Cryptocurrency

Cryptocurrency is a digital currency. It is created and transmitted by cryptographic methods, mainly based on blockchain technology.

«Coins» are initially issued in an electronic form by means of mathematical calculations.

The cryptocurrency is an artificial payment system, equivalent to real money, with an official rate.

The term «cryptocurrency» was first discussed in 2011, starting with the publication of Forbes magazine. Since then, the name has been well established and applied to coins that are not in the form of paper or metal coins. This type of money exists exclusively in digital space.

The prospects for the development of cryptocurrency are linked to the progress of Internet technology.

Unlike other electronic payment systems, cryptocurrency initially appears without real money. To become the owner of a certain sum of coins it is enough to connect to the service of their creation, to become a member of the unified network of mining and to wait for the «earnings».

The key difference between cryptocurrency and real money is that the latter are issued strictly by decision of the Central Bank of the Russian Federation.

Why is virtual money popular?

Any type of cryptocurrency has no official status as means of payment. But generic properties like decentralization are attractive to users. The owner of any existing cryptocurrency is not tied to a geographic location, state or political order.

Despite pegging the rate to real money like the US dollar or the euro, digital money is «valuable in itself».

The Reason for Virtual Money’s Popularity

High prevalence, versatility. The purse is easy to create on any gadget.

Simplicity, transparency of transactions. The complete history of incoming and outgoing transactions is kept without time limits.

Every node in the cryptocurrency generation system is equal, there is no single center. This rules out the possibility of blocking wallets, cancelling and controlling payments.

Maximum anonymity increases the independence of the payment system. When making payments it is possible to specify: address, account number at the request of the owner of the purse from which the payment is made.

Transactions are protected by cryptographic means. Without the transfer of a block with a special verification code, there is no way to confirm a financial transaction. If this is done, no one can cancel the transfer of money, which rules out fraud in the payment of cryptographic goods/services.

Due to the high reliability of electronic purses protected by a private key, cryptocurrency can be used to create savings. Many users accumulate bitcoins in order to earn a substantial gain against the United States dollar/Russian ruble.

Types of cryptocurrencies

  1. Blockchain technology

    It is used in the coin generation of the cryptocurrency, allowing the creation of an unlimited number of types of digital money. But not all users can achieve high popularity and connect to the main generation process. Without a developed network the quantity of «coins» will be minimal and special interest for the public such «currency» cannot represent.

    In many European countries, including Russia, the possibility of producing «state» cryptocurrency is being considered.

  2. Bitcoin

    The first version of the cryptocurrency appeared in 2009.

  3. Ethereum

    It was started in 2015. The technology is used in the registration of transactions, transfer of resources/copyrights.

  4. Litecoin

    It is considered a derivative of bitcoin. It was launched in 2011.

  5. Dash

    The currency was formerly called Darkcoin.

All types of cryptocurrency apply an open generation algorithm, so connecting any of them to a common network is purely voluntary. Electronic wallet information is perfectly secure and no personal information is disclosed. In part, this is a disincentive to the recognition of coins by the state, as legislation requires full control over the movement of money in the country, and cryptocurrency is initially protected from it.

Drawbacks

Cryptocurrencies are exposed to the same risks as online accounts with real money.

It is recommended that the following points be highlighted:

Security of the password. There is a risk of both loss and theft of the account data.

High volatility. If you change the course of a cryptocurrency, you can earn as much as you lose. Everything depends on the fluctuation of the exchange rate after purchase of «coins», whether the owner will immediately spend the currency or will seek to create savings.

Restrictive laws. In Russia, the Central Bank, as the main regulator of the financial system, seeks to control the entire money supply in the country. There is already an initiative to limit the amount of cryptocurrency available to individuals

Mining loses popularity due to the dramatic increase in the complexity of the algorithm’s computing and the ever-increasing demands on the hardware of computers used for computing. The profitability of the purchase depends on the current rate and changes in the near future. As long as there is a steady upward trend, temporary downward price adjustments of cryptocurrencies are insignificant, bitcoins and analogues remain an attractive investment tool.

How do you get a cryptocurrency?

Anyone registered in the system can become the owner of a cryptocurrency. This requires:

Cryptocurrency is appealing in that it can be obtained practically without investment.

Methods of acquiring a cryptocurrency (as in the case of Bitcoin):

Over time, new options for obtaining digital coins have emerged. The higher the value of the cryptocurrency, the higher the user activity.

Earnings from cryptocurrency

The interest in cryptocurrency is not only manifested as a way to create online accumulation. Internet purse is profitable because there is no risk of theft when accessing the home of outsiders or as a result of force majeure such as fire, flooding.

On various cryptocurrencies it is possible to earn even without direct purchase, much depends on the possession of the situation, the ability to predict course change.

The cryptocurrency business can be profitable.

There are several common ways of earning from the same bitcoins:

Investment in cryptocurrency

Undervalued coins are purchased and sold at peak values. This allows to earn from the exchange rate difference.

ICO (Initial Coin Offering)

The creation of the first coins of the new cryptocurrency makes it possible to own coins at a minimum price. They are then exchanged for the real currency at any time when the rate rises to its desired value.

Trading

The BTCUSD can be traded on a stock exchange with both a downward and an upward movement.

A job as a cryptocurrency consultant.

Ideally, you can not even have your own electronic wallet, but only understand the system, be able to explain the intricacies of its work to other users. Such a business is popular due to the lack of large financial investments and the ability to run it all over the country, regardless of where the owner is located.

In 2017, the most famous variants of cryptocurrency are: Stratis, Nem, Ripple, Ethereum, Dash, Litecoin.

They’ve gone up in less than a year to 30, 90 times. Those owners of the digital currency who purchased it early in the mining improved their financial position and became the holders of significant sums in Rubles/United States dollars.

Why is Bitcoin popular?

Many of the benefits of digital money are seen in bitcoin. When you study what cryptocurrency is, in simple terms, you mean BTC. Its rate has also risen sharply over the past few months, attracting exchange-rate professionals (through periodic price increases/falls).

The popularity of Bitcoin is also linked to its recognition of several States as an official payment system.

The other benefits are common to all types of cryptocurrency:

Full transparency of transactions. Only the owner of the money can make the transfer, and once he does, no one can cancel the operation.

Enhanced anonymity. Only the wallet number is available to users of the system, personal data are not published or transmitted.

Guaranteed currency deficit. There is a strict limitation in the number of coins generated, this is due to the algorithm of computation of satoshi («a penny» of bitcoin).

No Inflation. The digital nature of cryptocurrency allows it to be independent from economic, political, and natural factors that directly affect the exchange rates of real currencies.

The cost of Bitcoin is constantly rising, and projections for further growth are positive. Through this positioning, its popularity will increase further. As a result, the calculation period of the last coin is approaching exponentially. At the time of this event, the Bitcoin course can change unpredictably, but as long as it is not discussed, users of the system expect to make it before the final day.

Prospects for the cryptocurrency market

The practical use of cryptocurrency as money depends largely on government policy. The European Union regards Bitcoin as a universal treaty-based instrument, and in a number of Asian countries have formally adopted it (Japan) or limited its use to a total ban on coin ownership (China).

Russia has not yet determined its attitude to digital currency. The Central Bank of the Russian Federation proposes to create its own analogue Bitcoin (under the control of the state), but until a legislative basis has been developed, it will not appear. The security agencies consider such means of payment as a means of financing illegal activities or money-laundering of the proceeds of crime. How cryptocurrency legislation will evolve will be a matter of time.

Meanwhile, traders around the world use pairs like BTCUSD

Access to trade is provided by the same brokers that work in the Forex market with the currencies of the countries of the world. The high volatility of the Bitcoin pair provides a chance to earn quickly without directly buying a cryptocurrency.