When most people think of cryptocurrency they would be thinking of cryptocurrency. It seems that very few people know what it is and for some reason it seems like everyone is talking about it. Hopefully this report will demystify all aspects of cryptocurrency so that you have a pretty good idea of what it is and what it consists of when you finish reading it.
The cryptocurrency may or may not be for you, but at least you can talk to a level of certainty and knowledge that others will not have.
There are a lot of people already negotiating with the cryptocurrency that has reached millions of states. It is clear that there is a lot of money in this new industry.
Cryptocurrency is an electronic currency, short and simple. However, what is not so short and simple is to have value.
Cryptocurrency is a digitized, virtual, and decentralized currency created by cryptography applications, according to the Merriam Webster dictionary, which is “computerized encoding and decoding of information”. Cryptography is the foundation that enables debit cards, computer banking, and eCommerce systems.
Cryptocurrencies are not protected by banks; it is not backed by a government, but rather by a very complicated arrangement of algorithms. It is electricity encoded in complex chains of cryptocurrency algorithms. What gives them value for money is their complexity and their security against hackers. The way crypto currency is made is too difficult to reproduce.
The cryptocurrency is against what is called fiat money. Fiat money is a currency worthy of government orders or laws. The dollar, yen and euro are examples. Any currency that is defined as legal tender is trustworthy money.
Unlike reliable money, another part of what makes a cryptocurrency valuable, such as commodities like silver and gold, is that there is only a finite amount of it. Of these very complex algorithms, only 21,000,000 were created. No more, no less. It can’t change with more printing, just as the government is printing more money to protect more systems. Or when a bank changes a digital book, the Federal Reserve will order banks to adjust to inflation.
Cryptocurrency is a means of buying, selling, and investing that completely avoids banking systems for government oversight and tracking the movement of your money. In a destabilized world economy, this system can become a stable force.
Cryptocurrencies also offer you great anonymity. Unfortunately this can lead to a misuse of a criminal element by using cryptocurrency for their own purposes, just as conventional money can be misused. However, the government can invade the tracking and personal privacy of each of your purchases.
It has a few forms of cryptocurrency. Bitcoin was the first and is the standard used by all other cryptocurrencies for their model. All are generated by rigorous alpha-numerical computations based on a complex encoding tool. Other cryptocurrencies are Litecoin, Namecoin, Peercoin, Dogecoin and Worldcoin, to name a few. These are called altcoins as a generalized name. The prices of each are regulated according to the supply of the specific cryptocurrency and the market demand for that currency.
The way cryptocurrencies exist is quite fascinating. Unlike gold that needs to be extracted from the earth, cryptocurrency is just the entrance to a virtual book stored on various computers in the world. These entries should be “ripped” using mathematical algorithms. Individual users, or probably a group of users, perform computational analysis to find specific data sets, called blocks. ‘Miners’ find data that creates an accurate model of the cryptographic algorithm. At that point, it is applied to the series and they find a block. After an equivalent data series in the block matched the algorithm, the data block was left unencrypted. The miner gets a reward for a certain amount of cryptocurrency. As time goes on, the amount of the reward decreases as the cryptocurrency becomes smaller. Adding to this, the complexity of algorithms in the search for new blocks also increases. Computationally, it is more difficult to find a matching series. These two scenarios merge to reduce the speed at which cryptocurrencies are created. This mimics the difficulty and scarcity of exploiting a commodity like gold.
Now, anyone can be a miner. The creators of Bitcoin made the mining tool an open source, so it’s free for anyone. However, the computers they use run 24 hours a day, seven days a week. The algorithms are very complex and the CPU is completely distorted. Many users have specialized computers made for cryptocurrency mining. Both the user and the specialized computer are called miners.
Miners (humans) also keep transaction books and act as inspectors so that a coin is not duplicated in any way. This prevents the system from being hacked and run by mothers. They are paid to do this work every week when they receive a new cryptocurrency. They store their cryptocurrency in specialized files on computers or other personal devices. These files are called portfolios.
Let’s revisit some of the definitions we’ve learned:
• Cryptocurrency: electronic currency; also called digital currency.
• Fiat money: any legal money; government-backed, used in the banking system.
• Bitcoin: the original and gold standard of cryptocurrency.
• Altcoin: Other cryptocurrencies that are models of the same processes as Bitcoin, but with small variations in encryption.
• Miners: a person or group who uses their own resources (computers, electricity, space) to extract digital coins.
o Also a specialized computer specially designed to find new coins through a series of algorithms.
• Wallet: A small file on your computer where you store your digital money.
Summarizing the conceptualization of the cryptocurrency system:
• Electronic money.
• Taken from individuals who use their own resources to find coins.
• Fixed and stable currency system. For example, only 21,000,000 Bitcoin are produced for all time.
• It does not need a government or bank to function.
• Prices are determined by the number of coins found and used, combined with the demand for people to own them.
• There are several cryptocurrencies, Bitcoin in the first place.
• It can lead to great wealth, but, like any investment, it carries risks.
To most people the concept of cryptocurrency seems fascinating. The next field for many of them is the new gold mine. If you see that you would like to know more about cryptocurrency, you have found the right report. However, I barely touched the surface in this report. There’s a lot more to cryptocurrency than what I’ve experienced here.