Cryptocurrencies are spoken about at every step. Meanwhile, while some consider them a revolutionary trend in the financial market, and others - a global financial bubble that will burst one day, the majority still have a very distant idea of what it is. Let's try to explain what cryptocurrency is in simple terms.
The term "cryptocurrency" itself has existed since 2011 and owes its appearance to the American magazine Forbes, although in fact the first such currency - bitcoin - was released in 2009. At its core, it is a digital (electronic currency) that is produced on the Internet and does not have physical media. This "money" is created using a special cryptographic cipher. at first glance, it seems that this is the same electronic money. However, in reality, cryptocurrency is something completely different.
First of all, the difference is that any specialized body regulating the issue is not responsible for the creation of cryptocurrencies, as, for example, the US Federal Reserve System controls the issue of dollars or the Bank of Russia - rubles. The cryptocurrency is based on the blockchain system - a distributed database. The more popular the cryptocurrency, the more memory it provides for its storage. It is created using electronic computing and is a code generated by a computer. The process of creating such a code ("mining" cryptocurrency) is called mining and takes place on a large number of computers located in different places. they can even be located all over the world, as is the case with bitcoin - the most popular cryptocurrency.
Miners come in all sizes. Someone equips entire halls for this (the so-called farms), investing large sums in the purchase of computing equipment. Someone simply installs a special program on their computer and "mines" cryptocurrencies in small volumes. Moreover, anyone with the appropriate knowledge can create their own cryptocurrency.
When we talk about paying with ordinary money, it doesn't matter, in cash or in electronic form, there are always intermediaries - payment systems. banks, exchangers that dictate their own rules. For example, under certain conditions, a bank may block a customer's account or card. Cryptocurrency allows you to do without such intermediaries, in many ways it was created for this. There is no bank regulating its circulation, it comes from user to user. As a consequence, the circulation of such units is difficult to track and control, in particular for the tax authorities. Moreover, it is not so difficult to trace the transaction itself, it is much more problematic to prove that a particular wallet belongs to a specific person.
The lack of intermediaries has its drawbacks. For example, in the event of an erroneous transaction, it is no longer possible to return the paid amount in any way, except to persuade their new owner. Another disadvantage is the different attitude of different states to the circulation of such units. some countries severely restrict or prohibit transactions with them. in Russia, the legal framework for cryptocurrencies is just beginning to emerge.
To become the owner of a cryptocurrency. it doesn't have to be generated. You can just buy it for regular money from a miner. At the same time, as in the case of buying regular currency, the seller will take a commission so that the transfer is profitable for him. Usually, special exchanges are used to buy and sell cryptocurrencies, but there are also exchangers, as well as special terminals where you can dial the wallet number and deposit cash.
There are still quite a few places in the consumer market where you can buy a product or pay for a service with bitcoins or other cryptocurrencies. Usually this virtual money is used as an investment tool to buy it. and then sell, making money on the difference in rates.the rate, in turn, depends on demand - what makes digital currency more popular, the more expensive it is.
