What is Cryptocurrency? Well, there is plenty of debate going on at the moment and I think if you are a new trader then it might be easier for you if you were to understand what is Cryptocurrency then to decide whether it is suitable for you.
Currency is a non-fiat product that has a legal tender status. It is usually issued from central banks (monetary authority of a country) and is usually backed by gold or foreign currency.
A Cryptocurrency is a type of digital asset which is designed to function as a medium of transfer, where individual private coin ownership records can be stored in an online ledger, in a manner of speaking, using powerful cryptography, typically through encryption software.
An example of a Private Coin is any currency that is issued by a country and is backed up by its own government. Another example would be USD. The US dollar has a reserve-currency status because it is accepted all over the world and it is the most widely accepted of all currencies in the world today.
So how can a Cryptocurrency be a currency at all, since a currency is an asset, as well as the owner of it, is protected by their government? Well, it is done by having your money encrypted with your private key. This can be done by either a hardware device like your keyboard or a software application such as PGP or GPG.
Some people believe that private keys can be stolen by criminals who could use them to issue counterfeit money and they might not even know it as the private key doesn’t show up on any kind of public ledgers. If you are worried about this then you could try out a service such as OpenPGP which will provide you with two types of keys, the public key, and a private key.
The private key is the one you use to send funds, so you will only be able to send that money to the person you want to send it to. However, you will also have access to your private information like your passwords and other private details, which will be completely safe, secure, and confidential. It will never be known that you have a private key as nobody will know that.
Another advantage of a private key is that it can be used by you as an investment if you choose a good one. A good quality Private Key can be worth hundreds of pounds in the currency markets. Although not a lot but still some money.
So, what is Cryptosystem? Well, I hope you now have a better idea as to what it is. Read here if you want a more hassle-free way to start trading today.