How Cryptocurrency Works

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In simple terms, cryptocurrency is digital currency, designed to be secure and anonymous in some cases. It is closely associated with the Internet, which uses cryptography, a process in which legible information is converted into a code that can not be decrypted to cover all transfers and purchases.

Cryptography has a history dating back to the Second World War, when it was necessary to communicate in the most secure way. Since then, a similar evolution has occurred and it has become digital today, where different elements of computer science and mathematical theory are used to secure communications, money and information online.

The first cryptocurrency

The very first cryptocurrency was introduced in 2009 and is still well known around the world. Since then, many other crypto-currencies have been introduced today and you can find as many on the Internet.

How they work

This type of digital currency uses decentralized technology to allow different users to make secure payments and also to store money without necessarily using a name or even going through a financial institution. They are mainly run on a blockchain. A blockchain is a large public book distributed publicly.

Cryptocurrency units are usually created with the help of a process called extraction. This usually involves using a computer. Doing it this way solves the calculation problems that can be very complicated when generating parts. Users are only allowed to buy currencies from brokers and then store them in cryptographic wallets where they can be easily spent.

The crypto-currencies and the application of blockchain technology are still in their infancy when considered in financial terms. More uses could emerge in the future because nothing helps to know what else will be invented. The future of trading in equities, bonds and other types of financial assets could very well be negotiated in the future thanks to cryptocurrency and blockchain technology.

Why use cryptocurrency?

One of the main features of these currencies is the fact that they are secure and that they offer a level of anonymity that you can not get anywhere else. No transaction can be reversed or simulated. This is by far the biggest reason why you should consider using them.

The fees charged for this type of currency are also quite low, making it a very reliable option compared to the conventional currency. Since they are decentralized by nature, they are accessible to anyone, unlike banks where accounts are opened only with authorization.

The cryptocurrency markets offer a whole new cash and the rewards can sometimes be great. You can make a very small investment only to find that it has turned into something big in a very short time. However, it is still important to note that the market can also be volatile and that buying involves risks.


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