Based on cryptography the art of writing codes and currency meaning money.
The crypto currency market is just like that of stocks and shares Bitcoin was launched in 2009 as an alternative currency. They are mined and not printed like Fiat currencies. They are a global network utilised through computing power.
They were designed by a computer scientist using the pseudonym Satoshi Nakamoto (n.d.). The total number of Bitcoin's will never exceed that of 21 million. The market is capped at around 160 Billion dollars which today is only about 1% of the world GDP however by 2025 it has been estimated that Crypto will be 10% of the GDP.
There are two ways of sourcing Bitcoin's
By mining the currency
Through traditional exchange using a Bitcoin wallet
Checking all monetary transactions creating Bitcoin rewards. (My 7 Network)
Valid transactions collected into blocks are added to a ledger, linking it to previously accepted blocks called block chains
Having an online wallet and buying Bitcoin's. Wallets can be stored using mobile phone Applications and web based access. Which can be susceptible to hackers on both devices. However wallets do hold digital private encryption keys and codes, needed for transactions.
Demand has grown for Crypto currency because it is easier to use has high security, there is only a limited supply and is decentralised. meaning that it is independent of governments and any centralized authority.
Many countries have decided to use Bitcoin as legal tender, Japan, Australia and many more. Some have legalised the currency and others see Bitcoin as illegal.
What are the Risks
Just like any currency Bitcoin can be used for lawful and unlawful purposes. With its anonymity transactions are untraceable. nevertheless there is the case of Silk Road in October 2013 Where the U.S Federal Bureau of investigation were able to track down its founder. The biggest risk is the future of Bitcoin, this depends on the number of interested active users and merchants that will accept and trade with this currency. Bitcoin can be converted back into Fiat currency using an exchange.
Bitcoin's value is determined by its supply, demand and trust in the system. Advocates of this virtual currency believe that Bitcoin's Peer to peer structure and low level entry will lead towards creating a generation of innovative financial services, the same way in which the internet opened up the way to new online services. Supporters convey that Bitcoin provides a cheap and quicker way to pay, especially regarding international transactions and transfers
So to invest in crypto currency? It has been suggested that it is wise to not put all of your eggs in one basket and invest also in other forms of Crypto.