Cryptocurrencies of all kinds are formed through the functioning of high-powered computers and special encryption algorithms. Digital currencies are uncontrolled assets that are independent of traditional banks.
The principles of the Bitkoin idea were first introduced in 2009 under the pseudonym Satoshi Nakamoto. Over the course of ten years, Bitcoin’s capitalization reached millions of dollars, and the number of alternative cryptocurrencies exceeded seven hundred.
Network coins are gaining the widest acceptance, becoming indispensable in many new systems and penetrating niches traditionally occupied by conventional payment methods.
Let’s talk about the current state of traditional paper currencies.
– The number of existing “banknotes” does not correspond to the gold equivalent.
– The material used for manufacturing has a different value.
– Real assets do not back the existing currency.
– The state imposes conditions that lack an economic basis.
In contrast to standard currencies, cryptocurrency is not threatened by hyperinflation.
What are the characteristics of cryptocurrency?
– Entries in databases cannot be changed without meeting specific conditions.
– There is no government regulation.
– There is no control by tax authorities and banks.
– Thanks to decentralization, any user has the right to own any number of digital coins.
– Inflation is excluded; the generation of bitcoins has a defined limit, maintained by the initial algorithm; the number of token shares depends on market demand.
– Transactions cannot be reversed, challenged, or blocked; the process is irreversible.
– Forgery of personal cryptographic keys or coercive actions with transactions are impossible; ownership is solely with the rightful owner.
– There is no need to prove the correctness of the original blockchain transactions; equality of all assets and actors is maintained.
– While preserving anonymity, the essence of inter-address transactions remains transparent.
Tools and Participants in the Cryptocurrency Market
Cryptocurrency production is ensured by miners – digital output miners. They accept, confirm, and distribute transactions. The workplace is indifferent to the result; the main factor is the presence of powerful hard drives and graphics cards. The reward is earned in the form of bitcoins or other types of alternative money.
Coins are generated through complex mathematical calculations, and transactions become nodes in the blockchain chains.
Large farms have gained popularity, capable of providing maximum power. Miners unite in pools, cooperate on capabilities, and share profits based on participation percentages.
Electronic wallet programs are used for transactions; it is impossible to counterfeit their addresses or apply a transaction repeatedly.
