The word "cryptocurrency" can be heard everywhere: there are daily news online on the growth or fall of the Bitcoin exchange rate or the creation of a new cryptocurrency, hacker attacks on cryptocurrency exchanges, on the fact that even the most eminent financiers now choose cryptocurrency instead of traditionally investing in shares, gold or dollars. What is the cryptocurrency and why it has gained such popularity all over the world?
Cryptocurrency: what is it?
In simple terms, the cryptocurrency is one of the varieties of digital currencies that is created using cryptographic (encryption) methods. Cryptocurrency is a system of unique computer codes of the type that are used to encrypt information when transferring money over the Internet. Each such code is one cryptonet. It can be generated independently with the help of computer equipment, which has very large computing power. This process of extracting cryptocurrency from the Internet is called mining.
Cryptocurrency is also often called virtual currency, because unlike ordinary money, it cannot be cashed. There are no physical cryptomanes or bills, but this is not a problem nowadays, because almost everything can be bought and paid online now. Of course, for the time being the range of application of cryptocurrency is not so wide, but now the same bitcoins can be used to buy software, to pay for the tickets for a plane or a hotel room booking or even for making a donation for the church!
What is Bitcoin?
Even if you know nothing about the cryptocurrency, the name Bitcoin is probably familiar to you. Bitcoin is the very first and the most popular and expensive cryptocurrency at the moment. It was created in 2009 by a mysterious programmer Satoshi Nakamoto (by the way, his identity is still a mystery!). Of course, at that time, few believed that cryptocurrency was not just another useless invention of Internet geniuses, but, perhaps, the currency of the future, so the cost of one coin was less than $ 1. In the first years of its existence, the bitcoin course was growing and falling, but the real boom happened in 2017: the cost of Bitcoin grew almost 15 times! The maximum price of the year reached 20 thousand dollars for 1 bitcoin.
Why is bitcoin so expensive? First, high technologies have taken a huge leap forward and are improving more and more each passing day, which opens new opportunities for Internet users. Using cryptocurrency became not only convenient, but also fashionable, so the demand for the cryptocurrency began to grow by leaps and bounds. And secondly, the fast demand caused even more rapid price growth, because when the currency becomes more expensive, its value grows in the eyes of investors, it is bought even more actively, which only accelerates the growth of quotations. However, some experts believe the cryptocurrency "bubble" will burst soon and that all cryptocurrencies will collapse in value. Nevertheless, it hasn’t happened yet.
What differentiates the cryptocurrency from conventional currency?
Cryptocurrency is not only a currency without cash: it has a number of cardinal differences that makes the digital currency so attractive. For example, conventional currencies, such as the euro or the dollar, are issued and controlled by central banks. Regulators can follow all transactions with these currencies, because with any electronic transfer it is clear who sent the money to whom. With cryptocurrency, everything is completely different. They do not have a centralized supervisory authority, and the use of cryptocurrency is anonymous. All transactions are just combinations of computer codes, behind which anyone can stand. On the one hand, this may seem insecure, since cryptocurrency can be used for money laundering (that is why the virtual currency is still banned in so many countries). On the other hand, it is very convenient, because such transactions have a very high degree of protection.
Cryptocurrencies have already become an integral part of the world and their popularity is constantly growing. Evidently, the opportunities for earning money on them are also expanding: for example, today there are such trading tools that make it possible to earn even on fluctuations of the currency exchange rates.