Bitcoin regularly strikes the world public with sky-high figures. Its influence grows with a frantic pace, forcing to delve into the concept of “crypto-currency” even ordinary citizens, far from the economy. More detailed about what is Bitcoin we wrote earlier.
Behind the intimidating terminology are hidden intuitive principles, to understand which are not so difficult, the main thing is to give it some time.
So, in simple terms, the cryptocurrency is a digital money. It do not have a real physical embodiment and exist only as elements of computer code.
Blockchain Technology definition
All work of the system is based on the blockchain technology. We collected all the information from Wikipedia and now we will try to tell you what it is simple.
Imagine a chain of interconnected blocks of digital data, each containing information about previous transactions.
By combining all the links in a chain, you will get a complete database of one or another crypto currency. This technology is called blockchain.
To protect the blocks from interference in their work, they use elements of cryptography, or, in other words, encryption.
This allows you to protect the system from virtual fakes. Also, users can rely on anonymity. In the information blocks there are no data about the clients, except for the committed transfers.
Cryptocurrency is not really supported by anything. It does not depend on precious metals, but, first of all, on the number of its users. Thus, the more popular one or another digital currency, the faster it grows in price.
Blockchain: advantages and disadvantages
One of the key features of digital money is an absense of a centralized administration. It is impossible to interfere with the system work, it can not be brought down, users can not be influenced, at least directly.
Also the cryptocurrency is protected from inflation. In contrast to ordinary money, the emission, for example, of Bitcoin is limited.
The limit of its release is 21 million coins. Upon reaching this limit, the extraction of the currency stops, preventing its depreciation. Sounds reassuring, does not it?
That’s all! This is quite enough to move to a closer acquaintance with the cryptocurrency. Remember that there is no reason to be afraid of it, the one who has been in the topic for a long time earning decent money on cryptocurrency mining.
In the end, the usual “paper money” in the fullness of time, too, caused a sea of indignation. Perhaps in a couple of decades, we will see in them only echoes of the previous days, meanwhile checking a balance of the Bitcoin wallet.