What is cryptocurrency and how is it used?
Cryptocurrency. Definition and description
Cryptocurrency is any type of currency in digital or virtual form; cryptocurrency uses encryption (cryptography) to protect transactions. There is no central authority for issuing or regulating cryptocurrencies. A decentralized system is used to record transactions and issue new units.
What is a cryptocurrency?
Cryptocurrency is a digital payment system that does not involve banks in checking transactions. It is a peer-to-peer system that allows any user, anywhere, to send and receive payments. Cryptocurrency payments exist solely in digital form in an online database describing specific transactions. They do not involve transactions with physical money, which has circulation and exchange possibilities in the real world. When funds are transferred in cryptocurrency, transactions are recorded in a public registry. Cryptocurrency is stored in digital wallets.
The term Cryptocurrency came into use because encryption (cryptography) is used to verify transactions: advanced encryption is used to store and transmit cryptocurrency data between wallets and to public registries. The purpose of encryption is to ensure reliability and security.
The first cryptocurrency was bitcoin, created in 2009 and the most well-known today. Cryptocurrency trading is interesting in terms of profits; as a result of speculation, there are periodic price spikes in cryptocurrencies.
How is cryptocurrency applied?
Cryptocurrencies are processed in a distributed public registry, a blockchain, where records of all transactions are kept and updated by holders of the currency.
Cryptocurrency units (coins) are created through the process of mining. This is a process in which computer processing power is used to solve complex mathematical problems, resulting in the generation of coins. Users can also buy currency from brokers and then store and spend it using crypto wallets.
Cryptocurrency is not a tangible object; it is a key that allows a record or unit to be moved from one person to another without a trusted third party.
Bitcoin has been around since 2009, but in financial terms, cryptocurrencies and the use of blockchain technology are still in their infancy; in the future, they are expected to develop rapidly. In the future, cryptocurrencies could be used in trading stocks, bonds and other financial assets.
