What is cryptocurrency
Let’s start simple. Cryptocurrency is a digital currency whose unit of measurement is coin. The prefix crypto stands for encryption technology. The main feature of cryptocurrency is that it does not have a physical embodiment. Coins are mined, traded and stored only on the network. Therefore, they are almost impossible to steal or counterfeit.
Cryptocurrencies are independent of governments, banks, and any other financial institution. Also, there are no middlemen and bureaucracy in the cryptocurrency ecosystem. In fact, its existence is supported by the users themselves. More on this below.
How cryptocurrency appeared
Cryptocurrency is inextricably associated with bitcoin. Not surprising as bitcoin became the first mined coin on the network. Today it is the most significant and valuable among cryptocurrencies. The creator of bitcoin is Satoshi Nakamoto, who actively developed the coin in 2007-2010, and then disappeared. Until now, it is not known exactly whether this is a person, or a group of talented programmers.
Bitcoin has been on the fast track since 2008, from 10 cents to $ 48,800 (September 2021). Many economists and financiers believe that this is far from the limit.
Bitcoin has become an example for many other cryptocurrencies. The most successful today are Bitcoin, Ethereum, Ripple, Litecoin and Binance coin. In total, there are more than 1,500 different cryptocurrencies in the world, and this number is constantly growing. About 20 countries have already announced the development of their own cryptocurrency.
What is blockchain
Thanks to the advent of bitcoin, the world has re-learned about blockchain technology. In fact, this is a database without a single information storage center. All information is stored on users’ computers integrated into the network. The value of technology is that it cannot be tricked or damaged. Today it is the highest level of accounting and automation.
Financial institutions, banks, government, leading companies use blockchain technology to protect and save data, optimize processes, protect property rights, etc.
Investing in cryptocurrency
The dynamics of growth or decline in the rate of cryptocurrencies depends on several factors:
– Growth in the number of sellers and buyers who accept cryptocurrency
– Plans and actions of states to legalize or ban major crypto coins
– Investors’ willingness to invest in cryptocurrency
The complexity of mining coins on the network (mining) is one of the main factors that affects their cost. If a few years ago it was possible to mine bitcoin using an ordinary computer, today it requires a lot of power and a huge amount of energy.
There are several common ways to make money, for example, with bitcoins:
– Buying coins on a fall and selling them at their peak. Earnings due to exchange rate differences.
– ICO (Initial Coin Offering). The creation of the first coins of the new cryptocurrency allows you to become the owner of the coins at the lowest price. Further, the coins are exchanged for real currency at any time when the rate rises to the desired value.
– Trading. Trading on the exchange with the BTC / USD pair can be conducted both for a decrease and for an increase in the rate. You can read more about the work of the foreign exchange market in our article (link to the article: “What is Forex Market”).
One thing is for sure, digital currencies and blockchain have already become a part of everyday life. In the following articles, we will talk in detail about trading strategies, cryptocurrency predictions, blockchain technology and much more. Do not miss.