Most people would think of cryptocurrency when they think of cryptocurrency. It seems that very few people know what it is and, for some reason, everyone seems to be talking about it as if they were going to do it. We hope this report will demystify all aspects of cryptocurrency so that you have a good idea of what it is and what it is all about when you finish reading it.
It may or may not be the cryptocurrency for you, but at least you can talk to others with a level of certainty and knowledge that they won’t have.
There are a lot of people out there who have already reached the multi-million dollar state by trading in cryptocurrencies. 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 precisely how value is achieved.
Cryptocurrency is a digitized, virtualized, and decentralized currency created through the application of cryptography, according to the Merriam Webster dictionary, which is “computerized information encoding and decoding”. Cryptography is the foundation that makes debit cards, computer banking, and e-commerce systems possible.
Cryptocurrency is not protected by banks; it is not backed by a government, but by a very complicated arrangement of algorithms. Cryptocurrency is the electricity encoded in complex algorithm chains. What gives them value for money is their complexity and security against hackers. The way cryptocurrency is made is very difficult to reproduce.
Cryptocurrency is the direct opposition to what is called fiat money. Fiat money is the currency that gets its value from government judgments or laws. The dollar, yen and euro are examples. Any currency defined as legal is fiat money.
Unlike Fiat money, cryptocurrency is another part of what makes it a valuable currency, like commodities like silver and gold, which is only a limited number. Of these very complex algorithms, only 21,000,000 were produced. No more, no less. It cannot be changed by printing more parts to pump a system where a government prints more money without protection. Or if a bank changes the digital book, the Federal Reserve will order banks to adjust to inflation.
Cryptocurrency is a means of buying, selling, and investing that is completely circumvented by government systems that monitor government and monitor the movement of your money. In a destabilized world economy, this system can become a stable force.
Cryptocurrencies also give you a lot of anonymity. Unfortunately, a criminal element can lead to the misuse of cryptocurrency for its purposes, just as ordinary money can be misused. However, the government cannot track your every purchase and invade your personal privacy.
Cryptocurrency comes in few forms. Bitcoin was the first and is the standard for all other cryptocurrencies. All are generated using a complex encoding tool using a rigorous alpha-number encoding tool. Other cryptocurrencies are Litecoin, Namecoin, Peercoin, Dogecoin and Worldcoin, to name a few. These are called altcoins as a general name. The prices of each are regulated by the supply of the specific cryptocurrency and the market demand for that currency.
The way cryptocurrency is created is quite fascinating. Unlike gold that needs to be extracted from the earth, cryptocurrency is just a virtual book entry stored on various computers around the world. These inputs must be ‘mined’ using mathematical algorithms. Individual users, or possibly a group of users, perform computational analysis to find certain data series, called blocks. “Miners” find data in the cryptographic algorithm that creates an accurate model. At that point, it is applied to the series, and they have found a block. After an equivalent block data series 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. Along with 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 commodity mining like gold.
Now, anyone can be a miner. The creators of Bitcoin made open source mining tool code, 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 crooked. Many users have specialized computers made specifically for cryptocurrency mining. Both the user and the specialized computer are called miners.
Miners (humans) also keep transaction books and act as auditors so that a coin is not duplicated in any way. This prevents the system from being hacked and indifferent. They pay for this work because they receive new cryptocurrencies every week that keep them running. They store their cryptocurrency in specialized files on computers or other personal devices. These files are called wallets.
Let’s review some of the definitions we’ve learned:
• Cryptocurrency: electronic currency; also called digital currency.
• Fiat money: any legal money; protected by the government, it is used in the banking system.
• Bitcoin: the original cryptocurrency and gold standard.
• Altcoin: Other cryptocurrencies with the same process as Bitcoin, but with minor changes in their encryption.
• Miners: a person or group that uses their own resources (computers, electricity, space) to make digital coins.
o Also a specialized computer specifically designed to find new coins through computer algorithm series.
• 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.
• Stable and finite currency system. For example, only 21,000,000 Bitcoins are produced for all time.
• It does not need any government or bank to function.
• The price is decided according to the number of coins found and used, and is combined with the public demand to have them.
• There are many types of crypto currencies, Bitcoin in the first place.
• It can lead to great wealth, but, like any investment, it carries risks.
Most people think that the concept of cryptocurrency is fascinating. It’s a new area that for many of them could be the next gold mine. If you find that it’s something you want to know more about that cryptocurrency, you’ve found the right report. Anyway, in this report I have barely touched the surface. There’s a lot more to cryptocurrency than what I’ve spent here.