Cryptocurrency is digital currency in which encryption techniques are used to regulate its use and generate its release. Unlike fiat currency – such as US dollars, reais, euros and yen – cryptocurrency is not regulated or controlled by any bank, government or financial authority.
Instead, trust the internet power to secure your value and confirm your transactions. Users on a network verify all transactions and those transactions become public record. This prevents the same cryptocurrency from being passed twice by the same person.
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Cryptocurrencies offer a new way to store and spend money without using a centralized bank or financial institution. The technology is relatively new and therefore not yet widely understood or accepted as a means of payment. However, this financial movement is growing rapidly and may be an important method of financial transactions in the future.
cryptocurrency registry
The digital public journal in which all transactions are recorded is called a Blockchain. Data is stored on a network, so it is not susceptible to exploitation by hackers or central failure.
Each record or series of records on the blockchain is known as a block. A block is sent to the network and added to the blockchain after being accepted by the network as a valid transfer. Once verified, blocks cannot be changed.
cryptocurrency miners
Cryptocurrencies are released to the world through a process called “mining”. For you to mine this currency, you must try to solve a computational puzzle known as a hash.
People all over the world compete to be the first to solve a hash. Those “miners” who manage to solve the hash receive a reward in blocks – that is, an amount of cryptocurrencies that they managed to mine.
What is needed to mine cryptocurrencies?
You will need some very specialized tools to mine cryptocurrency. Invest in these items initially:
- mining hardware – You will need an ASIC chip for your computer specially designed for cryptocurrency mining.
- mining software – Look for free software with easy-to-follow instructions that explain how these programs work with your ASIC.
- Bitcoin Wallet – If you complete a block, you will need to store your bitcoin in a wallet.
How to buy and use cryptocurrencies?
Cryptocurrencies are part of a volatile market, with exchange rates that can fluctuate wildly by the day and sometimes by the hour. Bitcoin is the best known and most valuable cryptocurrency in existence, but there are many others to explore including litecoin, peercoin, dogecoin, monero and ripple.
When you buy or receive a cryptocurrency, you receive a digital key to that coin's address. You can use this key to access, validate or approve transactions.
You need a place to keep your key safe, and that's where the cryptocurrency wallet comes in.
- desktop wallets – Software like Cryptonator that allows you to send and store cryptocurrency addresses and also connect to the network to track transactions.
- online wallets – Cryptocurrency keys are stored online on exchange platforms such as Coinbase or Circle and can be accessed from anywhere.
- mobile wallets – Apps like Blockchain store and encrypt your bitcoin keys so you can make payments using your mobile device.
- hardware wallets – You can use a USB stick created specifically to electronically store bitcoin and your private address keys.
