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What is a cryptocurrency and why is it needed?

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Well, and, of course, a very significant magnet is the opportunity to make money on all this, and not only speculating on the cryptocurrency rate. There is also such a way of earning as Mining – here they pay for the provision of computing power (for example, your PC or a specially assembled computing system) for the extraction of monetary units and conducting transactions (transfers).

Today we’ll talk about what cryptocurrency is all about (I’ll try to explain in simple terms, understandable to everyone), how it appeared and how it can be used today, what its current rate is, what cryptocurrency exchanges it is worth using, what you need for mining, in which place is better to exchange and where to find the most accurate course calculator?

When the first electronic money appeared, people began to make a great many payment transactions on the Internet. Of course, the administrators of payment systems chose not to lose their hands and set a commission for each transfer or exchange made, the commissions were especially strong when transferring electronic money to real ones.

Advanced network users wondered: “How to make payment transactions commission-free?”, Began to offer a variety of options. In 2009, anonymous Satoshi Nakamoto realized his own vision for solving the problem: he proposed the release of an information currency that was not backed by anything but could be a unique medium of exchange. The currency is called Bitcoin.

Why is cryptocurrency so-called and how does it work?

Obviously, the name comes from words – cryptographic currency. In fact, it is encrypted (cryptography is just the area of science that studies the methods of encrypting and decrypting information) in such a system, not all, but much. Cryptography is used to protect the chain of transactions, i.e. of the most valuable, that is in this system, namely the database with all operations performed with monetary units. But we have to be able to trust If you trust only then you can get maximum profit using these coins.

Let me outline the structure of any cryptocurrency thesis (and now, apart from bitcoin, they have already divorced quite a lot), so that you can understand its radical difference from everything that was before:

  1. Cryptocurrency does not have any single administrator (neither internal nor external). It is completely self-organizing and independent of anyone’s system.
  2. There is no central server on which the database with all transactions (transfers) in the system would be stored (this is the decentralized system in BitTorrent). The fact is that all participants in the system have copies of the transaction database and they are constantly checked against each other automatically using special algorithms. 

In order to eliminate fraud attempts, it was decided to advertise absolutely all operations in the public domain – every person using the cryptocurrency has the opportunity to see which wallet and how much bitcoins were transferred to. True, it is not a fact that extracts the name from this information, rather the opposite, because the system is truly anonymous.

The cryptocurrency is not provided with gold reserves or the economy of any state, but it has a certain rate, which is constantly changing and is listed on the exchange. The more people use bitcoins as a medium of exchange, the higher the rate, since the popularity of information money is increasing, and their total number is strictly limited. For example, in the case of Bitcoin, in accordance with the algorithm for its implementation, more than 21 million monetary units cannot be created. So far this number has not been reached and what the rate will be after the extraction of the last bitcoin is unknown.

And most importantly, any such cryptocurrency system can not only have a host but even an external or internal administrator. It does not belong to anyone and therefore it has almost no transfer fees. The system is controlled by the algorithm that is embedded in it, and no one (neither the courts, nor officials, nor persons in execution) can intervene in its work. This freedom has a downside, but this is what distinguishes bitcoins, light coins, and other coins from any other type of electronic money.   

Disclaimer: This is a paid post and should not be considered as news/advice.


A Psychology and Journalism graduate, Rakshitha focuses on UK and Indian markets. As a crypto-journalist, her interests lie in blockchain technology adoption across emerging economies.
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