What is cryptocurrency?
Lately, many are asking: cryptocurrency — what is it?
Cryptocurrency is a digital (virtual) currency unit which is coin (eng. -coin). The coin is protected from tampering, as it represents encrypted information, a copy of which is impossible (the use of cryptography and defined the prefix "crypto" in the title). What is the electronic cryptocurrency is different from conventional money in electronic form? In order for an ordinary money appeared in the account in electronic form, they must first be deposited in a physical embodiment, for example, via the Bank or payment terminal. That is, for ordinary currency electronic form is just one of the forms of representation. Cryptocurrency is issued directly to the network and has nothing to do with any normal currency or any state currency system. Thus, the answer to the question "cryptocurrency is that it is" simple words will sound like "is an electronic money".
To start extracting it in the network (called hashing) can be anyone possessing computer equipment capacity requirements, and special software. In the process of mining computing power of the hardware to solve the algorithms whose complexity is gradually increasing, determined, mined a coin or a set of encrypted information. Evidence of coins in the network is the blockchain – a kind of account. Holding the currency is decentralized, distributed by e-cryptocotyle users.
Of its properties and characteristics are derived the advantages and disadvantages compared to traditional currencies:
The advantages of cryptocurrencies
Disadvantages of the cryptocurrency
The outdoor code of the algorithm allows to produce it for everyone
Due to the lack of regulatory mechanisms there is no guarantee of security of electronic cryptocell
The anonymity of transactions — information about the owner of the crypto missing (there are only number of the purse)
High volatility due to the specifics of usage
Decentralized nature, no single digital Bank, the lack of monitoring transactions and payments
By national regulators potential negative action against her (such as the prohibition of the Central Bank of the Russian Federation on bitcoin transactions)
Not subject to inflation (is issued a limited number of coins)
Losing the password to the e-crypto or malfunction result in the irretrievable loss of all the amount of cryptocoins.
Security: cannot be copied.
With the increasing level of difficulty mining becomes unprofitable amount of cryptocoins on the equipment of individual users.
All advantages and disadvantages has fully and most popular, today, cryptocurrency BitCoin (bitcoin). In the period from 2007-2009 a certain group of people has developed a unique algorithm of bitcoin began its emissions and production in the network. First, bitcoin was little known and was a lot of techies and it people. The number of miners as a result was limited, production was going slowly, the process of introduction of bitcoin in life, no one has managed (and, therefore, lacked any strategy and concept), in General it was not clear what bitcoin is and what to do with it. Was low and production cost is 0.1$ per coin. On the fate of bitcoin in 2010. — influenced by some of the events, the consequences of which there was for him so well. A breakthrough was the provision of one of the exchanges the exchange bitcoin for real money, albeit in a minor then the course. At the same time in bitcoin as an ideal means of anonymous transactions drew the attention of some of the portals of the underground trade. All this caused a rapid growth of interest in bitcoin gained popularity, the cost has become to grow very fast, and traders brought bitcoin to a global level of fame. Then there were the rise of bitcoin up to the$ 1,100 per coin in 2013. and the fall to the current level of 200-250$ for 1 sun.
But bitcoin is currently the most popular and well-known cryptocurrency, has the biggest capitalization of 3.2 billion dollars. Today, bitcoins can be exchanged in some machines for regular currency, some outlets and sites accept bitcoins as payment for goods and services, bitcoin has long lost its initial dependence on the institutions of the underground trade, and now bitcoin is used in the financial markets and the real sector.
Another popular bitcoin – LitCoin, LC, although it is represented not as widespread as bitcoin. Capitalization LC is small, less than 100 million $. Modern cryptocurrency is a small niche market. This is due, in particular, and with the chain "production-own-storage-use": the miners have either their servers or the connection to the server pools that mined virtual currency to then earn ordinary currency by speculation. Mined bitcoins - what to do with them next? The question is: if you have a cryptocurrency that you can buy on her? It can be stored in their cryptocotyle you can use to sell to those who do not have the capacity of mining can be spent on those services, which provide for payment in bitcoins. And which outlets accept bitcoin is, oddly enough, the online stores selling the same mining equipment, or gaming portals providing fast money and fast withdrawal. Of course, there are the usual shops and online services accepting bitcoin as payment, but it is not particularly systematic. Thus, today the cryptocurrency market is small, unbalanced and dependent on speculative sentiment, which leads to a lot of volatility.
That's what cryptocurrency is and is if to state briefly the situation with her today. Theoretically, today anyone can not only to mine crypto-currency (and its varieties – dozens), but also to create their own. The success of the cryptocurrency today is due to the breadth of the audience, such currency should be people known and popular. Watch the video "cryptocurrency — what is it", which is a lot today in the Internet, you can get more information on this topic.