Will virtual money make a real profit?
What is cryptocurrency?
Cryptocurrency is a virtual electronic money that does not have a physical carrier, for example, in the form of a paper note or a coin made from any metal. In essence, this is an encrypted (hence the crypto prefix) electronic record and nothing more. This money is not provided with real assets, for example, gold, but it is limited in terms of emissions.
The history of the emergence of virtual currencies associated with the development of electronic payments. In order for you to use online banking, pay with a card, pay for purchases directly from a mobile phone and it was all safe and secure, many programmers in the field of encryption worked and worked. And once they came up with their own money.
They were driven by the ideas of independence, anonymity and decentralization. And they made an anonymous system of settlements with a currency that is not subject to inflation that is not controlled by anyone. The main and most famous cryptocurrency is Bitcoin, but there are a lot of other “forks” (branches, variations: zcoin), and also non-Bitcoin cryptocurrencies.
Currently, the total number of virtual currencies has exceeded 2,500. Therefore, when it is offered to you to invest in cryptocurrency, praising it in every way, the big question is what exactly you are investing.
The creator of cryptocurrency Bitcoin is Satoshi Nakamoto. It is still not known for sure whether it is one person or a team of programmers. The document describing the essence of distributed cryptocurrency first hit the network at the end of October 2008.
Bitcoins cannot be faked. It’s true
It is absolutely impossible to fake a cryptocurrency, it is ensured by the system of its existence itself – the blockchain technology. Simplifiedly, this can be described as follows: information about all Bitcoins since their “birth” is distributed, in blocks is stored in all wallets. This is one big chain of blocks, only fragments of it are stored in each bitcoin, and if someone wants to hack the system by inserting their transaction links, then this “gag” is calculated automatically. Therefore, no one even tries to crack Bitcoins.
The currencies we are accustomed to have a single issuing center, which is played by the central banks of different countries: in Russia it is the Central Bank of the Russian Federation, in Europe – the European Central Bank, in the US – the Federal Reserve System, etc. In principle, there are no internal, no external administrator.
This means that neither banks, nor any state or private bodies can influence transactions of participants of such a payment system. This ensures the irreversibility of transactions – no one can cancel, block, challenge or forcibly complete a transaction without access to the owner’s private key, which belongs to him alone. True, if the owner loses such a key, then in fact he will lose his electronic money.
numbering-small.pngWhere does the cryptocurrency come from? Where is bitcoin printed?
Bitcoin is not printed anywhere, it is born from calculations and has no physical counterpart, bill or coin. Last year there was an attempt to “materialize” this virtual currency: a small circulation of special coins of 100 and 1,000 bitcoins was issued. But this is more of a “souvenir” version, and no one uses them seriously. Bitcoins are not printed, but mined – this process is called mining.
Actually mining (from English mining – mining) is a search for numbers according to a certain algorithm: a certain number is searched for, which allows you to release a new Bitcoin. The more people “mine” bitcoins, the harder it is to get them, that is, to produce on their computing power. The number of bitcoins is limited, and at some point the extraction will simply end. It will happen around 2032 – approximately 21 million bitcoins will appear in the world, and the “reserves” will be exhausted there.
The second type of mining is the maintenance of the transaction system itself, it also requires huge computational power. For conducting transactions, each computational node takes a commission, the amount of which is set by itself: at least 0%.
Learn more about bitcoins at bitcoin.org. He offers several bitcoin wallets and honestly warns: “Bitcoin is different from what you know and use every day. Before you start using Bitcoin for serious transactions, be sure to read the required information and take appropriate measures to ensure the security of your wallet. Always remember that choosing the right wallet and taking all precautions to protect your money is solely your responsibility. ”
How do these “unreal money programmers” become currency?
And how do payment facilities appear at all? Who determines why a piece of paper can be obtained for a piece of paper with numbers written on it? The answer is simple – the market.
Imagine that bitcoin is just a beautiful shell.