When most people think of a cryptocurrency, they might also think of a cryptocurrency. Few people seem to know what it is, and for some reason it seems that everyone is talking about it as if they know it. We hope this report demystifies all aspects of cryptocurrency, so by the time you finish reading, you’ll have a pretty good idea of what it is and what it’s about.
You may find that cryptocurrency is for you or not, but at least you will be able to speak with a certain amount of confidence and knowledge that others will not possess.
There are many people who have already achieved millionaire status by trading cryptocurrency. Obviously, 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 exactly how it acquires value.
Cryptocurrency is a digital, virtual, decentralized currency obtained using cryptography, which, according to Merriam Webster’s dictionary, is “computerized encoding and decoding of information.” Cryptography is a framework that allows you to make debit cards, computer banking and e-commerce systems.
Cryptocurrency is not supported by banks; this is not backed up by the government, but by an extremely complex arrangement of algorithms. Cryptocurrency is electricity that is encoded into complex chains of algorithms. What gives monetary value is their complexity and security from hackers. The method of making a cryptocurrency is just too complicated to reproduce.
Cryptocurrency is the exact opposite of what is called fiat money. Fiat money is a currency that gets its value through government decrees or laws. Examples are the dollar, yen and euro. Any currency that is defined as legal tender is fiat money.
Unlike fiat money, the other part of what makes cryptocurrency valuable is that, as with commodities like silver and gold, there is only a finite amount of them. Of these extremely complex algorithms, only 21,000,000 were produced. No more, no less. This cannot be changed by printing more of them like a government that prints more money to inflate a system without support. Or a bank that changes the digital book – the Federal Reserve will instruct banks to adjust for inflation.
Cryptocurrency is a tool for buying, selling and investing that completely avoids both government supervision and banking systems that track the movement of your money. Given the destabilization of the world economy, this system can become a stable force.
Cryptocurrency also gives you a lot of anonymity. Unfortunately, this can lead to the misuse of criminal elements by using cryptocurrency for their own purposes, just as ordinary money can be misused. However, it can also prevent the government from tracking your every purchase and invading your personal privacy.
Cryptocurrency exists in several forms. Bitcoin was the first and is the standard by which all other cryptocurrencies blow themselves up. They are all produced using meticulous alphanumeric computing with a sophisticated coding tool. Some other cryptocurrencies are Litecoin, Namecoin, Peercoin, Dogecoin and Worldcoin to name a few. They are called altcoins as a generalized name. Prices for each of them are governed by the supply of a particular cryptocurrency and the demand that the market has for that currency.
The way to create a cryptocurrency is quite exciting. Unlike gold, which needs to be extracted from the ground, cryptocurrency is simply an entry in a virtual book that is stored in various computers around the world. These records must be “retrieved” using mathematical algorithms. Individual users or, more likely, a group of users perform computational analysis to find a specific series of data called blocks. “Miners” find data that creates an accurate sample of a cryptographic algorithm. At this point it applies to the series and they found the block. Once the equivalent number of data on the block matches the algorithm, the data block was encrypted. Miner receives a reward for a certain amount of cryptocurrency. Over time, the amount of the reward decreases as the cryptocurrency becomes smaller. In addition, the complexity of algorithms when searching for new blocks increases. It is computationally more difficult to find a suitable series. Both of these scenarios combine to reduce the rate of cryptocurrency creation. This mimics the difficulties and scarcity of mining things like gold.
Now anyone can become a miner. The creators of bitcoin have made an open source mining tool, so it is free for everyone. However, the computers they use run around the clock, seven days a week. The algorithms are very complex and the CPU runs at full tilt. Many users have specialized computers made specifically for cryptocurrency mining. Both the user and the specialized computer are called miners.
Miners (human) also keep transaction books and act as auditors so that the coin is not duplicated in any way. This keeps the system from hacking and running. They are paid for this work by receiving a new cryptocurrency each week that supports their work. They store their cryptocurrency in specialized files on their computers or other personal devices. These files are called wallets.
Let’s summarize a few more definitions we learned:
• Cryptocurrency: electronic currency; also called digital currency.
• Fiat money: any legal tender; government support used in the banking system.
• Bitcoin: the original and gold standard of cryptocurrency.
• Altcoin: other cryptocurrencies whose patterns are similar to processes like Bitcoin, but with small differences in their encoding.
• Miner: a person or group of individuals who use their own resources (computers, electricity, space) to mine digital coins.
o Also a specialized computer made specifically for finding new coins using a computational series of algorithms.
• Wallet: A small file on your computer where you store your digital money.
Conceptualization of the cryptocurrency system in a nutshell:
• Electronic money.
• Extracted by people who use their own resources to search for coins.
• Stable, limited currency system. For example, only 21,000,000 bitcoins have been produced in all time.
• Does not require the government or bank to force you to work.
• Prices are determined by the number of coins found and used, which is combined with the requirement of the population to have them.
• There are several forms of cryptocurrency, and bitcoin is in the first place.
• Can bring great wealth, but like any investment, has risks.
Most people find the concept of cryptocurrency fascinating. This is a new field that could become the next gold mine for many. If you find that cryptocurrency is something you want to know more about, you’ve found the right report. However, in this report I barely touched the surface. The cryptocurrency is much more than what I have experienced here.