CRYPTOCURRENCY

What are cryptocurrencies?

Cryptocurrencies are encrypted digital currencies which are transferred between peers. They are decentralized, meaning not governed by any bank or government institution. They are a sequence of encrypted codes transmitted and stored over a network. All transactions are confirmed and stored on a public ledger. The system uses other complex techniques to certify and validate the record keeping process

Lack of regulation for cryptocurrencies mean that they are highly volatile by nature, and an investment with this can make a lot of money fast, and at the same time it can turn and one can lose money fast. The reason it is not yet accepted by a lot of businesses is partly due to the lack of regulation.

There is a set amount of digital coins that can be created and which was outlined from the beginning, after that number is reached no further coins can be produced.

The reality is that Bitcoin and digital currencies prices rise and drop for various reasons such as media and bad press, news events, and government statements, more people are using it and for this reason the price is rising. Their unpredictability makes it exciting for most traders. Moving forward there are discussions on how to manage the currencies and that in itself can swing the price.

How were cryptocurrencies created?

In 2009 Satoshi Nakamoto had found a way to build a decentralized coin and cash system without a central unit. From this Bitcoin was introduced to the world as the first digital currency of its kind.

The "blockchain" is the master ledger that records and stores all the transactions and mining activity, trades, and purchases. At the same time, it requires validation of ownership. Technically a transaction is not finalized until it is added to the blockchain which usually takes a few minutes and is irreversible. During the time between transactions, the units are not available for usage by either side, which prevents double spending, fraud and duplication.

Each user has a "wallet" with specific information that confirms them as the owners of any specific cryptocurrency. Each user's wallet allows them to send and receive coins and acts as a personal ledger of transactions. These wallets are built to be secure however additional measures and passwords need to be considered to keep them secure. The wallets can be stored on a cloud or an internal hard drive.

The "Miners" act as the "record keepers" for the cryptocurrency communities. Through technical methods they create new coins and verify the blockchains.

Why trade cryptocurrency

There are many reasons why the digital currencies are gaining popularity and momentum around the world. They have a finite supply that has been identified and source codes outline the exact number that can exist. Users of this currency benefit differently from users of traditional currency. For example, governments cannot intervene and banks cannot freeze your account. Since there is a limit on the amount, cryptocurrencies in that sense, are finite commodities, more like metals than a currency, and with time their value could go up.

They are attractive to people who worry about direct control of national banks and governments. Privacy and anonymity are key to the ownership of these coins which many people appreciate. It is more and more difficult to identify accounts of users. Generally, transactions are cheaper than the traditional way using banks.

Overall cryptocurrencies can change the financial world, and for the moment it is all still being worked on. Users of these coins still do need to remain aware of their limitations and volatility for the time being and foreseeable future.

Just like in Forex, their price flow is defined for the most part by market demand and thanks to the complicated code involved cryptocurrencies are impossible to counterfeit. They do make for a rewarding albeit uncertain investment endeavour. The long term results are still unknown but cryptocurrencies are only growing in popularity and for the immediate future they are here to stay and will most probably thrive.

Please note: The cryptocurrencies market's high volatility offers endless trading opportunities.

Why trade cryptocurrencies with Hereford

Hereford offers competitive spreads, with no commissions charged on transactions making it more profitable. When trading with Hereford you are trading on the price changes of the digital coin, and not physically purchasing it. Trading with Hereford ensures that you will trade with a 100% reputable broker. More reasons to trade cryptocurrencies with Hereford today are:

  ♦  Start trading with as little as $250
  ♦  Benefit from a wide range of top traded cryptocurrencies on the market
  ♦  Competitive swap rates
  ♦  All pairs can be shorted
  ♦  Up to 20:1 leverage
  ♦  Around the clock service and support