What is a cryptocurrency. Explaining in simple terms
Cryptocurrency is virtual money, payments with which take place in a decentralized (no one controls) system.
Cryptocurrency is the result of computer calculations; electronic registers that store information about how much cryptocurrency a user has and where he transfers it. Cryptocurrency is stored on special electronic wallets.
With the advent of the Internet, there have been periodic attempts to create a digital currency around the world. However, no one trusted these projects - and they did not receive popularity. They were too easy to fake.
The first cryptocurrency, bitcoin, was able to solve this problem with the help of the blockchain. This system is compared to a big book containing all the records of what is happening with the cryptocurrency. And each bitcoin owner has an independent, but identical copy of this book in his hands.
The entries in all the books are true and identical. Neither banks, nor the government, nor the creator of the cryptocurrency can forge these records. In other words, there is no single controller in the blockchain, the system is controlled by many participants. Built on mathematical calculations, the system protects digital currency from counterfeiting or hacking.
Today, cryptocurrencies are gradually becoming a serious competitor to the traditional financial system. Ordinary modern money issued by central banks is not backed by gold or other precious metals.
Central banks do not control the exchange rate of national currencies, but they can influence the amount of money in circulation and other parameters. Cryptocurrency, in comparison with conventional currencies, is transparent, and its quantity is limited by mathematical formulas, and not by the interests of states.
Nuances
Bitcoin was the first cryptocurrency in the world. Its creator is Satoshi Nakamoto, whose identity has remained undisclosed until now. He wrote the code and formulated the principles of the network of the future cryptocurrency. This happened in 2009. And the very next year, the active expansion of bitcoin into the global economy began.
In addition to the famous bitcoin, there are quite a few popular cryptocurrencies. One of them is ether, the currency of the Ethereum blockchain platform, created by Vitalik Buterin from Russia, the youngest cryptocurrency billionaire in the world. He was born in 1994, however, he has long been considered a cult figure in the cryptocurrency community. “When Vitalik talks about the blockchain, Stanford professors take out notebooks and start writing down,” this is how German Gref, head of Sberbank, presented Buterin at a forum in Davos in 2016.
Some cryptocurrencies "shoot" unexpectedly for their creators. The popularity of the “meme” cryptocurrency Dogecoin (the name refers to the Internet meme Doge with a Shiba Inu dog), which came to it after a flash mob on Reddit, shocked its creator Billy Marcus. He himself left the project a few years ago and therefore could not enrich himself on the tokens that rose in price in 2021.
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