many advantages and disadvantages. The first thing to consider is an ultimate trust in the cloud provider. A user is not in control of the equipment or how it is used.
The advantage, of course, is not having to deal with buying and managing equipment, running the equipment, cooling the equipment, keeping a solid Internet connection up and running, and so on. Unlike pool mining, with Cloud mining, you outsource all work.
How would cryptocurrency potentially impact the global financial market? The World Economic Forum predicts that by about 2027, about 10% of the global GDP will be stored on blockchains.
This means that cryptocurrency could become an integral part of our lives in future, pretty much like Cloud computing has been already implemented in business operations and individual users’ daily routines.