A cryptocurrency like bitcoin is a virtual currency traded peer-to-peer on a blockchain, independent of centralized authorities like banks and governments. Cryptocurrencies are entirely virtual, so they are not backed by physical commodities and have no intrinsic value.
Unlike traditional financial markets that often require large sums of money to start trading, cryptocurrency markets are generally more accessible. Many cryptocurrency exchanges allow users to start trading with small amounts of capital.
Crypto trading provides an opportunity for investors to
diversify their portfolios beyond traditional assets
like stocks and bonds.
Primarily, cryptocurrencies rely on blockchain technology to complete a transaction via an intricate P2P network. Once a transfer request is entered into the network, it is validated by the network and added to a pool of other transactions to create a block of data for the ledger, which is then entered into the existing blockchain. Once the block is successfully added to the chain, the transaction is approved and completed.
Absolutely. Cryptocurrencies have become established investment commodities among major financial institutions and have even been adopted by countries such as Australia and Japan. As with any investment though, there are risks linked to market movements, high volatility and economics.