What is cryptocurrency and how does it work?

Despite the fact that cryptocurrency appeared more than 10 years ago, many still do not understand what it is, where it comes from, how it works and why people invest in it. Everything in order in our article.

What is a cryptocurrency

In 2009, a certain Satoshi Nakamoto, whose identity has not yet been established, presented the first cryptocurrency - bitcoin. The developer was faced with the task of creating alternative money to national currencies and organizing transactions unregulated by government agencies. The experience was successful and marked the beginning of the era of digital coins.

Today, about 8 thousand different types of cryptocurrency are known, but bitcoin remains the most reliable and stable of the entire list. Here is an overview of the best coins included in the TOP in terms of capitalization and popularity. This information is useful for those who decide to invest in cryptocurrency. We will continue to deal with its nature.

In simple terms, "cryptocurrency" is virtual money, the emission of which occurs electronically through complex mathematical calculations. Tokens do not have a real physical form, are not backed by goods, and exist only on the Internet in the form of program code in the online database of specific transactions. However, they have their own course and can be used as a means of payment, and as a financial asset in which you can invest.

Where do you get cryptocurrency

There are several ways to get cryptocurrencies:

Mining. This is the processing of transactions and the formation of data blocks, for which a reward is issued in the form of cryptocoins. For mining, there are special programs that are installed on powerful computers with several video cards or ASIC controllers.

Exchanges and exchangers. The easiest and easiest way to become an owner of a digital currency is to enter the market and buy it with real money. For these purposes, many platforms have been created on the Internet: crypto-exchanges and exchangers.

There is another way, the so-called "faucet" sites. Here, cryptocurrency is distributed for certain actions: entering captcha, browsing sites, etc. Bonuses are negligible, but if you receive them regularly, you can accumulate a good amount over time.

How Cryptocurrency Works

Cryptocurrencies have mixed prospects. Experts express the most daring forecasts: from the complete capture of the world's financial market to a large-scale collapse. In the meantime, the cryptocurrency market is developing successfully: new types of coins are being developed, protection mechanisms are being improved, and the time of transactions is accelerating. Today, cryptocurrency can be used to pay for goods/services (in a number of countries), but it is especially interesting as an investment tool. Among the main principles of its work:

Decentralization. There is no single issuer, which means it cannot change the course or withdraw tokens from the exchange.

Inflation protection. The end issue is known, which preserves the value of the asset.

Anonymity. Many exchanges do not require the provision of personal data.

High profitability in the future. The price of the crypto depends on the demand. Despite the high volatility (rising or falling prices in the short term), in the long term, its value is growing.

Cryptocurrency is trending now, but is still at the stage of initial development. Investing in something new always comes with challenges to be prepared for. Therefore, experts give advice, before you start investing in crypto, to thoroughly study this tool.