What is cryptocurrency

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Basic information for beginners

Almost a decade ago, a phenomenon such as Bitcoin arose as a new monetary mechanism for payments, savings, and mutual settlements. This is a digital currency whose security is protected by unique crypto processes. Its main feature is that it has no circulation in our physical world, its habitat is exclusively the virtual world. Initially, no one could imagine that bitcoin would be able to squeeze out fiat money from the market. Available Internet payments, bank transfers are analogues of ordinary money.

The growth in the number of bitcoins and the number of transactions with it showed everyone that cryptocurrency is one of the types of money of the future, the use of which is quite convenient especially if the counterparties are in different countries.

Digital currency is a new system of mutual settlements for us. To produce such coins (the so-called mining), you need to create a unique calculation method. Any of the crypto units consists of a certain order of complex mathematical compounds-blocks. When forming a new transaction, the history of the previous ones remains in the chain, so tracking the entire history of a financial transaction does not present any problems.

What other differences are there between cryptocurrency and ordinary money

Money that is in our circulation is printed by banks of various countries. Decisions of governments, the economic life of states, and interstate interaction influence their price. The amount of bitcoin is initially limited to a certain amount – twenty-one million, and therefore the change in the price of it will be clearly related to demand, and not inflation, the price of oil and other factors.

Of particular interest are the properties of digital currencies such as decentralization and anonymity: since there is no one sole owner of this system, it will be quite difficult to prevent the spread of crypto, as well as disrupt its functionality; As for anonymity, there is a twofold opinion: on the one hand, it’s great when no one can track both the buyer and seller (recall, you can only trace the transaction chain itself), when the state remains “out of work”, but on the other hand, The era of the global transition period, this lack of control may not be so safe for ordinary people – the use of this system, unfortunately, allows it to be operated on in actions that are contrary to the law. Therefore, the legislative activity of governments in this field has increased markedly.

The purchasing power for bitcoins is gradually growing, as the exchange of goods for them is growing. Cryptocurrency investments are also growing. But you need to remember that the most profitable investments (and cryptocurrencies undoubtedly showed their rise) carry a high risk. Therefore, you need to decide for yourself what is the priority: a fantastic profit or a good night’s sleep.

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