Electronic gold - sometimes called cryptocurrency. This digital money has been on the Internet for several years. For some, they cause genuine interest, and many do not even know what is at stake. It’s worthwhile to understand cryptocurrency - what is it, why is it needed, how does it work and can it generate income? Let's find out the answers to these questions.
Cryptocurrency - what is it?
The meaning of this term is incomprehensible to many who have not encountered digital money. Cryptocurrency is a special electronic payment tool, the rate of which is supported only by supply and demand. Such electronic money is not regulated by any of the state systems, including the Central Bank. The function of observers and controllers in this case lies with Web users and cryptocurrency owners.
Many believe that cryptocurrency is the money of the future. This is confirmed by the fact that some large stores in the US and Europe can already make payments in cryptocurrency. Money transfer systems, such as eBay and Paypal, are already reconfiguring the functionality for working with this electronic payment tool.
Incredulous skeptics compare digital currency systems with fraudulent pyramids like MMM. And others, on the contrary, call electronic money the engine of progress and prophesy that soon they will be able to completely supplant paper means of payment. It is important to note that distrust most often arises from the fact that people do not understand this topic.
Cryptocurrency Features
The main distinguishing feature of this digital currency is its decentralization. Cryptocurrency is dispersed on the Web and, as already mentioned, does not have centralized management.
The advantage of electronic coins is also considered their anonymity and confidentiality of transactions. A cryptocurrency wallet is simply a set of characters that is not tied to personal data and cannot be the identifier of its owner.
Moving cryptocurrency between users (even if it is an international transfer) is much faster than a similar banking operation. At the same time, the absence of a commission is very pleased.
The cryptocurrency rate cannot be affected by the work of any financial institutions or political instability.
The specificity of digital money lies in the fact that its value is unstable and can change every minute. The cryptocurrency converter should be updated every minute, only then it allows you to find out the current value of electronic coins.
Some of the advantages of cryptocurrencies can simultaneously be called their disadvantages. For example, anonymity is good ground for Internet speculation with large masses of electronic money.
A flaw in such a settlement system is its vulnerability to computer viruses and damage to physical media. And also in different ways it is possible to consider the irreversibility of transactions with electronic coins.
There is an assumption that the spread of cryptocurrencies can cause a depreciation of the national currency, destructively affect the work of banks and other financial institutions, in a word, destabilize the global economy or the economy of individual countries.
List of existing cryptocurrencies
Over the several years of their existence, we learned about a wide variety of cryptocurrencies. This list is constantly growing. Some currencies appear and disappear, but there are also those that function for a long time and are known to us now. Here are the most popular cryptocurrencies in the world:
- Bitcoin, BTC (Bitcoin).
- Litecoin, LTC (Lightcoin).
- Peercoin, PPC (Pircoin).
- QuarkCoin, QRK (Quarkcoin).
- Feathercoin, FTC (Feathercoin).
- Protoshares, PTS (proto-actions).
- Namecoin, NMC (Namecoin).
- Worldcoin, WDC (Worldcoin).
This is only a small part of all existing cryptocurrencies. In the period from 2008 to 2015, there are about 600 types of active and already outdated digital money.
The most common cryptocurrencies in the world
What is the most popular cryptocurrency? That this is Bitcoin, anyone who once dealt with the crypto-money market will answer. Bitcoin is the very first cryptocurrency to appear. It became the basis for the creation of all subsequent electronic coins and to this day is the most popular in the world. Any cryptocurrency exchange works with bitcoin.
The second most popular today is lightcoin. It was created by a former employee of Google. This digital currency appeared in 2011. Its creator, Charlie Lee, planned to tie the price of this cryptocurrency to the prices of silver in the world market, so it is sometimes called electronic silver.
Cryptocurrency ratings for 2014 put pircoin in third place. But today, this electronic currency is characterized by insignificant inflation - 1% per year.
Buying Digital Currency
One way to get electronic coins is to buy them for money. For this, there is not one cryptocurrency exchange on the Internet. Such resources help exchange your real money for digital. After making a purchase, the received digital currency is withdrawn from the exchange to the cryptocurrency wallet.
So far, such a scheme works flawlessly only with bitcoins. Direct dollar purchases of other cryptocurrencies can be problematic. Therefore, it will be necessary to buy bitcoins according to the aforementioned procedure, on a special exchange, make an exchange of cryptocurrencies from one to another, and after that make a conclusion to the wallet.
How to get cryptocurrency without investments?
There is another way to get digital currency, not involving investments. This method is called mining. But only at first glance it is a cost-free method. In fact, in order to start receiving electronic money through mining, you must be the owner of computer equipment that has good computing power. Having installed the necessary program, you can start mining. Its meaning is to solve algorithms that help to find the required number. In digital currency terminology, this is called a “solve block”. The solution of each block helps to free up a certain amount of coins.
If all operations are performed by one user, this is solo mining. Recently, this type of earnings has become practically ineffective, since finding a block requires a lot of time. Miners began to combine the computing power of their computers, thus carrying out pool mining. The block is faster, but the reward is divided into all participants in the process.
Is earnings on cryptocurrency rate fluctuations real?
Since electronic coins reached the masses and began to gain popularity, it has become almost impossible to make a profit on mining. More and more users are taking the constantly changing cryptocurrency rate as a basis for making money.
This will be easier to understand for those who are already familiar with the principles of stock exchanges following the example of Forex. Huge jumps in rates are caused by the constant emergence of new cryptocurrencies and the fading of old ones. For example, the same bitcoin in 2013 changed its value from $ 90 to $ 1,000. The rate of new unstable currencies can fluctuate even more significantly.
This state of affairs makes it possible to quickly earn money by making a timely exchange of cryptocurrencies, but the likelihood of loss of investments is also high.
Non-standard ways of earning
note the investment in the organization of mining companies and the receipt of income from "caught" coins. In other words, this is a purchase of computing power, which are analogues of shares of mining farms. In essence, this implies investing your funds in order to receive dividends. Such operations should be approached with extreme caution, since there are many trap companies that mimic activities and are not capable of generating revenue.
Widespread on the Internet have gained ways of earning indirectly related to cryptocurrency. Most often, the basis of their work is to attract the masses for the accumulation of bitcoins. These are various entertainment sites that distribute digital coins for registration, viewing news, arranging referrals and other simple operations. Cryptocurrency is the basis of calculations for completed tasks. Reviews on the work of such sites are diverse. Some consider this a waste of time, but there are those who are steadily getting rewards in the form of bitcoins, which are subsequently exchanged for "real" money.
Instead of an afterword
And yet, cryptocurrency - what is it? Is it worth paying attention to and exploring the new opportunities that it provides? Surely many want to know if this has a useful perspective?
To date, no one can give a definite answer. Taking into account all the shortcomings of this electronic payment system, you can safely refuse any participation and protect yourself from the risks. But if you delve into history, we will recall that at first all the ingenious discoveries of mankind were harshly criticized, so that it may happen that cryptocurrency will turn out to be a new stage in world financial development.