When most people think of cryptocurrencies, they might as well be thinking of cryptocurrency. Very few people seem to know what it is and for some reason they all seem to be talking about it as if they do. Hopefully this report will demystify all aspects of cryptocurrency so that by the time you finish reading, you have a pretty good idea of ​​what it is and what it is all about.

You may find that cryptocurrency is for you or it may not, but at least you will be able to speak with a degree of certainty and knowledge that others will not possess.

There are many people who have already achieved millionaire status by trading cryptocurrencies. Clearly, there is a lot of money in this new industry.

Cryptocurrency is a short and simple electronic currency. However, what is not so short and simple is exactly how it comes to have value.

Cryptocurrency is a decentralized, virtualized, digitized currency produced by the application of cryptography, which, according to the Merriam Webster dictionary, is the “computerized encoding and decoding of information.” Cryptography is the foundation that makes debit cards, computer banking, and electronic commerce systems possible.

The cryptocurrency is not backed by banks; It is not backed by a government, but by an extremely complicated arrangement of algorithms. Cryptocurrency is electricity encoded in complex chains of algorithms. What gives it monetary value is its complexity and its security against hackers. The way cryptocurrencies are made is simply too difficult to reproduce.

Cryptocurrency is directly opposed to what is called fiat money. Fiat money is a currency that gets its value from government rules or laws. The dollar, the yen, and the euro are all examples. Any currency that is defined as legal tender is fiat money.

Unlike fiat money, another part of what makes cryptocurrencies valuable is that, as a commodity like silver and gold, there is only a finite amount. Only 21,000,000 of these extremely complex algorithms were produced. No more no less. It cannot be altered by printing more, like a government printing more money to power the system without backup. Or by a bank altering a digital ledger, something the Federal Reserve will instruct banks to adjust for inflation.

Cryptocurrency is a means of buying, selling, and investing that completely bypasses government oversight and banking systems that track the movement of your money. In a world economy that is destabilized, this system can become a stable force.

Cryptocurrencies also give you a great deal of anonymity. Unfortunately, this can lead to misuse by a criminal element using crypto currency for their own purposes, in the same way that normal money can be misused. However, it can also prevent the government from tracking all your purchases and invading your personal privacy.

Cryptocurrency comes in various forms. Bitcoin was the first and is the standard from which all other cryptocurrencies are based. All are produced by meticulous alphanumeric calculations from a complex coding tool. Some other cryptocurrencies are Litecoin, Namecoin, Peercoin, Dogecoin, and Worldcoin, to name a few. These are called altcoins as a generalized name. The prices of each one are regulated by the supply of the specific cryptocurrency and the demand that the market has for that currency.

The way cryptocurrency is created is quite fascinating. Unlike gold, which must be mined from the ground, cryptocurrency is simply an entry in a virtual ledger that is stored on various computers around the world. These inputs must be ‘extracted’ using mathematical algorithms. Individual users or, more likely, a group of users run a computational analysis to find a particular series of data, called blocks. The ‘miners’ find data that produces an exact pattern of the cryptographic algorithm. At that time, he applied to the series and found a lock. Once an equivalent data series in the block matches the algorithm, the data block has been decrypted. The miner gets a reward of a specific amount of cryptocurrencies. As time passes, the reward amount decreases as the cryptocurrency becomes scarcer. Added to that, it also increases the complexity of the algorithms in the search for new blocks. Computationally, it becomes more difficult to find a matching series. Both scenarios come together to slow down the speed at which the cryptocurrency is created. This mimics the difficulty and scarcity of mining a commodity like gold.

Now anyone can be mine. The creators of Bitcoin created the open source mining tool, making it free for anyone. However, the computers they use run 24 hours a day, seven days a week. The algorithms are extremely complex and the CPU is working at its best. Many users have specialized computers made specifically for cryptocurrency mining. Both the user and the specialized computer are called miners.

Miners (humans) also keep transaction records and act as auditors, so that a coin is not duplicated in any way. This prevents the system from being hacked and going crazy. They are paid for this work by receiving new cryptocurrencies each week that they maintain their operation. They keep their cryptocurrency in specialized files on their computers or other personal devices. These files are called wallets.

Let’s recap by reviewing some of the definitions we’ve learned:

• Cryptocurrency: electronic currency; also called digital currency.
• Fiat money: any legal tender; government backed, used in the banking system.
• Bitcoin: the original and gold standard of cryptocurrencies.
• Altcoin: other cryptocurrencies that follow the pattern of the same processes as Bitcoin, but with slight variations in their coding.
• Miners: a person or group of people who use their own resources (computers, electricity, space) to extract digital currencies.
o Also a specialized computer made specifically to find new coins through a series of computer algorithms.
• Wallet: a small file on your computer where you store your digital money.

Conceptualizing the cryptocurrency system in a nutshell:

• Electronic money.
• Mined by individuals using their own resources to find the coins.
• A stable and finite currency system. For example, only 21,000,000 Bitcoins are produced of all time.
• Does not require any government or bank to operate it.
• The price is decided by the number of coins found and used which is combined with the public demand to own them.
• There are various forms of crypto currency, with Bitcoin being the first and foremost.
• It can generate great wealth, but like any investment, it has risks.

Most people find the concept of cryptocurrency fascinating. It is a new field that could be the next gold mine for many of them. If you find that cryptocurrency is something you would like to learn more about, then you have found the right report. However, I have barely scratched the surface in this report. There is much, much more to cryptocurrencies than what I’ve been through here.