What is Cryptocurrency?
A cryptocurrency is a virtual currency (virtual currency means that it can’t be physical and can be maintained only in online wallets). It’s like having your savings in your online bank account , but in this case the cryptocurrencies can be bought , sold, or maintained in online crypto wallets.
Why everyone loves cryptocurrencies?
Cryptocurrencies have a lot of advantages that even banks or other financial insitutions don’t have:
1. Cryptocurrencies are decentralized currencies.
This means that they exist outside the control of governments and central authorities.
How can we understand hits characteristic? While centralized currencies like Euro , that is managed and administered by the Frankfurt-based European Central Bank (ECB) and the Eurosystem (composed of the central banks of the eurozone countries) are often facing ups and downs because of political or economical decisions, Cryptocurrencies are not owned by anyone, and also are not under any regulatory ent or policies.
- Cryptocurrencies are ‘’untraceable’’
While every transaction is recorded in a permanent fixed ledger, called the blockchain these transactions have no name , or email, or any other clue attached to them.
It means when someone is sending cryptocurrencies to someone else, the cryptocurrency that is sent goes without any information to the receiver. The only thing that can be traced is the cryptowallet used on this transaction. It’s like a receipt of the transaction that can be searched on blockchain and it says only the amount of crypto’s sent and the time of the transaction.
Many countries are against the approval of these currencies , because they may bring two main problems : 1. Money laundering and 2. Tax evasion
- Time
While a bank transfer takes from 24h to 48h or 2 to 5 working days if it’s an international transfer , the cryptocurrencies transfers take only a few seconds/ minutes. You can transfer thousands or even millions of dollars within few minutes.
- Fees
Bank accounts take a lot of fees, like commissions for the maintenance of the bank account , commissions for actions taken with credit or debit cards, commissions for transferrin money to a third person etc. Cryptocurrencies and even crypto wallets don’t take maintenance commissions. The only commission that they take are the commissions of transferring the coins to another person.
- Cryptocurrencies can be bought or produced
While cryptocurrencies can be bought in online crypto wallets, or cryptoexchangers they also can be produced.This process is called crypto mining.
Crypto mining is the process when different cryptocurrencies are entered into circulation. “Mining” is performed using sophisticated hardware that solves an extremely complex computational math problem. So to produce cryptocurrencies you need a veryexpensive computer, graphic card, cpu etc.
Miners receive coins as a reward for completing “blocks” of verified transactions, which are added to the blockchain
