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September 1, 2021

What is a cryptocurrency

Everyone makes money on cryptocurrency, but you don't know where to start? Everything you need to know about cryptocurrency here

What is a cryptocurrency

Cryptocurrency is a means of payment and electronic money on the Internet. It exists only virtually - it is impossible to take such money in your hands, they are not issued in physical form, they do not belong to anyone, they do not belong to any fiscal authority.

Despite this, the cryptocurrency is exchanged for real money through exchangers - special services. This happens quickly and without cheating. 

Information - where it is stored

All transactions and balances of cryptocurrency owners are stored as a blockchain using Blockchain technology. Information about transfers can be tracked. Each subsequent block of the chain reflects information about previous transactions and service information.

Each coin in the blockchain chain has new blocks with a certain frequency because of the work of miners. This interval is predetermined in advance. For example, Ethereum has 15 seconds, Litecoin has 2.5 minutes, Bitcoin has 10 minutes. Creating new blocks is called “mining”.

Miners - who are they?

These are people interested in income, who support the network and the functioning of the cryptocurrency, protecting it from hacking. They are rewarded for their work as a commission.

There is a lot of debate on the Web about whether it is correct that everyone calls cryptocurrency money. In fact, it’s not quite right to call it that. After all, the currency must be supported by something, and in this case, its “weight” is determined only by the demand at the current time. When demand increases, the cryptocurrency becomes more expensive, when it falls, it becomes cheaper. But it can be exchanged for real money and earned if the value of the crypt has increased.

Is cryptocurrency legal

Some countries recognized cryptocurrency as a payment instrument in 2018. It was Germany and Japan, but they did not call it money. In 2019, Korea legalized all financial transactions with cryptocurrency, and some other countries are allowed to pay salaries in it.

Types of cryptocurrencies

In 2021, it became known that about 5.5 thousand types of virtual money. At the same time, many of them will not last long and will end their "life" soon. We will tell you about the most famous and reliable cryptocurrencies.

Bitcoin (BTC) - appeared in 2009. The oldest cryptocurrency received the status of “digital gold”. Its source code is outdated, and it cannot compete significantly with other alternatives. But it is still considered the best since BTC capitalization accounts for up to 80% of the market, new blocks appear every 10 minutes, about 19.5 million BTC in turnover. 

Ethereum (ETH) - exists since 2015. It works based on the Blockchain, blocks appear every 15 seconds. The developer is considered a programmer from Canada Vitaly Buterin (he is Russian). Over 112 million ETH in circulation. 

Dash - 2014 year of appearance. Instant transactions, security, anonymity, and low fees are its main characteristics. New blocks - every 2.5 minutes. 

Litecoin (LTC) - 2012. New blocks - every 2.5 minutes. An almost complete copy of Bitcoin, it is accepted almost everywhere where electronic money is “spinning”. 

ZCash (ZEC) - 2016. Anonymous crypto asset. It can be mined only on video cards. 

Ripple (XRP) - 2012. Centralized private coin. Not mined, but produced in one center. Popular in the USA.

These cryptocurrencies are promising and liquid. Among the new products that are gaining popularity, we can also distinguish EOS, ADA, TRX, BNB.

Where is cryptocurrency stored?

In online wallets. These are programs or applications that are installed on a PC or smartphone. For each type of crypto money, a "native" wallet is downloaded, and there is simply no universal one. But there are multi-currency crypto wallets on the Network. For example, MATBEA, COINBASE, COINPAYMENTS.

The best multi-currency wallet is considered to be Matbi (opened in 2014). It works with 4 popular coins, there is a functional online exchanger. More than 100 thousand people have already used the services of Matbi.

The most convenient crypto wallet for Ethereum is MEW-MyEtherWallet with a free mobile application, where a full set of tools is presented. The crypt is securely stored and purchased, investment control is monitored, "wrapped bitcoin" is purchased, etc. The interface is simple and secure. Cryptocurrency is stored on a smartphone, and no one knows how much a person has. The system is used by about 3.5 million people.

What is a unique wallet address?

Each wallet has its own address, it is not repeated. It is to this account that you can transfer funds (hereinafter referred to as DS). This is what it looks like:

You can find out the wallet address in the app.

Cold Wallet

This is the most reliable option for storing cryptomonets - a device that connects to a PC to send coins. Without this, they do not go online and are considered the most reliable storage places. The minimum price for a cold wallet is $ 100 - they are similar to flash cards.

Rules for working with wallets

Each “crypt” has a website that describes the official wallets. Download them only from there.

● If you lose access to the wallet, you will lose your DS. Many people could withdraw millions of US dollars so create backup copies of the keys. Otherwise, the DS will remain online forever.

How to send a DS

Check the address to which you are sending the cryptocurrency. If there is a typo, the funds will be debited, and you will never return them. Don't confuse the addresses either. For example, Bitcoin and Bitcoin cash-each has its own Blockchains and wallet addresses.

Mining - a little more

If cryptocurrency is not released, where does it come from? DS appears because of a process called mining. Mining is the search for a Hash-a hexadecimal encrypted number through an encryption algorithm. It «sews» information about commissions, transactions, time, etc. Miners change it and get different hashes. The PC who first picked up the correct hash will receive a reward. For Bitcoin, this is 6.25 coins + commissions. Over time, this fixed remuneration decreases. Halving is called halving. The last decrease was observed in the spring of 2020. Halvings occur approximately once every 4 years or after 210 thousand blocks.

The hash rate of the network is all the participants. The more of them there are, the more expensive extra money is.

The issue is usually limited. Bitcoin has 21 million, Litecoin has 84 million. Therefore, the cryptocurrency is not subject to inflation and can theoretically only become more expensive.

But there are cryptocurrencies without restrictions on the issue - Ethereum, Monero.

There is electronic money in the Network without mining. It is unnecessary to extract them since they are in circulation - Ripple, EOS.

How to buy virtual money

Online trading is carried out on special sites - crypto exchanges. Examples are BINANCE, EXMO, BITMEX, YOBIT.

This can also be done in exchangers. They are suitable for beginners, but with their help, you cannot learn the difference in courses. The most famous exchangers are PROSTOCASH, XCHANGE, MATBEA, 60CEK, WW-PAY. Exchange rates are constantly “jumping”. Prices for exchange directions are also constantly changing (for example, from Kiwi, Yumani, debit bank cards).

Cryptocurrency can also be “mined”. To do this, you need a powerful PC, a specialized computer with good video cards or ASIC controllers.

Mining is done by experienced users who understand and accept all risks. A powerful mining farm costs about 200 thousand rubles, consumes a lot of electricity, and not everyone can invest so much in earning money on cryptocurrency. Despite everything, the miners ‘investments usually pay off in about a year. This time depends on two constantly changing indicators - the complexity of mining, cryptocurrency rates.

An alternative option for “crypto mining” is to rent capacity on cloud mining sites. You pay for 12 months of using the equipment. The minimum initial investment is $ 0.6, and there is no need to administer the process. Well-known cloud mining systems are CRYPTOUNIVERSE, GENESIS-MINING, NICEHASH.

Another option is sites with bonuses (Taps). The size of their transfers is extremely small, but if you receive bonuses regularly, then a good amount will accumulate. Coins are awarded for simple actions: browsing websites or entering a captcha. We warn you: here you can run into a fraudster who will not pay the promised reward. Reliable Taps - FREEBITCOIN, SATOSHIHERO, ADBTC, Free Ethereum, Free Litecoin. They work with Satoshi - this is 1/100million Bitcoin.

Crypt mining using direct exchange

Some people want to enter the cryptocurrency, while others want to exit it. If you find a person who will make a direct exchange (p2p) with you, you will purchase the crypt directly, bypassing the exchangers. Such users live on LOCALBITCOIN, but you can only get there through TOR.

Cryptocurrency - how to use it

● You can make transactions with low fees.

● All transfers are transparent.

● The issue is limited - the cryptocurrency is only getting more expensive.

● The work is anonymous.

● This is an alternative for storing valuables.

Unfortunately, cryptocurrency has several disadvantages.

  • It is not regulated by anyone.
  • The emergence of a new cryptocurrency puts the old ones at risk.
  • Almost no one accepts it for payment.
  • May disappear from the market.

Cryptocurrencies create interesting ways to earn money. If you accumulate it and exchange it, you will get a good margin. Therefore, it is worth using these opportunities to the maximum.