What is cryptocurrency?
Today it has become common to hear about the cryptocurrency from the TV screen, from the radio report or just read another “explosive” news about a man who earned millions on it from the social network. Massively, the topic of “electronic money” is discussed only in the media, and from our usual environment, few people can say what cryptocurrency is in simple words, without referring to complex terminology and reference books. In this article, we will try using simple explanations to give the reader a definition of what is cryptocurrency in simple words and the main related topic cryptocurrency terms.
Cryptocurrency – what kind of beast is this?
In fact, it is not a beast, but digital, i.e. electronic money. This concept in the modern language, there are many synonyms, and the user in the vast network can meet such as “coin”, “coin” or “crypt”, which are different variations of the same term. Any cryptocurrency has a certain number of properties that distinguish it from paper currency, which we are used to seeing in our wallets. These properties include:
Decentralization. For the issue of cryptocurrency, there is no so-called “Central Bank”, the body that in the case of real money produces the money supply. An alternative to such a body is the blockchain system, which is a computer database.
The direct exchange of crypto currency, no intermediaries.
Low fees for cryptocurrency transfer, complete absence of fees for certain types of currencies.
Immunity to inflation.
Ease of use.
Where does cryptocurrency come from?
Merchants sell goods, gold diggers on the Goldfields wash the gold, and cryptocurrency is not extracted, and “bottom”. The concept of “mining” has recently, but firmly entered the lexicon of those who are now engaged in the production, exchange or sale of the crypt. The process of mining itself is the creation of new blocks in the aforementioned blockchain, as a result of which new units of cryptocurrency appear. It seems impossible to hack the blockchain, because if you change one block, the hash of the blocks following it will no longer coincide with the others. To start mining, users run a special program on their computer that searches for and signs new blocks in the blockchain.
Where it is advantageous to use a cryptocurrency?
First, cryptocurrency, like any other currency, can be used to buy goods or services, or exchange for another type of currency, more beneficial to the owner. At the same time, the owner of the cryptocurrency can save a lot on fees for payment.
Secondly, cryptocurrency is a great option for long-term investments. Any educated user has already heard about the famous bitcoin, the rate of which has grown a thousand times in a few years, and market professionals can not say with certainty that the re-growth of prices for cryptocurrency is not expected.
Third, as in the case of conventional currency, cryptocurrency has its own exchange for the game, and since the jumps in value within 5-6% daily for such a currency – the norm, many have been successfully earning on this for a long time.
We hope that our article helped you to understand the issue, and now you will be able to explain what cryptocurrency is in simple words to your friends and acquaintances.