Cryptocurrency – What It is, How It Works and is It Worth Investing

Nowadays almost nobody carries coins in their pockets anymore. For a few years now, cash money has been circulating less and less. In addition to credit and debit cards and smartphones, financial transactions in the 21st century are also being made using digital currencies, known as cryptocurrencies.

Cryptocurrency - What It is, How It Works and is It Worth Investing

What is cryptocurrency?

The cryptocurrency is a digital currency, with the logic similar to cash. Thus, it assists in the purchase and sale of goods and services through virtual transactions.

How Cryptocurrencies Work

Production

Despite having characteristics common to other currencies as a means of exchange, cryptocurrencies have very striking distinctions. The most important detail is that they are neither produced nor regulated by a government’s central bank. Those who produce them are the users themselves.

Commercialization

Financial transactions with cryptocurrencies do not need an intermediary, as banks do in currency transactions such as the dollar or the euro.

Thus, one person can transfer money or make a payment to another over the internet without the help of a third party. In addition to agility, this new financial movement logic also reduces the cost of operations.

Transaction vouchers

Instead of banks, there is a system called blockchain, where all transactions carried out in cryptocurrencies are publicly registered. However, all information about the “accounts” of each user is kept confidential and securely kept.

Virtual currency and virtual wallet

Purchased coins are stored in a virtual wallet and protected with encryption. As a kind of individual account, users use codes with letters and numbers for transactions. After the transfer, the deal can no longer be undone.

Main types of cryptocurrencies

The main digital currencies in the market are:

  • Bitcoin;
  • Ripple;
  • Litecoin;
  • Ethereum;

Some were created as an alternative to bitcoin – the best known type of cryptocurrency –, others with the objective of competing with the most famous, but each one of them has its peculiarities.

Facebook Cryptocurrency: Libra

Facebook has received harsh criticism for trying to be a single global currency and unraveling the power of central banks. So the initial plans were abandoned and it has started negotiations with regulatory bodies.

Why invest in cryptocurrencies and risks

The cryptocurrency market turns out to be very attractive for investors due to the possibility of generating profits in excess of 1,000% in certain periods.

But this is a double-edged sword. The damage can be huge too. Therefore, it is important to always be aware of accurate information and Cryptocurrency news about this market to know when, how much and which cryptocurrencies to buy. For this, check out The Next Bitcoin.