With traditional currencies, we rely on the use of trusted central authorities, such as banks, to act as middlemen and verify that people have the appropriate funds to carry out a transaction. They are also trusted to look after the security of those funds, to prevent theft by malicious parties.
Bitcoin was the first cryptocurrency to offer a solution as to how wealth can be transferred of from one user to another without the need for such middlemen.
The revolutionary idea was to replace the central authority with a ledger (the Blockchain), and to distribute that ledger to everyone over a large peer-to-peer network of users for verification, creating a decentralised system for the exchange of wealth.
There are now over 700 cryptocurrencies in existence, however only a small percentage of these have any meaningful daily transaction volume. Many of the coins are simply clones of the open-source Bitcoin code, with various parameters, such block times, altered. However, the more successful coins such as Ethereum offer more, with innovative concepts such as smart contracts.
Generally, the market capitalization of a cryptocurrency gives a good initial indicator of the markets which have the most potential, and it is on these more liquid coins that Alphabit focuses our trading strategies.
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