In modern society, more and more people are interested in cryptocurrency and its potential, people are beginning to recognize the bitcoin icon from the photo above. However, many still do not understand what a cryptocurrency is, why it is needed and how it works. In this article, we will look at the main aspects of cryptocurrency, explain its essence and advantages, and also tell how ordinary people can use cryptocurrency to their advantage.
What is cryptocurrency?
Cryptocurrency is a kind of payment instrument that exists in electronic form. It is implemented in the form of a mathematical code and got its name based on the principle of operation – all transactions are carried out using cryptographic elements and an electronic signature. The main unit of measurement in the cryptocurrency system is a coin that exists only in digital form.
How did cryptocurrency appear?
The term "cryptocurrency" first appeared in 2011 in an article in Forbes magazine. Since then, it has become increasingly popular and has started to be used frequently in news and people's conversations. Cryptocurrency was developed as a response to the need for secure and anonymous financial transactions in the digital space.
How does cryptocurrency work?
The basis of the cryptocurrency is the blockchain technology. Blockchain is a public special registry that stores information about all transactions with cryptocurrencies. Each transaction is recorded in a block, which is then added to the block chain. Each block contains information about the previous block, which ensures the integrity and reliability of the system.
Basic principles of cryptocurrency operation:
● Decentralization: Unlike traditional financial systems, cryptocurrency is not controlled by a central institution such as a bank or government. Instead, transactions are conducted directly between network participants.
● Anonymity: Cryptocurrency transactions are carried out using pseudonyms and do not require disclosure of personal information of participants. This makes cryptocurrency attractive to those who value privacy.
● Fast and low fees: Cryptocurrency transactions are processed almost instantly and require insignificant fees. This makes them more convenient and profitable to use in comparison with traditional financial systems.
● Reliability and security: Blockchain ensures the reliability and security of transactions with cryptocurrency. Each transaction is recorded in a block and stored on multiple computers, making it virtually impossible to fake or modify.
Why do we need cryptocurrency?
Why do we need a cryptocurrency? Cryptocurrency has a number of advantages and applications:
● Payment for goods and services (prohibited in the territory of the Russian Federation, 259-FZ): Many online stores and trading platforms already accept cryptocurrency as a means of payment. Cryptocurrency allows you to make anonymous and secure payments that do not require the disclosure of personal information.
● Investments: Cryptocurrency provides an opportunity for long-term investments. Many people buy cryptocurrency and wait for its value to rise in order to sell it at a profit.
● Trading: The volatility of the cryptocurrency exchange rate allows you to earn on the price difference on trading platforms. Many traders are actively engaged in buying and selling cryptocurrencies for profit.
● Storage of funds: Cryptocurrency provides secure storage of funds. Since access to the wallet is carried out using a private key, the theft of funds is almost impossible.
The modern benefits of transactions in cryptocurrency
Cryptocurrency is regulated by each individual country in different ways. But the technology itself does not depend on any country. The currency is decentralized, so your crypto wallet cannot be blocked by the authorities of any country. This means that the cryptocurrency is not subject to sanctions.
In modern conditions, this is a great way for residents of Russia to transfer and receive funds. If we are talking about good intentions. Of course, cryptocurrency is also popular with scammers, but if you buy cryptocurrency yourself and then transfer it in proven services, withdraw it in verified exchange offices, then you don't have to worry about scammers. The value of cryptocurrency in terms of protection from fraudsters and other criminal elements is that you can store the balance physically, that is, just on a flash drive.