Blockchain Basics (and Why Crypto is Here to Stay)

Last Updated on May 20, 2021 by MoneyVisual

First-timers attempting to get their heads around the whole blockchain thing often feel they are being spoken to in a foreign language. Which is technically true, given the jargon and terminology you need to get used to when traversing the crypto landscape.

One useful and brief definition of the blockchain (as provided by the experts at Bitvavo) is as follows:

“A network of distributed ledger technologies.”

To clarify this a little further, the Oxford English Dictionary defines a ledger as:

“A book or other collection of financial accounts of a particular type.”

Combine the two and you have an extensive network of digital ledgers that are used to record financial transactions. This is the virtual space in which cryptocurrency exists, enabling individuals and businesses to conduct transactions using alternative forms of virtual currency.

This is just about as simple an explanation of blockchain as you are going to find – the key to understanding how it all works lies in getting yourself involved.

Reasons to Get Yourself into Cryptocurrency

Fair enough, but to what extent is the whole crypto game worth getting into in the first place? If it is simply another form of currency, why not keep things simple and stick with conventional money?

The appeal of cryptocurrency has been growing among newcomers and established investors for some time, who in many instances are turning their backs on conventional currencies and safe-haven assets.

As for what makes cryptocurrency such an appealing prospect, there are several attributes to crypto and crypto coin trading that have secured it a place in the future indefinitely:

1. The Potential Returns Are Remarkable

All types of asset and commodity trading are technically forms of gambling, though none offer the potential for such massive short-term rewards as crypto coin trading.

This is of course linked to the high-risk nature of crypto trading, but make the right moves at the right time and you could literally write your financial success story overnight. You need only look at the long list of traders who’ve made a fortune on Bitcoin to understand the appeal of crypto trading. 

2. Technological Innovations

Slowly but surely, the more innovative minds on the crypto scene are developing and launching all manner of tools and technologies to help traders and investors succeed.

Just a few examples of which include price prediction tools, trading bots, block explorers, portfolio trackers, automated mining tools, analytical tools and so on.

All of which provide automated or semi-automated alternatives to the usual advisory tools and services available to those who trade conventional currencies and other assets.

3. Simplified Online Trading

With platforms like Bitvavo, the cryptocurrency landscape is becoming more accessible than ever before. Even for first-time newcomers with no prior experience, getting set up with a crypto account and trading globally is an absolute breeze.

Likewise, no longer does a foray into cryptocurrency trading mean bearing the brunt of heavy initial costs. However restricted your budget and low your risk appetite may be, you can still give crypto trading a try.

4. Free from Government Interference 

The fact that cryptocurrency is 100% decentralised is one of its primary points of appeal for many investors. Cryptocurrency is not overseen or regulated by any central banks or authorities worldwide, eliminating the risk of government interference from the equation.

It is also a uniquely safe and discreet form of currency for conducting digital transactions, which guarantees the kind of anonymity no other conventional currency can rival.

Cryptocurrency may be uniquely volatile, but as a decentralised currency is not influenced by the same national or international economic and political factors as conventional currencies.

5. Unattractive Alternative Investment Options 

Last but not least, many of the most attractive alternative investment options of recent times have begun wavering in popularity and appeal over the past few years.

Traders and retail investors alike have been discouraged by factors such as currency disparities and inflation, removing the lustre from several safe havens and making high-return investment opportunities more difficult to find.

Unsurprisingly, the liquidity and spectacular volatility of cryptocurrency trading has motivated many to diversify or shift their investment portfolios.

Final Note…

Without question, cryptocurrency is here to stay. Whether or not it eventually replaces all forms of conventional currency remains to be seen, but what can be said for sure is that crypto will continue to play an increasingly important role in the investments and currency trading landscapes worldwide.