By now, it's more likely than not that you have heard or read about cryptocurrency. Maybe you have a friend or a family member who has already invested in cryptocurrency and have told you how rich they are getting off of the digital currency market with investments in Bitcoin, Litecoin, Ripple and even Ethereum. There are thousands of cryptocurrencies on the market compared to when it first came into existence. Bitcoin is the original cryptocurrency and the most stable and tested, and offers tons of information on the internet in how to invest in Blockchain.
How much is it you really know about these digital phenomena? If you are like most people, then your answer is probably, "Not much." This article will change that. Before we dive into the Blockchain aspect of things, let's first take a closer examination of the basics of digital currency. Let's start with the definition.
Despite what your dentist may have told you, to put it in the simplest terms, cryptocurrency is an electronic, person to person, or business to person transactions, that do not physically exist. Meaning you cannot touch these currencies like you can with the dollar bills in your wallet right now. Even though that's not possible, does not mean that cryptocurrencies hold no value. In fact, the opposite is true. If you have paid attention to the digital market space, you have probably seen the rise in prices of cryptocurrencies in the past few months, and also the sudden dips and spikes.
According to a recent study, as of December 2017, there are over 1,000 types of cryptocurrency out there, just waiting for potential investors to purchase. It's important to note that to gain access to these cryptocurrencies, there are no special requirements. You don't have to belong to a secret society or social class, and as long as you have the desire, the time investment, the spare cash to invest, and a support group, you will earn a substantial return on your investment over a long period once you learn how to invest in Blockchain.
There will be more and more cryptocurrencies emerging, allowing investors to have a diverse portfolio of options. The entire concept of digital currency was floated around over 2 decades ago, but it was never successfully launched, until 2008, with the emergence of Bitcoin by an anonymous user called Satoshi Nakamoto, which eliminated all the flaws of the failed attempts in the past.
What flaws could there possibly have been you ask? Well, for starters, if you consider how long a standard financial institution settles up a multi-state or even multinational payment, how they also earn big on the fees associated with those payments, then you get the lightbulb to go off. Cryptocurrencies are the workaround to the traditional banking system, through what is called Blockchain technology.
What Is Blockchain?
The official definition of Blockchain is, "Blockchain is a distributed, decentralized, public ledger." The simplified version of what Blockchain is would be, it's literally a chain of blocks. You can think of the chain as the database that stores all the public transactions, and the block as the public information itself also referred to as data.
How does Blockchain Work?
In order to understand how to invest in Blockchain, you should know there are three essential parts to a Block, which is the digital information piece in the transaction.
The first block is designed to house specific details and information about each transaction like the amount of the transaction, the date and the time of the purchase, the IP address, etc.
The second block will store the information about the persons involved in the transaction and the merchant. For example, if you purchase airline tickets on CheapAir, it will store your username, which is a unique identifier to you, and also information about your flight, hotel, and whatever else you purchase. It also knows your unique identifier as a "digital signature" in the Blockchain world.
The third and final block stores information that will then make the information in the previous 2 blocks distinguishable from the other blocks on the chain. Each block has a name, in the form of a unique code, called a "hash." This enables the blocks to be distinguishable from each other.
It is important to understand that while these are real-world examples of how one transaction is stored, in the real world, one block chain can hold up to 1MB of information. What that means is that a single block in the chain can hold several thousand transactions.
Each transaction is visible to the entire network, including yourself. If you were to examine the Blockchain for Bitcoin, you would notice that you can view transaction information, including the time, where, and by whom, the block was added to the chain.
Where Do You Store Blockchain?
As mentioned, anyone who uses the Blockchain has access to its transactions and entire contents and can directly connect to the network via their computer. The reason for doing this would be to stay in the loop each time a new block is added to the chain. It's kind of like Twitter notifications. You get notified whenever someone mentions you on Twitter.
Each computer houses its own version of the original Blockchain, meaning there are literally hundreds if not thousands of copies of the same Bitcoin Blockchain out there since it is the original cryptocurrency. Each copy of the Blockchain is the same and is difficult for anyone to manipulate.
While you have access to content about transactions, for security reasons, you do not have access to anyone's personal information, and likewise, they do not have access to yours. Which brings up the question, is it really wise to invest in Blockchain?
Is It Wise to Invest in Blockchain?
Blockchain Trust and Security
You may want to learn how to invest in Blockchain since it has a high chance of changing the way the world does its buying and selling. Blockchain innovation has addressed the issue of trust and security in a myriad of ways. For one, the blocks that are on the chain are stored in a linear and chronological order. To picture what that looks like, it means that each new block on the chain is added to the end of the chain, like the last link.
Once a block has been placed into the chain, it is difficult, and almost impossible to go back and change anything about the contents of that block. That is due to the "hash" that we mentioned earlier. It essentially creates hash codes using a math function that converts digital data into a series of numbers and letters. That means if someone edits any part of the information in a block, the hash code associated with that block will also change.
That is critical the security of the Blockchain. For example, let's say a hacker wanted to edit one of your recent transactions from CheapAir, so you would end up having to pay more than once for your air and hotel. The moment that the hacker attempts to edit the monetary value of your transaction, the hash in the block automatically changes. The next subsequent block in the chain will still have the old code, and that means that the hacker would have to backtrack to remain undetected. So that means changing every single block, or transaction that came after yours. What hacker wants to do all that legwork for a few hundred or even thousand dollars? It's just not worth it.
To approach trust, Blockchain systems have executed tests for computers that desire to join and add blocks to the chain. These tests are referred to as “consensus models,” and the premise is that all users are required to “prove” themselves prior to being able to add blocks. Bitcoin uses a system called “proof of work.”
Proof of work does not make raids by hackers impracticable, merely it makes them rather ineffective. If a hacker wanted to coordinate an attack on the Blockchain, they would need to answer complicated computational math problems at 1 in 7 trillion odds just like everyone else. The expense of coordinating such an attempt would surpass the advantages.
How to Invest In Blockchain
How to Invest in Blockchain
There are essentially four ways you can invest in Blockchain.
Blockchain as a technology is a "paradigm shift." It has the potential to evolve the way we transfer data, much like the Internet-connected laptops and smart devices we use every single day. Those are exhilarating ideas, and Blockchain adds the perspective of transfer of monetary value between two machines and two people in an effective and reliable method once you understand how to invest in Blockchain.
Besides what was already mentioned earlier about why and how to invest in Blockchain, there are several important reasons to invest in cryptocurrencies, but the main 3 are this. Invest to grow your net worth. Invest because you support the forward vision of the cryptocurrency industry so that we all have access to free and hard money all over the world. And last, invest because you appreciate and enjoy technology. Learn how to invest in Blockchain by doing your own research and figuring out what options are right for you. Best of luck!