What is Cryptocurrency? The future's Money

What is Cryptocurrency? The future’s Money

  • 2 December 2020
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Cryptocurrency is a decentralized digital currency based on Blockchain technology that is being developed at high speed and with the support of many developers. Compared to tangible cash, it has no physical existence and is digitally available for exchange. The word “encrypted” actually refers to its cryptographic structure. Blockchain uses the encryption structure when performing transactions to increase security and authentication in the network.

The use of cryptocurrency in transactions instead of cash does not require the existence of any intermediary institution such as a bank. This feature can reduce or eliminate the amount of commission that financial institutions receive for various operations.

How to create a cryptocurrency?

The blockchain network processes cryptocurrency transactions. The blockchain is a decentralized network. It takes a while for users to approve transactions, and they may suspend you as a user. One of the criticisms that have always been leveled at Bitcoin from the beginning is the amount of time it takes to complete a transaction.

Cryptocurrency transactions are inside a block on the blockchain. Computers on this network have to solve a complex mathematical problem. After one of these computers solves the problem, the answer is shown to the others on the network. If the whole network reaches a consensus that the answer is correct, that block will be added to the blockchain and the transaction will be successful. The network is frequently validating and verifying the last block on the blockchain and adding it to the chain. That’s why cryptocurrency has the ability for Crypto Mining.

How does the Crypto Mining work?

Crypto Mining is more like accounting. Miners are nodes that make transactions possible by performing certain tasks.
The steps are as follows:

  1. The blockchain network will be notified that they must send cryptocurrency tokens.
  2. Miners receive and encrypt information. This operation is a hashing function.
  3. Therefore, the platform collects information and hashes it until it is enough to create a block.
  4. Miners such as Bitmain AntRack miner compete to guess and find the encrypted code that will be given to the new block.
  5. A miner who guesses the correct code will add this block to the blockchain and will reward cryptocurrency in return.
  6. All nodes on the network now validate the transaction information on the new block.
  7. It is valid if the new block matches the whole blockchain. So the winning miner can add this block to the blockchain. This is called “proof-of-work“.
  8. The transaction ends.

Besides computers, many kinds of miner devices also participate in mining.

What is the crypto market?

The main characteristic of crypto markets is that they are decentralized. This means that it is not issued or supported by a central authority such as the government or any national bank. Instead, they run through a network of computers. Unlike traditional currencies, blockchain stores cryptocurrency only as a record of digital ownership information.

You can also trade cryptocurrencies with Fiat currencies, and you can replace your digital currencies with dollars, pounds, euros, etc. in some well-known markets and exchanges.

You can enter the cryptocurrency market for profit through both investment and trading. But in both cases, there is a risk to your capital. We can say that trading is relatively risky and has higher profitability. The price may go up or down in a short time. So of course, this price fluctuation is profitable for a skilled trader.

You will make a profit through investing, but it needs time because it takes a while for the profit to reach the investor.

What is the meaning of Altcoin?

According to the list of crypto markets, today there are more than five thousand digital currencies and more than 20 thousand different types of related markets. Bitcoin is the world’s first, oldest, and most well-known digital asset, and we call any cryptocurrency other than bitcoin an alternative coin or altcoin.

The term altcoin refers to any of the thousands of common post-bitcoin cryptocurrencies that pursue bitcoin-like goals. They may compete with bitcoin and other cryptocurrencies for ultimate dominance.

Since 2011, the amount of creation and publication of altcoins has grown to ascend. Bitcoin is more than 11 years old and so far there are about 5098 alternative cryptocurrencies or Altcoins.

Ethereum is the first Altcoin introduced to the market, followed by Litecoin, Ripple, and other cryptocurrencies. There are now thousands of cryptocurrencies that use bitcoin-based code, and developers have made minor changes to create coins such as Litecoin, Dash, Zcash, and Novacoin. Developers also developed Ethereum forks such as Ethereum Nowa and Ethereum Classic.

Most currencies in the crypto market, such as Tron, initially used the ERC20 standard, developed their tokens on the Ethereum platform, and then moved to their blockchain network.

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