This is a virtual currency created using cryptography (cryptography ensures the confidentiality and integrity of data). In general, this is not money we used to. This quasi-money is a set of figures protected by encryption. All the necessary data is hidden in these figures: nominal, so-called address of the owner, date of creation. The ways of cryptocurrency application are similar to securities, but such crypto-actions are not provided by any property.
How does the cryptocurrency work?
The part of cryptocurrency data remains open in order to simplify this technology. Anyone on the network can check this part of the code. There is a special technology called blockchain to transfer this technology. It is a blockchain system that gives the cryptocurrency its phenomenal simplicity and resistance to hacking. The blockchain is a matrix that controls these figures. Each action is encrypted into a separate block, which contains the encrypted signature of the previous block. The data is simultaneously stored on all participants’ computers.
The blockchain is an account book where each record is a protected data block. It is located on a large number of computers simultaneously to provide security. Moreover, all the available copies are checked. Cryptocurrency is not the only possible application of the blockchain. This technology also makes it possible to create any database that is extremely hard to hack and easy to verify. For example, you can store cadastral data, certificates, and diploma numbers with the help of the blockchain. That is why it is called technology of the future.
It is important that any person can issue a cryptocurrency; this is just a collection of zeros and figures that are charged as a reward to people in the system that provide their computers for the calculating transactions. It transforms into a currency after a set of quotations on a special exchange. To date, there are more than two thousands of cryptocurrencies on the exchanges. The most expensive and popular one is Bitcoin, capitalization of which exceeds billions of dollars.
Why did the cryptocurrency become popular?
Crypto-currency and blockchain-technology are literally public inventions since their main advantages are the possibilities that are not accessible to users of common digital money. That is why any government is now trying to take them under control.
Usually, you need an intermediator to work with common digital money, for example, a bank or a government. They guarantee the security of the transactions and protection of participants from hacking. The intermediary is not needed in the blockchain system — it’s impossible to deceive the protocol due to the decentralization because changes will be accepted only if more than 50% of participants confirm them.
Despite the lack of support, crypto-currencies have a number of qualities inherent in money, for example, they are difficult to obtain, easy to verify, and their offer is limited. In addition, they perform monetary functions: it is a payment method, it also circulates from one user to another and it accumulates as well. Thus, it is almost imperceptibly appeared on our planet.
The cash provides the great freedom; the bank could not trace how an individual spends money. The noncash transactions allowed the government to control the expenses of any individual closing his or her accounts automatically in case of any violations.
Cryptocurrencies gave our confidentiality back and this is its main advantage.
The problem is that a governments can’t really take control of the cryptocurrency; they can only legalize them according to Japan’s example and track cash withdrawals through exchange offices or payment systems. Another “option” is to tighten the circulation of the cryptocurrency as Chinese government did.
How to earn cryptocurrency?
The production of cryptocurrency carries out automatically, for example, in the case of bitcoin, its finite number is known. In total, 21 million bitcoins will be produced; the more computers involved in the production, the slower its emission. Approximately, in 2033, bitcoins can only be bought from those who already own them.
The application of a computer to calculate and create new blocks was called mining. The first block of 50 bitcoins was produced on January 3, 2009. The sharply increased popularity of crypto-currencies has led to the fact that thousands of people around the world engaged in mining.
For most of the people out there, cryptocurrency is something unknown and uncertain since it is far less propagated that simple digital money. However, according to the rate of these new types of currencies growth, soon enough all the common payment methods will be substituted by new ones — it is only a matter of time. Together with multiple advantages convenient payment methods without any need for additional charges and impossibility of encryption, this new phenomenon has certain, let’s call them disadvantages, like selling or buying of weapons and drugs on the internet without any tracking.
How to earn money by means of cryptocurrency?
Cryptocurrency exchange is characterized by the conditions of functioning. This feature differs it from the common exchange. The main factor is the lack of predictability of course changing, even with regard to news and statements of its creators. You need to create your own strategy.
You can’t get rid of the currency or rush to buy it when the price will be increased by 2 points. It is better to stick to more or less average values. There is no need to wait for extreme changes in order not to play at a loss.
In order to earn money on such trading platform, you need to monitor economic events and the course variability. You need to develop your own forecasting strategies. The difficulty lies in the fact that only one person with a large fortune can significantly change the situation on the market. For example, by 2013, the rate of cryptocurrency increased by more than 5000%. At the beginning of last year, the value of one Bitcoin was $ 540, and in the middle of June the price increased up to $760. Such situation is unlikely to happen with common currencies since it will collapse the world economy.
How to start trading on the stock exchange? You should determine the amount of money you are ready to lose. Then you need to practice on a test account, and then start real trading. You should carry out transactions having evaluated all pros and cons waiting out unfavorable periods. You should buy cryptocurrency cheap in order to make a profit using the difference in prices.
A crucial piece of advice for the beginners
The probable forecast is based on the analysis of Japanese candlestick. If the trading session has grown, the body of the candlestick is painted in red or black color. If there was a good start, and by the end of the session the rate fell, the candlestick is painted green or white. There is the concept of shadow. This is the maximum and minimum price in the course of trading. If the candlestick is almost without a body, and there is only a shadow, it is called dodge.
Four useful dogmas for a trader
1. Do not invest your last dollar. You should definitely have a backup plan. So you can calmly reflect and make reasonable decisions.
2. Buy Bitcoins while the price decreases and sell them in the course of its growth. There is no need to wait for a critical point. The guaranteed profit is within the ranges above and below an average value.
3. Cryptocurrency exchange does not forgive mistakes. Therefore, you can only bank on your own experience and strategies.
4. Specialized websites provide the user with a choice of several currency pairs. Experienced traders recommend moving in several directions without focusing on a single one.
About the author: An author that decided to investigate this popular phenomenon is Melisa Marzett. As far as you can see she deepened into this topic as far as she could and found much interesting information that, we hope, will be interesting for you. If you want to check other essays of her, visit a website where she works as a freelance writer resume-service.org.