The term “cryptocurrency” refers to digital currencies. It is created and transmitted using cryptographic methods, mainly based on blockchain technology. Initially “Coins” are emitted in electronic form through mathematical calculations. In simple phrase, cryptocurrency is an artificial payment system equated with real money and has an official exchange rate.
The concept of cryptocurrency in simple words
In 2011 people began to discuss the term “cryptocurrency”.Since then, the name has come into use and it is used to coins (literally coins), which do not have the form of banknotes or coins made of metal.This kind of money exists in the digital space only.
Prospects for the development of cryptocurrencies are interconnected with the progress of Internet technologies.Unlike other electronic payment systems, cryptocurrency initially appears without real money. To become the owner of a certain amount of coins, it is enough to connect to the service of their creation, become a member of a single mining network and wait for your “earnings”.This is the key difference between cryptocurrency and real money-the latter are emitted by the permission of the Central Bank.
Why virtual money is popular
Any type of cryptocurrency has no official status as a means of payment (a number of countries have already recognized bitcoin, but this issue is still being discussed in Russia).But typical properties like decentralization are attractive to users. The owner of any existing cryptocurrency is not tied to any geographic location, state or political system. Despite the peg to real money like the US dollar or the Euro, digital money is “valuable in itself”.
Virtual money gained popularity for the following reasons:
It is widely used. Wallet is easy to create on any computer, smartphone or tablet.
Simplicity and openness of payment transactions.The full history of
incoming and outgoing transactions is stored without time limits.
Each node of the cryptocurrency generation system is equal, there is no single center, which excludes blocking wallets, cancellation and control of payments.
Anonymity increases the independence of the payment system. When making payments, you can note the address, account number if you wish.
Transactions are protected by a cryptographic method. You will not confirm the financial transaction without transfering a block with a special verification code. If it is done, no one will be able to cancel the money transfer, that eliminates fraud when paying for goods/services using cryptocurrency.
Due to the high reliability of e-wallets, protected by a private key, cryptocurrency can be used to create savings. Savings will be useful as a universal means of exchange, a method of payment in online stores or on the freelancer exchanges. Many users accumulate bitcoins in the hope to earn due to the significant growth of the exchange rate against US dollar.
Forms of cryptocurrencies
The blockchain technology used in generating cryptocurrency coins allows creating unlimited number of types of digital money. But not everyone can achieve high popularity and connect a large number of users to the mining (generation process).Without a developed network, the number of “coins” will be minimal and the public won’t be interested in such a “currency”. Many European countries consider the possibility of issuing a “state” cryptocurrency. Popularity is considered the value of exchange rate against US dollar:
Bitcoin ( the first variant of cryptocurrency) came in 2009.
Ethereum. The creation began in 2015.The technology is used in registration of transactions, transfer of resources/copyright.
Litecoin is considered to be a derivative of bitcoin. The generation was launched in 2011.
Dash. Previously, the currency was called Darkcoin. Requires a minimum of resources for mining.
The list is easy to continue — Primecoin, Peercoin, DogeCoin, Namecoin, etc., but only a small number of digital currency variants are recognized.
The rest are often named ” bubbles”, electronic financial pyramids that can cease to exist at any time.This risk exists for all forms of cryptocurrency. In practice, even bitcoin can “disappear” (there is no legally accepted way to resolve such situations).
All types of cryptocurrencies use an open algorithm of generation, so the connection to a common network of any of them is purely voluntary.The transfer of information about the e-wallet is completely safe, no personal data is disclosed. In part, this is an obstacle to the recognition of coins by the state, because the legislation requires full control over the movement of funds in the country, and the cryptocurrency is initially protected.
Before using cryptocurrency it is worth paying attention to a number of shortcomings inherent in this payment system.They are common to most online resources and it easy to pass them by paying attention to the security of your computer.
Focus your attention on the following points :
The safety of the password. It is a great risk to lose the password (forgot, can’t replace because of the change of the SIM card, e-mail), and theft of credentials. The second case is more risky because you can loose all funds in the wallet.
At the change of the cryptocurrency exchange rate, you can both earn and loose money. It all depends on the exchange rate fluctuations after purchasing “coins”, whether the owner will immediately spend the currency or will create savings.
There is a high probability of
restrictive laws emergence.
In Russia, the Central Bank is the main regulator of the financial system and it seeks to control the entire money supply in the country. There is already an initiative to limit the number of cryptocurrencies that will be available to individuals.
Mining is losing popularity due to the sharp complexity increase of the algorithm calculations and the constant growth of requirements for the hardware of computers used for calculations.The profitability of the purchase depends on the current rate. As long as there is a tendency of its constant growth, temporary adjustments in the direction of reducing cryptocurrencies price are insignificant, bitcoins and analogues remain an attractive investment vehicle.
How to get cryptocurrency
Anyone who registered in the system can become the owner of the cryptocurrency. It is enough to create your own e-wallet, verify your personal account and save your credentials in a safe place. You can recharge a wallet after registration. Cryptocurrency is attractive because you can get it almost without investments.
Ways to acquire crypto currencies (for example Bitcoin):
Mining on your own computer (you will need a powerful video card or farm for calculations on a given algorithm).
Connection to cloud mining services. For a low subscription fee you can acquire access to powerful remote servers that suitable for mining.
Purchase at the current rate. You can use any online exchanger that offers the most favorable rate and accepts the available currency. You can use almost any accumulation (WebMoney, Kiwi, etc.).
Variants to obtain digital coins appear.The higher the value of the cryptocurrency, the higher the activity of users.For example, receiving bitcoins is possible as a payment for the work or as a gift from another user of the system.
How to earn with the help of cryptocurrency
Cryptocurrency is not only one of the ways to create online accumulation.Internet wallet is beneficial due to the lack of risk of theft or force majeure such as fire, flood. Various cryptocurrencies can be earned without direct purchase, much depends on the situation, the ability to predict the change in the rate.
There are several ways to earn on bitcoins:
Investing in cryptocurrency.Buying coins at a lower rate and their implementation at peak values. This allows you to earn through the exchange rate difference.
ICO (Initial Coin Offering).
Creating the first coins of the new cryptocurrency allows you to become the owner of the coins at the lowest price.Subsequently, they are exchanged for real currency at any time when the rate rises to the desired value.
Trading on the exchange pair BTC/USD can be carried out both on the decline and on the appreciation.
You can also work as a consultant. You can not even have your own e-wallet, but only understand the system, be able to explain the subtleties of its work to other users. Such a business is popular because of the lack of large financial investments and the ability to conduct it throughout the country, regardless of the owner location.
In 2019, the most famous variants of cryptocurrencies are Stratis, Nem, Ripple, Ethereum, Dash, Litecoin.
They have risen in price in less than a year to 30-90 times. Those owners of digital currency, who purchased it at the very beginning of mining, improved their became the owner of significant amounts in terms of rubles/us dollars.
Why bitcoin is popular
Bitcoins are considered as an example of advantages of digital money. When they study the question of what cryptocurrency is they mean BTC. Its rate has also increased over the past few months, what attracts specialists in earnings on exchanges (due to periodic growth/fall in prices).
The bitcoin popularity is associated with its recognition of a number of States as one of the official payment systems (for example, this happened in Japan).
The rest of the benefits are common to all types of cryptocurrency:
Full transparency of transactions. Only the money owner can make the transfer, and once he does, no one is able to cancel the operation.
High anonymity degree
Users of the system can only access the wallet number, personal data is not published or transmitted.
Guaranteed currency deficit.There is a strict limit of the generated coins number it is due to the algorithm of calculations Satoshi (“penny” bitcoin).
The absence of inflation.
The digital nature of cryptocurrency allows to ensure its independence from economic, political and natural factors that directly affect the real currencies rates.
The cost of bitcoin is constantly growing, the forecasts for further growth are positive.Due to this positioning, its popularity will continue to grow. As a result, the calculation period of the last coin gets much closer. At the time of this event, the bitcoin exchange rate can change unpredictably, but until this is discussed, users of the system expect to earn.
Prospects for the development of cryptocurrency market.
The practical use of cryptocurrencies as money largely depends on the state policy.The European Union considers bitcoin as a universal contractual means, and a number of Asian countries have officially accepted it (Japan) or restricted its use up to a complete ban on the possession of coins (China).
Russia hasn’t made up its mind about attitude to the digital currency.The Central Bank of the Russian Federation proposes to create its own analogue of bitcoin (under the state control), but until the legislative base is developed, it will not appear. Defense and law enforcement agencies consider such means of payment as a way of financing illegal activities or money laundering obtained by criminal means. Time will show how the system of legislation on cryptocurrencies will develop.
Meanwhile,traders around the world are using pairs like BTC/USD to make money on the jumps in the bitcoin value, including the growth trend and systematic price correction.Brokers that work in the Forex market with the currency of the world, precious metals provide access to trading.
The high volatility of the pair which includes bitcoin provides a chance to earn quickly without direct purchase of cryptocurrency.