What is cryptocurrency and how it works? Opurbo Tech
Cryptocurrency, sometimes called crypto-currency or crypto or invisible currency, is a form of currency that exists digitally or virtually and uses crypto-currency to secure transactions. Cryptocurrencies do not have a central issuing or controlling authority or owner, instead using a decentralized system to store transactions and issue new units.
What Is Cryptocurrency
Cryptocurrencies are decentralized digital currencies that rely on blockchain technology and are secured/protected by cryptography. To understand cryptocurrency one must first understand three terms/concepts – blockchain,decentralization and cryptography.
Simply put, blockchain in the context of cryptocurrency is a digital ledger whose access is distributed or tracked among authorized users. This ledger records transactions related to a range of assets, such as money, houses or cars and even intellectual property.
Access is shared among all its users and any information shared is transparent, immediate and "immutable". Immutable means something that remains in the blockchain record for good and cannot be modified or tampered with by any administrator. In a word, what cannot be changed or changed.
How does cryptocurrency work?
Cryptocurrencies run on a distributed or observable public ledger called blockchain, which is updated by currency holders and contains a record of all transactions.
Cryptocurrencies are created through a process called "mining". It is a difficult process. Basically, several workers are required to solve the puzzle in some mathematical way on a specially designed computer system to be rewarded in exchange for bitcoins.
In an ideal world, it would only take an honest person 10-12 minutes or less to mine a Bitcoin, but in reality, this process takes approximately 30-40 days to complete.
How to buy cryptocurrency
You may be wondering how to buy cryptocurrency safely or completely confidentially. There are usually three steps involved. These are described below:
Step 1: Choosing a platform
The first step we'll discuss is deciding what kind of platform to use. Generally, you can choose between a traditional or legacy broker or a dedicated cryptocurrency exchange:
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Traditional Brokers: These are online brokers who offer various currencies in addition to buying and selling cryptocurrencies, as well as other financial assets such as stocks, bonds and ETFs. These platforms offer low-cost trading but fewer crypto features.
Cryptocurrency Exchanges: These cryptocurrency exchanges have multiple cryptocurrency exchanges to choose from, each exchange offering different cryptocurrencies, wallet storage, interest bearing account options and more. Many exchanges charge asset-based fees.
Should You Invest In Cryptocurrency?
Trading in cryptocurrencies has many pros and cons and also has its fair share of cons. Here are three of the biggest factors that work for and against cryptocurrencies.
Advantages:
They are private and secure: blockchain technology that gives cryptocurrencies privacy and user anonymity. It ensures a high level of security or privacy through cryptography.
They are decentralized, immutable and transparent: the entire system is based on shared ownership, where data is available to all authorized users and remains tamper-proof.
They are hedges against inflation: Cryptocurrencies act as a great and easy investment during times of inflation. For example, investors often compare cryptocurrencies to gold or valuables. One of the reasons behind this is that, just like gold or precious metals, they are in limited supply, as there is a cap on mining any type of cryptocurrency.
Is cryptocurrency safe?
Cryptocurrencies are usually created using blockchain technology or methodology. Blockchain conceptualizes how user transactions are recorded in "blocks" and time-stamps. This is a fairly difficult and technical process, but the result is a digital ledger of cryptocurrency transactions that is difficult for hackers to tamper with that is beneficial to users.
Additionally, transactions require a two-factor authentication process. For example, you may be asked to enter a username and password or other information to initiate a transaction Then, you may need to enter an authentication code sent via text to your personal cell phone.
They are decentralized, immutable and transparent: the entire system is based on shared ownership, where data is available to all authorized users and remains tamper-proof.
They are hedges against inflation: Cryptocurrencies act as a great and easy investment during times of inflation. For example, investors often compare cryptocurrencies to gold or valuables. One of the reasons behind this is that, just like gold or precious metals, they are in limited supply, as there is a cap on mining any type of cryptocurrency.