The virtual world is complex and multifaceted. You can implement almost any project in it, including your own money. But the first digital currencies appeared only in 2009, when someone under the pseudonym Satoshi Nakamoto presented to the public his project - Bitcoin, which became the world's first cryptographic coin.

True, after this people had to explain for a long time what cryptocurrency is and why it is needed. The fact is that at that time a limited number of people had heard about digital coins, and even fewer could use them. Nevertheless, cryptocurrency quickly gained the status of a new generation of money, despite the fact that the history of these coins does not even count ten years. So, finally, we acquired a worthy competitor. The most daring forecasts on the topic of why cryptocurrency is needed say that they can completely or partially displace fiat from everyday life and be used as its more convenient, safe and profitable replacement.

These statements can be justified by the fact that the most popular coin today - Bitcoin - has grown in price so much that for one such coin you can buy a small apartment in a small city. Wait another year or two and it is quite possible that it will be enough for an expensive cottage in an elite area. Given such a rapid growth in the Bitcoin rate, people simply could not ignore the emergence of cryptographic coins. Therefore, the desire to understand what the essence of cryptocurrency is and how to work with it is natural.

The essence and principles of cryptocoins

The essence of cryptocurrency is to try to make money that does not depend on anyone. The very definition of “cryptocurrency” comes from a couple of words. The first word is cryptography, and the second is currency. That is, it is a currency that is based on the principles of cryptography. Money is essentially a kind of encrypted code. In addition, many coins operate on blockchain technology, just like bitcoins.

All cryptographic coins exist only in virtual space. But the essence of the concept of cryptocurrency is as follows - it is simply a code that is encrypted in such a way that each coin is unique. This prevents them from being counterfeited. To perform some kind of financial transaction, you need to transfer this hashed coin code to another person, who is the recipient.

This money is stored in virtual wallets or in wallet programs installed on the computer. But such wallets transfer the entire blockchain to the computer. If we take Bitcoin as an example, its blockchain today weighs more than 150 GB and is constantly growing. Therefore, users who want to work with cryptocurrencies, for the most part, choose virtual wallets, which are easier to manage and maintain.

Virtual wallets are often located on cryptocurrency exchanges. Exchanges are platforms where financial transactions with cryptocurrency are carried out; traders play on exchange rate differences, thereby earning their capital. You can also store and accumulate digital finances there. There’s just a risk that if something happens to the exchange, no one else will be able to gain access to their wallet.

In addition, unscrupulous exchanges deliberately block user accounts in order to get their coins. So it's a huge risk. Therefore, for Bitcoin, it is better to use BTC wallets created on the official website of the blockchain.info system, or by using other services, of which there are countless on the Internet. But it is better to use proven resources. Among them are the following wallets:

Transactions between wallet owners are made directly without intermediaries and almost instantly. But you have to pay a small commission for the transfer, although not for all cryptocurrencies. But for Bitcoin, for example, the commission is constantly growing. If you want your transaction to be completed as quickly as possible, then the commission should be higher. If you are willing to wait, then indicate a small commission or not indicate it at all. This is a voluntary transaction.

But before you take care of your wallet, you need to choose the method in which you will mine cryptocurrency. We are now talking about cryptocurrency mining. At the moment, there are three relatively realistic ways to mine cryptocoins:

The essence of working with cryptocurrency is to mine as many coins as possible. Some of them can be used as a means for long-term investment, while others are better used for quick earnings due to active rate fluctuations.

Miners play a very big role in cryptocurrency. In particular, on the Bitcoin blockchain, miners prevent the possibility of double spending. It is the miners who must give their consent to the transaction.

Cryptocurrency principles:

Nevertheless, having considered the concept and essence of cryptocurrency, we must not forget about its versatility. Among the coins existing today, we can distinguish liquid and illiquid. As their name implies, the former have relatively high chances of becoming a full-fledged financial unit in the future, while the latter also have this opportunity, but the likelihood of its implementation is much lower.

Among the cryptocurrencies that are characterized by high liquidity, in 2018 there are many cryptocurrencies other than Bitcoin. Speaking selectively, this list may include coins such as Ethereum, Litecoin, Namecoin, PPcoin and Primecoin.

What is the value of cryptocurrencies and why are they needed?

When considering why cryptocurrencies have value, it is important to talk about their positive aspects. And the advantages of the cryptocurrency financial system directly follow from its principles, which have already been stated above:

Why was cryptocurrency invented? Perhaps you should ask the creator of the world’s first cryptocurrency – Bitcoin – about this. Satoshi Nakamoto did it. But the prerequisites for creating digital money appeared a long time ago. The world of finance must develop, and cryptocurrency is just another step in development, and a completely natural one at that.

Fiat funds and securities are mostly accumulated by a privileged group of individuals. If we consider the situation in the United States, an example of such a distribution can be called: Federal Reserve System - first-tier banks - second-tier banks - everyone else.

If a distribution participant is close to the Fed, then he receives more privileges. That is, a person has a large number of unique conditions to use the resources provided. And the Fed itself does not have any restrictions at all either in issuing or declaring money, and even more so in its distribution.

But cryptographic coins like Bitcoin do not give anyone any preferences. In particular, there is no influence in the distribution of the newly issued money supply. In fact, login to the system is not controlled in any way - anyone can do it. The main thing is that this does not violate the rules of the system itself. And participants with equal voting rights will distribute resources. This is the main thing that can be said when answering the question of what cryptocurrency is needed for.

In addition, it does not need complex systems to ensure the movement of its funds. In particular, one or more cloud servers can replace a complex system of Swift, correspondent banks, data center and more. This will get rid of the main drawback of today's financial system - its closedness to ordinary people. Cryptocurrencies for everyone. They may not be ideal, but when considering who needs cryptocurrency, we can say that everyone needs it.

And finally, what is the use of cryptocurrency? It will revolutionize, if it has not already, the financial world. The economies of countries must now adapt to new conditions. In addition, those categories of the population who once could only think about wealth are now very wealthy people, having managed to invest in tokens that later became giants of the cryptocurrency market.

In addition, digital coins are not just money, they are entire platforms that solve most of the problems of the banking industry. For example, many coins help make instant international transfers with absolutely no fees, such as Ripley. Although, to be fair, there is a commission here, but it is one hundredth of a dollar, so due to its size it is almost invisible.

Ethereum generally positions itself not as a crypto-coin, but as a platform that uses a new generation of blockchain - the second in a row. Although, if we return to the same Ripley, it uses the third generation of blockchain, further refined and improved.

There is still a fly in the ointment

Considering the peculiarity of cryptocurrency, this financial industry cannot be called completely safe and ready for large-scale use. Still, the fact that cryptocurrencies appeared not so long ago affects what we have now. In particular, many projects are at the development stage, and it is too early to say what will come of them in the future. Other sites quickly and rapidly become outdated, unable to keep up with market demands. In particular, this applies to Bitcoin, on the network of which it is very difficult to complete a transaction, because the blockchain performs only 7 transactions per second, while users are not satisfied with even advanced indicators.

Among the disadvantages of electronic cash, if we summarize all cryptocurrencies, we can highlight the following points:

• 
  A person is forced to store all digital money in digital wallets, which we have already discussed above. This is convenient, but it is also one of the weakest points of the cryptocurrency system. To gain access to the wallet, you must be the owner of the keys and access codes. Usually they are stored on the computer if the wallet itself is installed on the device. If for some reason these codes end up in the wrong place, for example, in third-party hands, you can say goodbye to your money. Since when transferring them to another account, neither the legal owner nor the state will be able to return the cryptocurrency to its rightful place. The situation is exactly the same if for some reason the user loses or forgets his access keys. They are simply not stored anywhere else, so it will be impossible to restore access. The situation is the same on exchanges - the maximum penalty for closed accounts is no more than loss of reputation;
• 
  The second big disadvantage (or advantage, depending on your preference) is the volatility of the coins. Since the coins are not backed up by anything, including statements from the state that supports the exchange rate of fiat money, their price is subject to sharp and rapid jumps. Many people like frequent changes in the value of coins, but in fact it is a very dangerous thing. For example, the Bitcoin exchange rate has now increased (its rapid growth began at the end of 2017). The maximum price of the coin reached 18 thousand dollars and showed every sign that it would grow higher. But users who bought Bitcoin for 18 thousand dollars were in for a big disappointment, because after some time the coin fell to 14 thousand dollars and continues to fluctuate somewhere around 15 thousand. That is, people suffered losses. But the situation could have been much worse if Bitcoin had started to fall even lower. If we take into account the volatility factor, this decline could continue until the bubble called Bitcoin burst altogether. But this coin has worn out its reputation. Bitcoin is popular by inertia as a financial unit that has proven its reliability. True, it is difficult to predict how long this will continue;
• 
  Since cryptographic money is not controlled by anyone or anything in the virtual world, it can pose a serious threat to the global economy. Currency capitalization is constantly growing and regularly breaks records. Today, the total capitalization of the cryptocurrency market is $726.7 billion, while less than a month ago it was only $600 billion. Many countries do not want to accept such rapid growth, but this does not force users to give up earning cryptocurrency. But the country may officially ban the use of cryptocoins. Then people who want to keep up with the times and use coins will have a bad time. Exchanges will close, it will be impossible to exchange coins for fiat money, and exchanges will stop working - the use of digital money will become impossible;
• Over time, it will become more and more difficult to mine and earn bitcoins or other crypto coins that are subject to mining. The mining procedure itself involves increasing the complexity of the technology. Previously, it was possible to mine coins on a regular computer, but today it is almost impossible. More precisely, you can try, but it will be unprofitable. Today there are several alternatives to solo mining.
• 
  Connection with crime. Since encryption ensures complete anonymity, the criminal world, according to rumors, has not bypassed this industry with its attention. It is ideal for money laundering. But accusing the cryptocurrency community of being specifically designed for the mafia is stupid. The Internet is also used by criminal organizations, just like regular money, but no one is going to give it up. Nevertheless, such a scheme for using cryptocurrency raises concerns, so the lack of control over the cryptocurrency market in this context is rather a minus.

And, of course, there is always a risk that crypto coins can disappear at any moment - burst like a soap bubble, instantly losing, if not all of their value, then half of their value. In particular, this applies to the sensational Bitcoin. Even eminent experts call this coin something like a financial pyramid.

In addition, users who invest their money in ICOs risk even more than those who invest in regular crypto coins. Unfortunately, statistics do not lie, and more than 90% of all initial coin offering projects turn out to be unprofitable for users. But the remaining 10% can be beneficial.

To become successful, it is advisable to choose several coins at once to work with. And to protect yourself even more, it is important to use several exchanges at once. If there is another drop in the exchange rate, there is no need to rush to drain crypto coins. Often this is a temporary phenomenon that can be waited out.

Thus, the use of digital money is not distinguished by either legal or administrative security. Users make all transactions at their own peril and risk. So if any illegal actions are committed in relation to cryptocurrency, there will be no one to turn to. Well, the biggest drawback is the uncertainty of the purchasing power of virtual funds.

What do the experts say?

The topic of cryptocurrencies and why they are needed worries not only ordinary users, but also experts. They continue to figure out the reasons why cryptocurrency has such value and how it comes to be. This money is unique in its essence, because not everyone is like bitcoin. Let's look at a few expert opinions on why cryptocoins are needed:

So when considering Bitcoin and other cryptocurrencies, professionals see them as the future. The point is to have time to introduce new technologies into the economy and do it correctly.

Cryptocurrency is a new generation of virtual money. Their history is not even 10 years old, but economists talk about them as a new generation currency. According to them, cryptocurrency on the Internet is already a worthy competitor to fiat money (state currencies), and in the future it will be able to completely displace them from the sphere of electronic payments. These opinions are justified by the fact that now the exchange rate of the most famous digital currency Bitcoin to the US dollar exceeds 1 to 3600. And it is not surprising that among ordinary Internet users, cryptocurrency arouses great interest and a desire to understand what mining is and how to use coins. Let’s take a closer look at the features of digital money and try to explain in simple words “for dummies” what their essence and advantages are and how to earn and use them.

Digital currency: what is Bitcoin cryptocurrency in simple words for dummies

Today, the most famous and popular cryptocurrency is Bitcoin. In 2017, this digital currency is accepted by many online stores, it is traded on the Forex exchange, significant sums of world-famous corporations are investing in it, and the rate of these virtual coins is growing steadily. But in order to use bitcoin, you first need to understand what the essence of this currency is and how it differs from ordinary money.

The essence of Bitcoin cryptocurrency in simple words

The very concept of cryptocurrency comes from the addition of the words “cryptography” and “currency”, so it is obvious that this digital money can otherwise be called a currency, when performing transactions with which cryptography (encryption) methods are used. All electronic currencies exist only in virtual space, so if we explain what the Bitcoin cryptocurrency is in simple words for dummies, we can say that each btc is a digital code. And payments with digital money represent the transfer by the payer of a hashed code of a financial unit to the recipient.

The smallest financial unit in the Bitcoin system is Satoshi. 1 satoshi equals 0.00000001 BTC. Network users can store and accumulate digital finances in BTC wallets created either on the official website of the blockchain.info system, or using other services that are easy to find on the Internet. The user’s account can have any amount - from a few satoshis to hundreds of bitcoin coins or more, and no commission is charged for creating and using the wallet.

The whole truth about Bitcoin in simple words

Settlements between owners of Bitcoin wallets are made directly and almost instantly. There are no commissions or hidden payments in this virtual financial system, so paying with electronic money is very profitable.

Differences between cryptocurrency and fiat money

The main difference between coins and government currencies is the fact that they are not backed by anything, and their nominal value is not guaranteed by any administrative body. In simple terms for dummies, the coin rate is not set or supported by either states or non-state organizations. It depends only on how much the users themselves are willing to buy them for.

Cryptocurrency is issued in a decentralized manner, since this virtual money is not printed, but created by system participants. Therefore, there is neither a single issuer (in simple terms - an institution where there is a machine that prints money), nor a body that controls the issue and circulation of digital financial units.

What is cryptocurrency, its types, and why is it needed?

Despite the difference between digital money and fiat money, its purpose is the same as that of any government currency. The answer to the question of what cryptocurrency is and why it is needed is simple - bitcoins and other coins are a means of payment, accumulation and savings. Despite the fact that this money does not exist in physical form, it can be used to pay for goods and services on the Internet, as well as exchanged for dollars, euros and other currencies in online exchangers or sold on an exchange.

Types of cryptocurrencies

Today there are more than 250 types of digital currencies, but most of them are in low demand even on specialized exchanges. However, despite the difference in rate and liquidity, all electronic finance has a number of common characteristics, namely:

• Decentralized emission
• Possibility of coin mining by any network user
• Lack of a body that controls the issuance and circulation of digital money
• Irreversibility of transactions in the system (in simple terms - not a single payment made can be canceled or returned)
• Anonymity and high security of the electronic financial system.

In 2017, in addition to Bitcoin, digital money such as Ethereum (Ether), Litecoin (Litecoin), Namecoin, PPcoin and Primecoin are distinguished by high liquidity. But over time, the situation may change, and little-known currencies have a good chance of increasing their liquidity over time. Therefore, people who make money by investing in virtual financial units do not wonder why little-known cryptocurrencies are needed, but buy coins whose value is beginning to rise.

The history of the emergence of cryptocurrencies and blockchain technology

The history of the emergence of cryptocurrencies began in 2009, when the first digital currency bitcoin was created. At the same time, the real name of the creator of this electronic financial system remains a mystery to this day - the programmer or group of programmers who wrote the Bitcoin code is known to the world under the pseudonym Satoshi Nakamoto.

But it cannot be said that before the creation of btc no one used similar technologies. In fact, Satoshi Nakamoto used the “blind signature” and electronic cash algorithms created in 1983, the essence of which, in simple terms, is to maintain the anonymity of the payer while protecting the recipient from fraud.

The blockchain technology that underlies the entire Bitcoin system (and other cryptocurrencies) was created on the basis of the Hashcash anti-spam system, which was developed by Adam Back in 1997.

The essence of blockchain technology and its role in the history of cryptocurrencies

Blockchain technology is a chain of information blocks built according to certain rules and in a strict sequence that cannot be changed in any way. In fact, the entire Bitcoin system is a continuous sequence of blocks that reflect information about all transactions. In simple terms, blockchain is an archive of the entire system in which you can track the turnover of each individual financial unit.

It is blockchain technology that guarantees that counterfeiting bitcoin is impossible in principle. Each coin's code is unique and can be easily tracked in the database, so any fraudulent attempt will be immediately detected.

It is also important that the database is stored decentralized, on the computers of the owners of BTC wallets. This means that in order to hack it and counterfeit coins, you need to have physical access to the PCs of several million people.

Blockchain for dummies

Hello, dear readers of the site magazine! Today we will tell you what cryptocurrency is in simple words, how it works and why it is needed, what types of cryptocurrencies there are (we will give a list of the most promising ones).

Also from this article you will learn:

• How to use cryptocurrency and whether it is possible to make money on it;
• How is digital money secured?
• What can you buy with cryptocurrency?

And at the end of the publication you will find answers to the most popular questions on the subject of cryptocurrencies.

In this issue we will talk in simple and understandable words about cryptocurrency - what it is and what it is needed for, what cryptocurrencies there are besides Bitcoin, how to use them in everyday life

1. What is cryptocurrency in simple words - an overview of the concept for dummies 📋

Before using cryptocurrency, you should first understand what it is and how it works. First of all, you need to find out where this concept came from. First time term "Cryptocurrency" was used in 2011 year in an article in Forbes magazine. From that moment on, the term became firmly established.

What does “cryptocurrency” mean - definition and meaning of the term

Cryptocurrency (from English cryptocurrency) is a special type of electronic means of payment. At its core, it is a mathematical code. The term reflects the principle of operation of the currency, namely use of cryptographic code. When circulating cryptocurrencies, it is applied electronic signature📋 .

The unit of measurement in the digital money system is coins "coins" 💰 ( translated from English this term literally means "coins" ). But we should not forget that the physical expression in the form of banknotes and metal coins of cryptocurrency Dont Have. Such funds exist only in digital format 💻 .

The fundamental difference between cryptocurrencies and traditional (fiat) money is that they originated in a digital format. To use real currencies in non-cash payments, they must first be deposited into a special account or electronic account. In contrast, cryptocurrencies are already formed in electronic format.

There are several ways to “issue” digital money:

1. ICO – initial placement of money, which is essentially an investment system;
2. mining – maintaining the functionality of a special platform in order to generate new money;
3. forging – creation of new blocks in existing money.

Creation methods prove that cryptocurrencies are formed directly on the Internet.

Another important difference between electronic digital money and fiat money is the decentralization of emission. The issuance of cryptocurrencies is the generation of a mathematical code followed by an electronic signature.

Fiat money is issued exclusively by the central banks of various countries. At the same time, it has the right to issue cryptocurrencies absolutely any person . To make transactions using electronic money, you do not need to contact any financial companies, including banks.

Payments using cryptocurrencies are carried out on the same principle as traditional electronic transfers based on the principles of non-cash payments.

The exception is exchange trading, which allows you to conduct transactions with digital currencies, that is, transfer them into traditional means of payment, buy and sell them. Read about it in the article at the link.

The circulation of cryptocurrencies is carried out according to the blockchain principle. Translated from English, this concept means “ closed circuit" Such a system is a database distributed over a huge number of computers around the world🌍.

At the same time, the storage and recording of information during the circulation of electronic currencies is carried out simultaneously on all devices. This allows us to guarantee transparency and openness of all ongoing operations. You can read more about it in one of our publications.

2. Why has cryptocurrency become so popular 📈

The popularity of electronic money is determined primarily by the requirements of the time. The age of global spread of information technology has come 📡⌨🌏. In this situation, universal means of payment that are accepted for making payments in the digital space have become especially in demand.

At the same time, it is important that there was no binding to a specific country or financial institution. Cryptocurrencies have become just such a tool.

To make payments with such “crypto money” you only need a wallet number. This is why cryptocurrency does not require any real expression. Digital money protected by cryptographic code. As a result, they become more reliable compared to fiat funds💵.

❗Absolute decentralization of the issuance of cryptocurrencies leads to the fact that they impossible fake or prohibit.

Another characteristic that contributes to the growing popularity of electronic digital money is its complete anonymity . When carrying out transactions with cryptocurrencies, information about the parties to the transaction is not transmitted anywhere. The only information that is used in conducting them is the numbers of blockchain wallets.

Attention to cryptocurrencies Also attractive is the opportunity to create them yourself. In fact get it (mine ) digital money is available almost out of nowhere ⛏. At the same time, you can also make good money by investing in cryptocurrencies 📊, as well as trading them 📈.

Moreover, mined electronic money can be easily exchanged for real money. The result is a good regular income.

3. Pros (+) and cons (−) of cryptocurrency 📊

Electronic money differs greatly from fiat money. As a result, there are a huge number of not only the advantages of cryptocurrencies, but also their disadvantages.

The main advantages of cryptocurrency:

1. Anyone can engage in cryptocurrency mining (mining). The absence of emission centers, as well as regulatory authorities, means that there is no ban on the extraction of digital money for any citizens.
2. Decentralization of emission entails not only the possibility of independent issuance of cryptocurrencies by anyone, but also the lack of control on the part of states and financial authorities.
3. Protection with a cryptocurrency code allows you to protect electronic money from copying and counterfeiting.
4. Absolutely all transactions are carried out anonymously. In this case, the only information available is the e-wallet number. Other information about the payer and recipient of funds is confidential.
5. For each type of cryptocurrency, the maximum emission volume is determined. Therefore, excess output is not possible. As a result, there is no inflation for cryptocurrencies.
6. When conducting transactions with electronic money, there is almost never a commission. This is due to the absence of the need to involve a third party in the transaction, such as a bank or other financial institution. As a result, the cost of transactions with cryptocurrencies is much lower than with fiat money.

Despite the huge number of advantages of cryptocurrencies over real money, electronic money also has a number of disadvantages.

The main disadvantages of cryptocurrency:

1. Many states still do not accept cryptocurrencies as legal means of payment. Moreover, government agencies often try to negatively influence such funds.
2. Recover your password and e-wallet code impossible. Therefore, loss of access to the storage means the loss of funds placed in it.
3. Recently, there has been a trend towards increasing the complexity of cryptocurrency mining. Today, it is becoming less and less profitable for an individual user to mine digital money.

Another feature of cryptocurrencies is the high volatility level . This means that the course is in continuous motion. During the day, changes in the value of a currency can reach tens of percent. This feature can also be perceived as advantage, And How flaw. On the one hand, high volatility allows you to make good money, on the other hand, if the price goes in the wrong direction as expected, the losses can be colossal.

Each type of cryptocurrency has the following advantages and disadvantages. Before using any digital money, it is important to carefully study all the pros and cons. Cryptocurrencies also have all the main features of traditional money:

• means of calculation;
• versatility;
• medium of exchange;
• means of storage.

The value of electronic currencies is determined by the interaction of supply and demand for them.

List of popular types of cryptocurrencies

4. Types of cryptocurrencies – list + review of the TOP 6 most promising 📑

So, what are the cryptocurrencies? Below is list of 6 cryptocurrencies who turned out to be the most promising:

1. Bitcoin;
2. Litecoin;
3. Ethereum;
4. Monero;
5. Ripple;
6. Dash.

We will consider a brief overview of the above-mentioned cryptocurrencies below.

Cryptocurrency #1: Bitcoin

It became the world's first cryptocurrency. Since its creation, its popularity has grown so much that it is accepted as payment on many service sites, as well as in online stores. In a situation of continuous growth in the value of this currency, owning it becomes the most profitable.

Cryptocurrency No. 2: Litecoin

Litecoin was created as a peer-to-peer network. It was this that formed the basis of the new cryptocurrency. Litecoin appeared in 2011 and is one of the first forks of Bitcoin.

Among the advantages of this cryptocurrency are the following:

• higher level of emission compared to bitcoins;
• fast block formation - in just two and a half minutes, which is about four times less than for Bitcoin;

For investors, another advantage is the lower cost of Litecoin compared to Bitcoin, which allows you to enter the market with a much smaller amount.

Cryptocurrency #3: Ethereum

The source code for Ethereum was developed by Russian-born Vitalik Buterin, who lived most of his life in Canada. Ethereum was launched in 2015. Just two years later, this cryptocurrency entered the top five electronic monetary units with the largest volume of capitalization, that is, funds invested in it.

Many experts call Ethereum the only real alternative to Bitcoin that exists.

Cryptocurrency No. 4: Monero

When creating the Monero cryptocurrency, an emphasis was placed on security as well as user privacy. The system turned out to be so effective that a hacker attack in 2014 was successfully repelled.

The volume of Monero emission is not limited. Cryptocurrency is popular in online casinos and gaming sites.

Cryptocurrency No. 5: Ripple

Initially, the Ripple project was conceived as a trading platform for trading electronic currencies and various goods. When the exchange needed its own currency, they named the new currency after their project. Today, Ripple has taken third place in the world in terms of capitalization.

Cryptocurrency No. 6: Dash

The Dash cryptocurrency was created relatively recently - in 2014. Its main difference from Bitcoin is the need for less energy for mining. It turns out that the process of issuing the Dash currency unit is much simpler. In addition, this cryptocurrency uses several cryptographic algorithms, not just one.

If you carefully study the features of the main cryptocurrencies, it will be much easier to choose the right one for your job.

5. What can you buy with cryptocurrency in Russia and the world 📃

Many people do not take seriously money that cannot be held in their hands. It is even more surprising for them that digital currencies, like traditional ones, have purchasing power.

Cryptocurrencies today can be exchanged virtually for any goods and services. In some countries around the world they are accepted as payment not only on online sites, but also in offline stores. Moreover, if desired, cryptocurrency can be easily exchanged for fiat money 💱.

Note! Not all experts recommend spending digital money, the cost of which is constantly growing ⬆. Financiers know of many cases where those who spent several units of cryptocurrency later regretted that they did not keep them.

In Russia, legislation regarding cryptocurrencies is not yet properly regulated. This is why there are certain problems with exchanging digital money for goods and services.

Experts recommend considering cryptocurrencies primarily as investment method . Today this direction is quite promising, because the rate of most digital currency units continues to grow steadily 📈↗.

Ways to earn income from cryptocurrency

6. How to make money on cryptocurrencies – 5 main options 📝

We have already explained what cryptocurrency is in simple words, and now let’s talk about how you can make money on it.

The popularity of cryptocurrencies has led to an increase in the number of ways to make money on them. Today there is 5 the most popular options for making a profit from electronic money. Their main features are described below.

Option 1. Mining

How Cryptocurrency Works

In other words, a cryptocurrency wallet is a program that stores unique keys 🔑. Such support interacts with the block chain, that is, the blockchain. As a result, the owner of the wallet gets the opportunity check balance, transfer cryptocurrency or make another transaction.

✔ When sending electronic money to any user, the funds are credited to his wallet number. In this case, the transfer of real money not implemented. The only thing that happens at the time of transfer is the appearance in the blockchain of a record of the transaction performed.

Question 3. What is the cryptocurrency backed by?

In the process of studying cryptocurrencies, their security becomes an important issue. Fiat money is backed by gold and foreign exchange reserves , and state economy . In contrast, cryptocurrencies are absolutely are not provided with anything ⚠ .

The cost of digital money is determined solely by the demand for it. The higher it is, the higher the exchange rate of the currency.

The creators of cryptocurrencies usually determine the maximum volume of their issue. When this level is reached, production stops.

Question 4. What is the name of the cryptocurrency with the largest market capitalization?

The largest market capitalization, as you might guess, is the first cryptocurrency created - bitcoin . In March 2018 it exceeded $140 billion. At the same time, the total capitalization of all cryptocurrencies is at the level of 330.3 billion. It turns out that Bitcoin takes almost 43% electronic currency market.

10. Conclusion + video on the topic 🎥

Cryptocurrency is a relatively new financial market instrument. At the same time, digital money did not arise spontaneously, but in accordance with the needs of our time.

At its core, cryptocurrency has no physical embodiment. Despite this, such money is increasingly entering the life of a modern person, becoming means of payment , investment . They can also be used in various transactions.

Almost everyone can earn cryptocurrency today. There are several methods available for this. Despite the fact that electronic digital money is largely similar in function to fiat money, it also has a number of features . To use cryptocurrencies effectively, you should study them carefully.

Video about Blockchain technology:

And also a video - “What is Bitcoin and who invented it”:

This is where we end.

The site team wishes everyone financial well-being! Let the amount of electronic and real money in your wallets constantly grow!

Hello! In this article we will talk about cryptocurrency and try to give all the most important information about it.

Today you will learn:

1. What cryptocurrencies exist?
2. Why are they so popular?
3. How can you make money on them?

What is cryptocurrency

Let’s figure out what is hidden under the term “cryptocurrency”, what it is in simple words, and why it is called that way. The name Crypto Currensy itself, meaning “cryptocurrency,” appeared in Forbes magazine in 2011. And since then the name has firmly entered into everyday use.

Cryptocurrency called a special type of electronic payment instrument. Strictly speaking, this is a mathematical code. It is called that because when circulating this digital money, cryptographic elements are used, namely an electronic signature.

The unit of measurement in this system is “coins” (literally “coins”). Cryptocurrency does not have any real expression such as metal coins or paper bills. This money exists exclusively in digital form.

The fundamental feature that distinguishes crypto money from real money is the way it appears in the digital space. Thus, real means of payment must first be deposited into a specific account or electronic wallet, and cryptocurrency units appear in electronic form.

The “issue” of digital money occurs in various ways: this is ICO (initial coin offering, system), and mining (maintaining a special platform for creating new crypto-money), and forging (formation of new blocks in existing crypto-currencies). That is, cryptocurrency literally emerges “from the Internet.”

Another important difference from conventional currency is the decentralization of issue. The issuance of electronic currency involves the generation of a mathematical code followed by an electronic signature.

Only the Central Bank has the right to issue real money, but anyone can issue crypto money. In order to make transactions using cryptocurrency, you do not need to contact any third-party organizations (banks).

Payments using digital money are carried out in exactly the same way as regular electronic transfers via a cashless payment system. The only exceptions are exchanges through which crypto money can be monetized, that is, converted into regular means of payment.

The circulation of such currency occurs according to the “blockchain” system (literally “closed chain” in English). This system is a database distributed across millions of personal computers around the world. At the same time, the storage and recording of information when circulating cryptomoney occurs on all devices at once, which guarantees absolute transparency and openness of the transactions performed.

Why is cryptocurrency so popular?

The popularity of cryptocurrency is due to the demands of the time. In the age of widespread dissemination of information technology, universal means of payment are extremely in demand, which could be used to pay in the electronic space without being tied to a specific country or institution. Cryptocurrency became such a means.

For payments with virtual money, only their number is used, so the cryptocurrency does not need real expression. Digital means of payment are protected by cryptographic code, which makes them more reliable than “real” money. And due to the absolute decentralization of the emission of virtual coins, they can neither be counterfeited nor banned.

Another feature that contributes to the popularization of crypto payments is complete anonymity. When conducting transactions, no one will receive any information about the payer or recipient; of all the data, only the electronic wallet number will be used.

And also the attractiveness of cryptocurrency is that you can get it yourself. That is, digital currency can be obtained almost out of thin air. But you can also buy and sell, as well as invest in cryptocurrency. At the same time, crypto money can be exchanged for traditional money, as a result of which they can generate quite tangible income.

Types of cryptocurrencies

Digital money first appeared in 2008, and by now there are already several thousand varieties of it. There is a large category (almost 50%) of crypto money that is actually not backed by any content. These are the so-called soap bubbles. Let's not take them into account.

The most common types of cryptocurrency:

1. (BTC, bitcoin, at the moment one bitcoin is equivalent to 4200 US dollars). Bitcoin cryptocurrency, in simple words, is the very first digital currency, on the basis of which all subsequent ones were developed. Bitcoin developer (developer group) – Satoshi Nakamoto. This currency has a stated quantity limit of 21,000,000, however, it has not yet been reached.

2. Ethereum(etherium, equal to 300 US dollars). This is the development of Russian programmer Vitaly Buterin. This currency appeared relatively recently – in 2015. Now it is quite popular along with bitcoins.

3. Litecoin(litecoin, LTC, equal to 40 US dollars). The currency was developed by programmer Charlie Lee and has been issued since 2011. Litecoin is considered an analogue of silver among cryptocurrencies (and Bitcoin is an analogue of gold). The issue of litecoins, like bitcoins, is also limited and amounts to 84,000,000 units.

4. Z-cash(Z-cash, 200 US dollars).

5. Dash(dash, $210).

6. Ripple(Ripple, $0.15).

In addition to the indicated names, Darkoin, Primecoin, Peercoin, Dogecoin, Namecoin and many others are also used in electronic circulation.

The most popular of all cryptocurrencies is Bitcoin. Its name is made up of the words “bit” - the smallest unit of information and “coin”, which means “coin” in English. For BTC, or bitcoin, not only a program has been created, but also a special digital wallet in which this currency can be stored.

In addition, there are now even special ATMs where you can convert bitcoins into regular paper money, and a number of retail chains and stores accept this currency for payments along with regular bills and coins.

Advantages and disadvantages of cryptocurrencies

According to its main characteristics, digital money differs significantly from conventional money. This entails not only continuous advantages, but also some disadvantages for users.

Pros:

1. Anyone can get this kind of money using specially organized activities (mining). Since there is no single emission center and no bodies controlling this process, no one can prohibit ordinary citizens from obtaining crypto money online.
2. All operations with cryptocurrencies (so-called transactions) occur completely anonymously. The only open information in this case is the electronic wallet number. And all information about its owner is closed.
3. Decentralized issuance, in addition to the possibility of everyone earning money, also determines the lack of control over this process.
4. Each type of cryptocurrency has an issue limit. Thus, excess emission is impossible and, as a consequence, there is no inflation in relation to this money.
5. The cryptocurrency is protected by a unique code like , so it is copy-protected and therefore cannot be counterfeited.
6. There are practically no commissions for transactions, since when conducting transactions using cryptocurrency, the role of a third party in the relationship - banks - is excluded as unnecessary. Therefore, such payments are comparatively cheaper than using regular cash.

With all the variety of positive characteristics, cryptocurrency also has disadvantages.

Minuses:

1. If a user has lost the password for his electronic wallet, this means for him the loss of all funds in it. Since there is no control over transactions using digital money, there are no guarantees of their safety.
2. Cryptocurrency is characterized by high volatility due to the specifics of its circulation (volatility means frequent changes in its value).
3. In relation to cryptocurrencies, attempts may be made to exert various negative influences on the part of national monetary regulators (for example, the Central Bank of the Russian Federation).
4. As the process of mining cryptocoins becomes more and more complicated over time, mining using the equipment of individual users becomes less and less profitable.

Each of the existing types of cryptocurrencies has both advantages and disadvantages inherent in them all together.

In general, all crypto currency units are characterized by the same features as modern money, namely:

• They are versatile;
• They are a means of exchange;
• They can be accumulated;
• Perform a calculation function.

The value of digital money varies depending on supply and demand.

How to make money on cryptocurrency

Currently, there are a number of ways to make money on bitcoins and other virtual currencies:

1. Buying and selling cryptocurrency. This is done on special exchanges or electronic money exchangers. The principle of operation is to buy a currency when its value decreases, and sell when it increases. Most often, such trading is associated with bitcoins, since their cost is higher than other types of cryptocurrency.

2. Cryptocurrency investments. are made by transferring a certain amount of electronic money from one person to another in trust. Typically, brokers deal with trust management issues.

3.Extraction of electronic money (mining). Cryptocurrency mining, in simple words, is the process of extracting cryptocurrency using special software. It will not be possible to produce large volumes of cryptocurrencies on an ordinary home computer; quite significant power is required, and, consequently, the purchase of additional equipment. A powerful video card and processor are required. In addition, special devices are used - so-called mining farms, which produce cryptocurrency.

4. Cloud mining. For such digital currency production, you do not need to buy additional devices. For this purpose, there are special services where you can sell and purchase computing power. That is, the service generates cryptocurrency for you, and you pay for the power expended.

5. Cryptocurrency giveaway. Such services are usually provided for attracting referrals or entering letters from pictures (captcha), that is, in fact, for increasing site traffic. These are the so-called gateways, taps or distributors. There are also special Bitcoin games in which you can earn electronic money. Earnings on such services are small: a small portion of Bitcoin (Satoshi) is distributed per hour.

Conclusion

Thus, cryptocurrency is a new word in monetary circulation. Its emergence is due to the needs of the time. Despite the fact that crypto money has no real expression, it can participate in various market transactions almost on a par with traditional currency units.

Currently, there are a number of ways to earn cryptocurrencies, as well as options for making a profit from them, which is what the most advanced users use.

In general, cryptocurrency in its characteristics is largely similar to traditional money, however, it also has a number of fundamental differences that allow digital money to increasingly gain popularity in the modern information space.

Since the emergence of the first cryptocurrency in 2009, the number of its followers has been steadily increasing. Interest does not wane, no matter what ups and downs are observed in the crypto sphere. We bring to your attention a detailed review article about cryptocurrency – its technology, history of appearance, methods of use and receipt. Also, the review presents a table with rates and main characteristics of coins (capitalization, issue, trading volume) and an online chart. You will find out where to buy or sell virtual coins, a list of exchanges, exchangers and cryptocurrency services is provided. Describes ways to earn money without investments (faucets) and with them.

Cryptocurrency is a digital unit, the emission of which occurs on the Internet, and the principles are based on cryptography. The creation of all cryptocoins is based on a chain of blocks ordered according to certain rules, the immutability of which is ensured by the use of cryptography. All transactions are completed privately and using keys. It is necessary to distinguish between the concepts of “cryptocurrency (coin)” and “token”. Token – does not use its own blockchain and is created on a third-party platform (for example, Ethereum) according to a standard template.

In simple words, cryptographic currency is a means of payment that exists exclusively in electronic form and represents a certain mathematical code. In the process of circulation of these assets, an electronic signature is used, encrypted using cryptography methods - hence the name. Individual units of cryptocurrency are called coins. These coins exist only on the Internet and have no physical embodiment.

Currently, there are a huge number of crypto coins. As of January 26, 2019, there are more than 1,900 cryptocurrencies and tokens that are traded on exchanges and have a blockchain. Most people know only the most popular of them: Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and are not aware of the existence of other cryptocurrencies that can be used well.

The official status of cryptocurrencies as a means of payment is recognized in Japan, thereby legalizing their use. This event played a major role in the growth of the cryptocurrency rate throughout 2017. Today, the “land of the rising sun” is the largest market in terms of cryptocurrency trading volume, with the United States in second place. In Russia and Ukraine there are no laws that determine the status of virtual coins. In December 2017, a revolutionary decree was signed in Belarus, which legalizes the use of cryptocurrencies, mining, ICO, circulation of tokens and exempts these operations from taxation.

Cryptocurrency rate

Which exchangers are reliable for buying cryptocurrency? Based on experience and user reviews, we can recommend:

Cryptocurrency exchanger	Cryptocurrencies	Fiat
Prostocash	Bitcoin, Tether, Ethereum, Litecoin, Monero, ZCash, Dash, Ripple, Dogecoin, Binance Coin, Bitcoin Gold, Ethereum classic, Stellar, Neo, EOS, Tron, NEM	RUB, USD, EUR, UAH, KZT, BYN
60sec	Bitcoin, Ethereum, Litecoin, USD Coin, Tether (USDT), Ripple, Bitcoin Cas ABC, ZCash Monero, Ethereum classic, EOS, Stellar, Cardano, Neo, Dogecoin, NEM, 0x, Binance Coin	RUB, USD, BYN, UAH, KZT, EUR
Ramon Cash	Bitcoin, Ethereum, Litecoin	RUB, USD
Platov	Bitcoin, Ethereum, Litecoin
Xchange	Bitcoin, Tether, Ethereum, ZCash, Litecoin, Ripple, Dash, Dogecoin, Monero, Neo	RUB, USD, EUR
	Bitcoin, Litecoin, Zcash, Dash	RUB
Kassa	Bitcoin, Bitcoin Cash, Ethereum, ZCash, Litecoin, Ripple, Dash, Dogecoin, Monero, Ethereum classic	RUB, USD, EUR
Magnetic Exchange	Bitcoin, Bitcoin Cash, Ethereum, Stellar, Litecoin, Dash, Monero	RUB, USD, EUR

For example, on the website of the Prostocash exchanger you can purchase and exchange cryptocurrencies: Bitcoin, Ethereum, Zcash, Litecoin, Dash and others. The exchange process usually lasts 10-15 minutes. The exchanger works around the clock. If something about the exchange is not clear, then immediately contact the online chat support service. Registration is not required, but after completing it you can get a discount on subsequent exchange transactions.

What payment systems can you use to purchase crypto? Almost all popular electronic money are available: Qiwi, Yandex.Money, Perfect Money, ; banks of Sberbank, Alfa-Bank, Tinkoff, Visa/Mastercard cards of any bank in Russia and other options. It is possible to purchase exchange codes: livecoin-code, .

The algorithm for buying cryptocurrency is as follows:

The exchange process takes a little time, after which you will become the owner of virtual coins. The process is similar: you will need to transfer it to the exchanger’s wallet address.

Buy cryptocurrency on the exchange

If you need to buy a crypto coin that is not available in the exchanger or want to earn money, then you need to create an account on a crypto exchange. Another advantage is better exchange rates.

If we consider crypto exchanges with a Russian-language website, we can highlight the following popular platforms:

Exchange	Cryptocurrencies	Trading with leverage	Fiat
	Bitcoin, Ripple, Cardano, Litecoin, EOS, Ethereum, Tron, Bitcoin Cash	Yes	No
	Bitcoin	No	Yes
	Bitcoin, Ethereum, XRP, Dash, Zcash, Bitcoin Cash, Litecoin, EOS, DAI, Stellar, Cardano, XEM, LSK, Tether and others (30+)	No	Yes
	Bitcoin, EOS, Ontology, Cardano, Tron, Bitcoin Cash, Litecoin, Ethereum, Bitcoin SV, Ripple, Cardano, TrueUSD, 0x and others (160+)	No	No

Let's take as an example:

On it you can exchange fiat currencies for 97 cryptocurrencies and trade 132 currency pairs:

Algorithm of actions on EXMO:

Online schedule

An online chart of any cryptocurrency is presented below. Quotes come from the most liquid crypto exchanges. In the upper left corner you can specify the desired crypto coin. Start typing her ticker and available offers will appear. By default, the BTC/USD chart is displayed. Time is shown in UTC (world time) format. You can select the required timeframe, technical analysis indicators, etc.

How to receive and earn cryptocurrency

Interest in digital money is not limited to theory - the question arises of how you can transfer it to your account for further use. There are quite a few ways, let’s look at the five main and most common ones.

Mining

Mining refers to the process of extracting crypto coins using special software. Since mining involves a large amount of computation, it requires high-power equipment. The software is used to connect the miner to the system, and a software wallet is required to conduct transactions (payments).

The principle of mining is based on decentralization. Each new transaction is recorded in a chain - blockchain - a copy of which is available to each participant connected to the network. Some time passes between records in the blockchain; it is necessary for the exchange of information between all clients of the system about the actions that took place during this period.

1. All miners simultaneously solve mathematical problems issued by the system, trying to find a certain code (hash).
2. The user's computer performs a brute force search, looking for a suitable code.
3. Once a solution is found, a block is formed. Block – summary information about all recent transactions.
4. The block is fixed at the end of the blockchain, where it can no longer be changed or deleted.
5. The updated blockchain is copied to all clients.

Thus, mining is an important component of the operation of the cryptocurrency network. To encourage people to engage in it, a reward system has been introduced - the participant who closes the block receives a certain amount of coins.

Cloud mining

Continuing:

Cryptocurrency faucets

1. Desktop. Installed on a computer or laptop. They have two subspecies - “thick” and “thin”. A thick wallet downloads the entire blockchain to a PC and therefore requires about 200 GB of free disk space and 2-3 days of continuous Internet connection for synchronization. Thin does not download the blockchain, but accesses it on the network to carry out each operation, and is therefore less secure.
2. Browser. They are sites with a personal account where you can store your private and public keys, as well as conduct transactions.
3. Mobile. They are downloaded as applications to a smartphone/tablet and usually have reduced functionality.
4. Hardware ( , ). They look like flash drives, sometimes with a small screen. You can only record your personal keys, and transactions are only available when you connect the device to a computer with Internet access.
5. Paper. A paper wallet is simply a piece of paper on which keys to access your balance are printed. From the point of view of protection against hacker attacks, the option is the safest and is suitable for long-term investors.

Bitcoin cryptocurrency wallet

To store Bitcoins, you can use the capabilities of the official website of the developers and download the necessary program or use the offered online services; hardware devices; mobile applications. To do this, go to the bitcoin.org website in the “Resources” - “Wallets” section.

Popular wallets for users to install on their computer:

1. "Fat" - Bitcoin Core.
2. "Thin" - .

It should be taken into account that after installing the “thick wallet”, the synchronization process with the Bitcoin blockchain network starts. All blocks with information about transactions are downloaded; the size of the downloaded files will be more than 200 GB. Therefore, it is advisable to purchase an external drive and write files to it. The process will take considerable time and will require constant Internet access.

Recommendation: after launching the wallet, be sure to backup it (save it), transfer a small amount to it, and then remove the program from your computer. Restore using a backup, and if everything works out, you can store larger amounts on it.

An easier option is to start one using online services. You can go to the “Web” tab on the official cryptocurrency website bitcoin.org in the wallet selection section or use the popular one. Follow the instructions, save your passwords, and within a couple of minutes your wallet will be created. Since this is an online wallet, there is no need to download any files, which is an advantage of this method of storing cryptocoins.

You can use it to store and trade cryptocurrencies.

Ethereum cryptocurrency wallet

We download the Ethereum Wallet program from the official website ethereum.org, save and launch, after which the standard synchronization process with the Ethereum network occurs. We make a copy of the wallet for recovery, to do this, go to the “Account” item, select “Backup” and then copy the file with the JSON extension. To check, we make a trial transfer of a small amount.

There is also the option of a lightweight online wallet, without installation on your computer. We go to and create this service.

Wallet for Litecoin cryptocurrency

1. GRAM. A coin from the creators of the popular Telegram messenger. The main goal of the project is to create a payment system that will surpass VISA and Mastercard in efficiency, ensuring the processing of millions of payments per second.
2. Siacoin. The idea of ​​the platform is decentralized cloud storage of files. With a low price at the moment, the coin has every chance of growing in the near future.
3. DigiByte. Payment platform with a high level of security and scalability. It differs in the speed of block creation (15 seconds). Compare with 10 minutes for Bitcoin.
4. Verge. A network capable of ensuring complete confidentiality of transactions. The functionality for paying for services and goods with Verge coins has already been implemented by some Internet platforms.
5. . A platform focused on entertainment and distribution of free content.

All of the listed coins are now very cheap, so they are quite accessible for investment. Meanwhile, they have excellent prospects, thanks to which in the future it will be possible to double or even triple investments.

The main features of cryptocurrencies compared to regular money:

• There is no central authority for management and emission.
• Anonymity. It is possible to determine who the owner is only if the wallet was used publicly.
• Transparency of transactions in the blockchain. The history of transactions is available to everyone, but it is impossible to understand who is behind them.
• Speed. It takes a couple of minutes to transfer cryptocurrency from one end of the world to the other. At the bank, this process will take several days.
• Small fees compared to bank transfer.

Legal status

States have different attitudes towards Bitcoin - from complete rejection and even ban, to encouragement. In those countries where transactions with crypto are legalized, digital money is regarded as investment assets or goods. In Germany and Japan, BTC is recognized as a unit of account. But in China, cryptocurrency transactions are allowed only to individuals.

Switzerland is considered the most loyal, where Bitcoin is accepted on the same terms as foreign currency. It is believed that Switzerland is the most favorable environment for launching blockchain startups.

Cryptocurrency discussions in Russia They have been going on for a long time, but they have not yet been assigned a specific status, although most officials speak in a negative way.

The future of cryptocurrencies

The future of the cryptocurrency industry is closely related to the attitude of the authorities towards her. Any positive movements associated with this segment are instantly reflected in the value of the cryptocurrency.

It is noticeable that the world, although slowly, is moving towards the adoption of digital money. Thus, at the end of 2017, Alexander Lukashenko signed Decree No. 8 “On the development of the digital economy.” This created unprecedented conditions for the creation of new projects and developments in the field of information technology.