Today, perhaps, there is not a single sphere left in life that new information technologies would not touch. Even finance, in fact, can now be virtual. What is meant? Talk about currency. It is customary for us to perceive this concept as a specific monetary unit of a state. So, in our country, the national currency is the ruble. Currency can be collective. That is the euro. There are a large number of classifications for this concept. But what is cryptocurrency, in simple words it is harder to tell.
Cryptocurrency concept
Digital or electronic currency is in great demand among users of the Internet space. It’s worth immediately distinguishing between the concepts of electronic currency and the system of Internet money. The main difference is that the equivalent of the latter is the real currency, for example, rubles. This is how Yandex.Money, Qiwi systems work.
And the Webmoney system has its own electronic currency, which works only inside of it. That is, when money is transferred to the wallet of this system, it turns into its own currency.
Cryptocurrency occupies a separate niche. This is a digital currency whose exchange, issue and accounting are based on cryptography, i.e. encryption. To summarize what has been said, what is cryptocurrency in simple words and what is its difference from other types of electronic currencies? Unlike electronic money, such as Yandex.Money, it does not have a physical embodiment. And unlike electronic currencies, for example Webmoney, cryptocurrency is decentralized, that is, it is not controlled by a single server that belongs to a bank or any organization.
How did cryptocurrency come about?
For the first time, cryptocurrency appeared in the Bitcoin payment system. This happened in 2009. The system developed was a group of people or a person under the pseudonym Satoshi Nakamoto. It has been constantly refined, changed, and so far, Bitcoin is dynamic.
In 2010, the first purchase for bitcoins was made. One of the Americans for 10 thousand bitcoins bought two pizzas. Note that initially Bitcoin was worth $ 0.1, and then skyrocketed to $ 1,300 for one or even higher - up to three thousand US dollars in the summer of 2017.
What is the basis of cryptocurrency?
What is the existence of cryptocurrency based on? To explain what cryptocurrency is in simple words and what lies at its base, compare cryptocurrencies with gold coins.
Like the gold reserve, the number of cryptocurrencies is limited, this is a kind of protection against emission. Cryptocurrency was originally created using such a technology that will not allow it to fall. Bitcoins, like gold, cannot be faked. Like gold, you can buy cryptocurrency or even mine it yourself. Again, as in the case of real gold, the number of bitcoins is limited (a total of 21 million coins are available, more than two thirds are already in the circulation of users).
The basis of the virtual money creation algorithm is as follows:
- Each computer has a public database.
- To make a translation, a key is used that is created only once.
Bitcoin cryptocurrency: what is simple words
Bitcoin is the very first type of cryptocurrency. What is cryptocurrency in simple words? These are bitcoins, since they became the first cryptocurrency. In principle, bitcoin can be called a computer program that creates a virtual currency. The principle of operation of bitcoin can be compared with the principle of operation of torrents. Several people immediately install the program on their PCs, and then transfer files among themselves without any control. The difference from torrents is that they don’t transfer files, but “virtual glasses”.
At ATMs, bitcoins can be exchanged for real money. They can also pay for goods and services.
The most popular cryptocurrencies
In addition to bitcoin, the founder of cryptocurrency, there are other types of cryptocurrencies:
- Ethereum Appeared in 2013. As of August 2017, its rate is $ 300.
- Litecoin. Appeared in 2011. Limited to 84 million. The course is 40 dollars.
- Zcash - a unit of currency is 200 dollars.
- Dash, equal to 210 dollars.
According to various sources, from 200 to 800 types of cryptocurrencies now exist in the virtual space. All of them, one way or another, are based on the principle of Bitcoin.
Ethereum as a type of cryptocurrency
In 2013, a programmer from Canada, Russian-born, Vitaly Buterin created a new kind - the cryptocurrency Ethereum. What it is? In simple words, this is, in fact, the next analog of Bitcoin, but with new features. The Ethereum platform can be used to create new cryptocurrencies. On Ethereum, as well as on Bitcoin, you can mine.
Mining, or How to make money on cryptocurrency in simple words
The cryptocurrency mining process is called mining. Derived from the word "mine" - "to excavate." The method, of course, is different from gold mining. To implement mining, take the motherboard, server or other power supply, hard drive, monitor and video cards. A special mining program is selected and installed, then it starts, then a fork and a pool are selected and the mining process itself begins.
Further, in simple words, how is cryptocurrency mined. The program installed on your PC will create the tasks that it must solve. For this action, the computer will receive virtual money. So, with Bitcoin, the program gives out no more than 3600 crypto coins per day.
Each time, the tasks that the miner’s PC must perform are complicated, and the miners have to create more powerful machines to solve them. The main point is that whoever decides first will receive Bitcoin. Today, there are a huge number of so-called "farms" - machines for solving the problems of the program.
How to exchange cryptocurrency?
There are two ways to exchange cryptocurrencies. Further, in simple words, that it is a cryptocurrency exchange. In the virtual space there are special services for exchanging such money. Easier - exchangers. First of all, when choosing one, pay attention to the course and commission.
Advanced users put exmo.com in the first place. Here you will need to enter the mail and come up with a password. If we want to exchange bitcoins, go to the "exchange" menu. We indicate the number of bitcoins that we want to exchange. The system will show us the course. To complete, click "exchange."
Another exchanger is 60cek.com. Similarly, we go through registration, confirm through mail and activate your account. Next, we also enter the number of bitcoins, for which we want to change. You can immediately transfer to a card at the bank. To do this, enter the card number, full name of the owner and other data.
The third most popular exchanger is blue.cash. We register as in the previous versions. Click "Exchange", enter the number of bitcoins that we want to change. You can withdraw exchange money to Yandex. Wallet. To do this, you need to specify the wallet number and mail.
Exchange as a means of cryptocurrency exchange
EXMO exchange is very popular among Russian miners . The exchange works with 6 types of currencies:
You can perform exchange operations using payment systems:
- VISA / MASTERCARD.
- "Yandex money".
- WebMoney.
- QIWI.
The commission is 0.2 percent of the transaction amount.
On the official website of the exchange, click the "Start" button. So we start the system. We pass registration in the section “Profile” - “Verification”. Here you need a passport. You need to download a scan copy of it.
The site works in English and Russian. In the “Bidding” tab you can familiarize yourself with the exchange rate.
EXMO works with both conventional and cryptocurrencies.
LiveCoin is an exchange created in 2014. Supports the following trading pairs:
- BTC / EUR.
- BTC / USD.
- BTC / RUR.
- EMC / USD.
- EMC / BTC.
- LTC / BTC.
- LTC / EUR.
- LTC / USD.
On this exchange you can not only buy or give currency, you can simply exchange it. The site works in English and Russian.
Cryptocurrency in Russia
There is no unequivocal position in our state regarding cryptocurrencies. But still, most compare them with financial pyramids. What is cryptocurrency in Russia? In simple words, it is called surrogate money.
The Ministry of Finance has prepared amendments to the legislation on punishment for the use of cryptocurrency, transactions with it.
In Russia, the concepts of cryptocurrency and blockchain are shared. If the former is treated sharply negatively, then the situation is different with the latter. Blockchain technology is considered precisely as technology. It is proposed to develop the blockchain for further use in the banking system or registries. Currently, the use of cryptocurrency by legal entities is considered as opposing the legalization of proceeds from crime.
Cryptocurrency Reviews
Reviews about the existence of cryptocurrencies are mixed. Those who make money on this talk about the future of cryptocurrency. According to reviews, cryptocurrency (what is it, in simple words, we said above) is a phenomenon similar to financial pyramids. There are also examples of defrauded virtual contributors. For example, the Hong Kong exchange My Coin crashed in 2015. As a guarantee to cover fraudulent activity, investors were given contracts, but there were no physical agreements.
Fraudsters use electronic cryptocurrency wallets in their actions. So, to create online wallets there is a collection site. After a certain amount appears in the wallet, it disappears.
Some manage to make money on bitcoins, moreover, this activity even in Russia has become extremely popular (confirmation of this is the soaring prices for video cards used in mining, and the excess of supply by demand). Of course, reviews about the cryptocurrency of such people will be positive. Others, having tried cranes, complain that earnings are very low and there is no point in doing this. In general, the reviews are diametrically opposed.
To summarize. What is cryptocurrency in simple words? A virtual currency that exists in virtual space. If you have the knowledge and experience in it, then you can work with cryptocurrency. If you are a regular PC user, use standard means of payment.