About cryptocurrencies in simple words: it is allowed to play, but according to the rules. Hard rules. What is cryptocurrency in simple words and how to make money on it Ok google what is cryptocurrency

Hello! Cryptocurrencies are very popular in the media. Someone earns millions on the growth of the exchange rate, someone calls them another "bubble". Politicians accuse cryptocurrency owners of money laundering, and large stores start accepting payments in cryptocurrencies. I myself mentioned cryptocurrencies several times, and now I decided to explain what a cryptocurrency is and why it is needed - simple and understandable language.

What it is

Cryptocurrency (crypto, coins, coins, as soon as they are not called) is digital decentralized money. Now we need to clarify a few questions.

What is money? It is a universal medium of exchange that cannot be faked or created out of thin air. Paper money, minted coins, animal skins, shells - all this performs the function of a medium of exchange. Seller and Buyer acknowledge value money and can exchange them for the right product. At the same time, money must be valuable in itself, so that it is difficult enough to obtain or manufacture. Therefore, tree leaves cannot be money - they are too easy to get, so they are of no value.

The emergence of cryptocurrency the next step in the development of the economy. Coins and papers are the last century. They are not always convenient to use: you can carry a limited number with you, count and check the change yourself, they can be lost or damaged. Electronic money is the equivalent of paper money, only manage them more comfortable. From the point of view of the state and business, cashless payments are also convenient - electronic payments pass fast, cheap, safely.

What is decentralization? This is the way the system works all participants are equal. When paying by card, the terminal sends a request to the bank's server, which checks the availability of money in the account, writes off the required amount and sends a confirmation. If the server goes down, it will not be able to confirm the payment - this is flaw centralization. In a decentralized system, the terminal will contact any nearby system participants who will confirm the payment.

Who releases?

Someone has to make money. The Central Bank prints rubles, hunters mine skins, divers look for shells, and the crypt is mined. Mining is inextricably linked with decentralization and blockchain. Blockchain is an archive, which consists from consecutive blocks. Each block contains information about transactions in the cryptocurrency network, that is, information about the movement in general is stored in the blockchain all coins during the existence of the crypt. Each block also has hash sum previous blocks. If you change one block, the hash of subsequent blocks will no longer match it, because of which it is impossible to hack or change the blockchain. The blockchain is simultaneously stored by all participants in the system. Blockchain structure - in the picture.

Mining- the process of finding and signing new blocks. To do this, the miners run a program on the computer that enumerates and hashes random numbers until one of the miners finds a number that matches the condition. The conditions are selected automatically to ensure a certain speed of block mining, depending on the power of the computers involved in mining. For the found number, the miner receives reward in crypto. If you want to learn more about mining - watch the video.

Structure

Information about all transactions is stored in the blockchain. An article will be released soon, with a detailed description of how the whole system works. If we simplify it a lot, then by records in the blockchain, you can track all the coins and find out the balance of any wallet. This way you can do without a central server - the nearest participants in the system can confirm that there is money on the wallet, confirm the transaction and add it to the next block to complete the transfer. You have to pay for translations commission, the size of the commission affects the speed of the transaction.

Advantages over fiat money

Impossible to steal- you can withdraw money only if you know private key. I urge everyone to be careful security: every day we hear about another hacking of a wallet, an exchange or a private person.
Small commissions- for the transfer of several million dollars to another country, they will take from zero to 5 dollars.
No central server, which can be hacked or disabled.

What is a cryptocurrency for?

Like any exchange medium, the crypt must be used to exchange for goods or for another currency. For cryptocurrency you can buy goods and services while reducing fees for money transfers. Also, coin flows can be well confused and make your purchases completely anonymous.
Crypto is a good tool for long-term investment. You can just buy coins and wait for them to grow in value. The price of bitcoin has risen from $10/BTC to $10,000/BTC in just a few years.
Cryptocurrency rate volatile, jumps of 5-6% per day are the norm. Speculators and skilled scalpers make good money on such short-term fluctuations with the help of crypto exchanges.

Significant cryptocurrencies

Coins differ from each other much more than fiat money. They differ in the method of extraction, commissions and scope of use. But the main features are market capitalization And well.

Top 5 cryptocurrencies by capitalization:

bitcoin. The most popular coin in the world, value - $8000 . Works with a regular blockchain, mines on farms and makes a profit;
Ethereum. The second most popular crypto, created by a Russian programmer Vitalik Buterin. Smart contracts are written on Ethereum, which are executed automatically upon reaching the prescribed conditions. Price - $500 ;
Litecoin. Made on the basis of the Bitcoin code, it has the technology of fast transactions, cross-currency exchange and smart contracts. Price - $200 ;
Ripple. "Banking" cryptocurrency. Used for fast and ultra-cheap transactions between banks, it cannot be mined. Price - $0.5 ;
Monero. Anonymous cryptocurrency, popular on the Dark Web. Due to this, it is not so much subject to price fluctuations. Price - $200 .

In addition to the giants, there are also cheap cryptocurrencies with a small capitalization, but interesting idea.

El Petro. National cryptocurrency of Venezuela, first state crypt in the world;
GRAM. Cryptocurrency from the founders Telegram;
CryptoKitties. Blockchain-based cryptocurrency, in which instead of coins there are cards with images seals.

This is all? No, there are more several thousand cryptocurrencies that differ in functionality and audience. You can find out about them on Coinmarketcap website .

There are the main indicators: capitalization, cost of one coin, daily trading volume, number of coins in circulation, rate chart. Most coins are listed on exchanges, and this information will help you discover trend And earn money on course fluctuations.

Cryptocurrency calculator

Sometimes I find it difficult to convert dollars into euros, but mentally converting BTC into DOGE is generally unrealistic. To find out the exact value of a coin or calculate how much BTC I will buy for $1000, I use this page .

Everything is simple there - select currencies, enter the amount and get result. Useful if you want to calculate how to deposit cryptocurrency on your wallet with maximum profit.

Technical analysis

To make money on trading, you need to know everything about the previous price movements. On tradingview There is all the necessary tools for analysis: chart, drawing tools, indicators, trading volumes, price history. If you are a beginner, you can look at ideas And notes other users. Also, you can run market simulation to test your trading strategy. The site is complex but very useful, perhaps in the future I will write a complete guide to developing my own trading strategies.

How to buy cryptocurrency?

Crypto enjoys demand, so popular exchangers add automatic purchase of coins to the functionality. I use Bestchange to find the best exchange rate. Buy on exchangers profitable, as their offers are often updated late. Having guessed the moment, you can buy on 5-10% more coins than you would buy on a public exchange with the current rate. Exchangers accept electronic money, payment by bank cards and other cryptocurrencies, between payment and receipt of cryptocurrency takes about 15 minutes.

Use favorable exchange rates

Cryptocurrency can be bought on exchanges. There will be a link to an overview of the best crypto exchanges, you can read it. The differences between the exchanges functionality- you can use them to buy and store crypto on your wallet or start trading right away. A wallet on the exchange can be used in the same way as a regular one: you can receive and send money without restrictions. Usually, when registering, they do not ask for a name, but due to the “legalization” and the creation of regulators in the United States, in the future, exchanges may oblige users verify identity.

List of profitable crypto exchanges

Binance;
Yobit;
Exmo;
Bittrex.

Which way did I choose? I buy crypto on public exchanges to get the maximum benefit from commissions. But I prefer to store on a separate wallet, as exchanges regularly hack and steal coins from users' wallets. I advise you to read the educational program on how to profitably buy cryptocurrencies, there are a few tricks.

Where to store?

On a special wallet. Each of them has public address And private key. The creators of cryptocurrencies came up with an interesting security scheme - for each transaction, the wallet creates new unique addresses. Let's say you want to transfer the coins that are on the wallet A. The wallet will first create a second wallet on its own IN and then send the money to the correct address. A wallet is created to accept a transaction WITH, from which money is automatically sent to the wallet A. So no one will know real the address of the wallet where the money is stored.

But not all wallets have such features and not all are equally convenient to use. There is a total four types:

Online wallet. This is a site, a layer between you and your money. The site stores wallet data, in order to access them, you need to enter a username and password. At the same time, the sites user-friendly interface and the ability to manage your money from any device that has an internet browser. On this wallet don't store large amounts, since the login and password can be stolen by a virus, keylogger or other malicious program. Examples: Coinbase, Exodus, Wallet.BTC.
Exchange Wallet. An online wallet with limited functionality, since on most exchanges you do not buy coins, but contracts. Only the main currency in which the exchange settles can be stored on the wallet of the exchange: this is usually USD, BTC or ETH. Convenient if you do not need other currencies, and you are actively trading in the crypto market.
cold wallet. Access data (address, passwords) is stored in a special file wallet.dat. Why not store this file where no one can steal or peep it, for example, on a separate flash drive? Cold wallet - storing data on a device that generally not connected to the internet and protected from strangers. Not very convenient, but very safe if you want to make a big investment. Examples: flash drive, password on paper, hard wallets like Trezor.
Local Wallet. You can store money on your computer, receive and send transactions - through a special wallet program. Safe enough, but to use it you will have to download a blockchain file that weighs several tens or hundreds of gigabytes. Examples: electrum, Jaxx.

There are many wallets, so I chose a few popular and reliable ones from each type - read the review of popular wallets. You can also see the review at Trezor- "iron" wallet.

It is safe?

Yes, it's safe. Cryptocurrency is the same electronic money as WMZ or Yandex.Money. But the media and politicians are trying to convince us of the opposite, since using cryptocurrencies, we do not pay taxes. So, popular myths:

But if you don't know how to use crypto, you risk losing money:

Wallet can be hacked. If you do not care about the security of information, do not come up with a sufficiently complex password and do not protect your computer, your wallet file or online wallet password can be stolen.
The investment may not be profitable. If you are going to invest in a new and not very promising cryptocurrency, take into account the probability of losing. Some cryptocurrencies are growing rapidly, others are losing value, just like with stocks, securities and fiat currencies.
You can lose on the stock market. The volatility of the cryptocurrency market is a very dangerous thing. You can determine the main trend, but it is very difficult to guess instantaneous sharp fluctuations. These fluctuations can easily cut stops or even eat up your entire margin, so trade very carefully.

Why have cryptocurrencies become popular?

The Internet is penetrating deeper into everyday life. Bank cards are a convenient way to pay for goods and services, but the owners have to pay for the service. Add here the percentage for withdrawal / replenishment, various commissions and "promotions" that eat up money. With the development of the Internet, it became possible to buy goods abroad and not pay intermediaries. But for international transfers too have to pay.

Cryptocurrencies allow you to send any amount of money to the other side of the world by paying a few cents for the transfer. Cryptocurrencies allow obfuscate transactions and ensure full anonymity. Blockchain stores all information on transactions to protect the system from hacking, and coins from theft. Cryptocurrencies automate monetary relations and make them completely transparent. In simple terms, this is new generation money.

At first, only enthusiasts were interested in these opportunities, later businessmen and investors became interested in them. Now banks, corporations and popular Internet resources create their own tokens and coins, implement blockchain and start accepting bitcoins and ether for payment. Cryptocurrencies are the future.

Summary

Cryptocurrencies - electronic money. Other users of the system recognize their value, which means that they are no different from ordinary money. Cryptocurrency can be used to buy goods, services and fiat money.
The crypto is stored in special wallets. Before you buy coins - get the appropriate wallet and take care of his safety.
Cryptocurrency can be bought in exchangers or exchanges, mined on a computer or a farm. Cryptocurrency can be used for trading, as a long-term investment or a trading tool. The crypto market is volatile, the rate of some coins is actively jumping up and down, and this is a good answer to the question of how earn money with cryptocurrency.
Popular cryptocurrencies vary greatly in structure, usage, and mining. For example, Ripple is used for large interbank transfers, so this coin is not interesting for ordinary users. Before buying interesting coins, Fine their study.

I tried to talk about all the main aspects of a new type of money. If I forgot about something or you have questions - write in the comments, I will definitely answer. Goodbye, wait for new articles!

If you find a mistake in the text, please highlight a piece of text and click Ctrl+Enter. Thanks for helping my blog get better!

A bubble that will burst at once, leaving thousands with nothing, or a revolution in the world of electronic payments – the attitude towards cryptocurrencies today is radically different. Cryptocurrencies are heard at every step today, but not everyone fully understands what they mean and how to use them.

What is cryptocurrency - in simple words for dummies

The term was fixed in everyday life after the publication in Forbes magazine in 2011, where the name "cryptocurrency" was mentioned, in English - crypto currency. In other words, it is a digital or electronic currency that is produced on the Internet and stored here on virtual wallets. There is simply no physical analogue of it.

When creating this currency, a special cryptographic cipher is used, consisting of sequential hashing and a digital signature. Hence the first part of the word - crypto.

At first glance, the cryptocurrency is similar to traditional electronic payment systems. However, the differences between them are actually enormous. And the first is the way money is issued and stored, which we will talk about later.

But first, the positives...

As with any concept, there are also advantages and disadvantages. Let's start with the advantages of cryptocurrencies, and among the main ones we note:

decentralization;
direct exchange in the absence of intermediaries;
transparency;
anonymity;
small commissions for transfers, or even their absence at all;
not afraid of inflation;
ease of use.

Decentralization

When creating a cryptocurrency, there is no centralized body that deals with emissions, that is, issues title units, such as the Fed in the USA, the Central Bank or the National Bank in the Russian Federation or Ukraine, respectively, when it comes to ordinary money. If we take payment systems like WebMoney or Yandex.Money, they also belong to certain organizations and are controlled by them.

In the cryptocurrency situation, there is no such central regulator. They are based on a system - in other words, a distributed database. Depending on the popularity of a particular cryptocurrency, it is stored simultaneously on thousands or even millions of computers around the world at the same time.

A few words where does the cryptocurrency come from

A cryptocurrency is created using mathematical calculations and is a computer-generated code. In most cases, the process looks like this.

Users send transactions to each other, which are collected in blocks sequentially linked to each other, and thus confirmed. With each found block, a certain number of crypto coins are released, which are received by the one who confirmed the block.

Cryptocurrency is created using mathematical calculations and is a computer-generated code. It is issued in blocks linked by sequential hashing.

Such a process is called, and those who do this are called miners. Thus, this currency is issued and stored decentralized.

Figuratively speaking, anyone can build a mint at home and turn on the printing press, subject to certain conditions. It is enough to have a powerful computer and install the appropriate program on it.

By analogy with the gold rush that hit humanity in the 19th century, today the world has been swept by a cryptocurrency fever. Entire mining farms are being created that tirelessly generate new and new coins (coins).

But that's not all. With a strong desire to create and put into circulation, you can also have your own personal cryptocurrency. If it inspires confidence among users, success is guaranteed.

By the way, it is worth noting that in some cryptocurrencies, all tokens are issued at the start of the system, and are not mined gradually over time. These include, for example, Ripple, Cardano, Stellar and others.

And through classical mining, coins are mined from such currencies:

bitcoin;
Ethereum;
Litecoin;
Monero
Dash.

No intermediaries

As a rule, we exchange money (we are not talking about cash in this case) through intermediaries. These can be banks, payment systems, exchangers. All of them establish their own exchange rules, which can be changed at any time. In any incomprehensible situations, your accounts may be blocked.

In the case of cryptocurrencies, there are no such intermediaries. Here, each user transfers money directly to another user's wallet from anywhere in the world.

Thus, the essence of cryptocurrencies is to eliminate a third party during transactions, that is, intermediaries in the face of banks, exchangers. Another nuance is that such transfers are difficult to track, for example, by the tax authorities. More precisely, all transactions in electronic cash systems are visible to anyone.

It is not a problem to see how much, from which purse and to which what amount was transferred. The question is different - it is not easy to associate these wallets with a specific person. The main goal of this approach is to eliminate fraud in transactions and maintain anonymity.

In the absence of intermediaries, the strictly established commission for transactions also disappears. You can often transfer money, if not for free, then for a small fee.

Another question is that it is more profitable for the miner to process those transfers that provide for a larger reward in the first place. However, compared to the commissions of banks or exchange offices, here you can set the amount as a reward an order of magnitude lower.

What does a cryptocurrency look like

But in fact, no way. There are simply no physical analogues. It is impossible to physically transfer cryptocurrency from hand to hand. In fact, these are only records of completed transactions. Let's say Vasya transferred 2 bitcoins to Gosha - it will look like a record in the blockchain about the transaction. And Gosha will have these 2 bitcoins on his wallet balance until he transfers them to someone else.

Cryptocurrency mining algorithms

As already mentioned, all transactions in cryptocurrency systems are encrypted in a special way. For this, different algorithms are used. For Bitcoin, this is, for example, SHA-256, for Litecoin it is Scrypt. Their transactions are confirmed using PoW (Proof-Of-Work, proof of work). Novacoin uses (PoS, proof of storage) in addition to PoW. Other cryptocurrencies like NXT only use PoS.

Of the other hashing algorithms, it is worth mentioning X11, X13, X15, N-Scrypt, CryptoNote, each with its own pluses and minuses.

How to get cryptocurrency

In addition to the mining mentioned above, when miners receive a commission for generating electronic currencies, you can get hold of coins either by accepting them as payment for goods or services, or for cash on specialized cryptocurrency exchanges. Among the popular:

Bitfinex;
bithumb;
Kraken;
Bittrex;
exmo;
Poloniex.

You can also purchase digital coins using exchange offices that will gladly exchange dollars, euros, rubles or hryvnias for popular cryptocurrencies.

There are also so-called cryptocurrency faucets that distribute tokens for free for performing certain actions - viewing ads, solving captchas. However, you can get a very meager amount of coins with their help.

How to store cryptocurrency

For this, there are special cryptocurrency wallets. They are of various types:

As a program for installation on a computer - in this case, your coins are stored on your hard drive.
As an application for mobile devices.
Online wallets that can be accessed through a browser. For example, blockchain.info.
Hardware wallets in the form of a physical medium, similar to a regular USB flash drive.

If you buy coins on the exchange, you can keep them directly on the balance of this site.

How without cons?

If there are advantages, then there are disadvantages. In the case of electronic cash, it is important to be careful about the safety of the wallet, as well as the password to it. If access is lost, you can say goodbye to money forever. It is unlikely to be restored.

It is also worth considering the irreversibility of transactions. If you mistakenly transferred money to the wrong wallet, you can return it only with the voluntary consent of its owner.

Among the minuses, it is also worth mentioning the ambiguous attitude of different states towards the existence of cryptocurrencies. Some consider them as a means of payment, for example, Japan, others either limit their turnover or completely prohibit any work with them.

What is cryptocurrency for?

Cryptocurrencies are a kind of symbol of freedom. Lack of control, transfers directly to each other - such opportunities attract many.

Therefore, given the growing popularity of virtual money, more and more shops in the world are beginning to accept them as payment. Also, cryptocurrencies are increasingly used as an investment tool. However, given their increased volatility, this should be done carefully.

What are the cryptocurrencies - how it all began and what we have

The first and currently the most expensive cryptocurrency was released in 2009 and it is called bitcoin. It was invented by an anonymous person or a group of people hiding under the name of Satoshi Nakamoto. It is with it that the very concept of cryptocurrency is most often associated.

Since that time, a great many different electronic currencies have appeared with original and not very concepts, most often tailored to a specific industry. For example, IOTA for the Internet of Things.

Their number has already successfully exceeded one thousand. Most of them duplicate each other, differing only in names.

The developers are doing their best to outdo each other. This is how cryptocurrencies appear for owners of Facebook accounts (Face), the LGBT community (GayCoin). Others are dedicated to famous people and contain their names in their names - EinsteinCoin, TeslaCoin.

In March 2018, the top 10 cryptocurrencies are as follows:

bitcoin;
Ethereum;
Ripple
Bitcoin Cash
Litecoin;
Cardano;
Stellar
Monero.

Most often, new cryptocurrencies are issued for specific tasks. If bitcoin was developed exclusively for transactions and is often called virtual gold, then, for example, Ethereum is intended not only for money transfers, it already contains smart contracts. Also, decentralized applications are launched on the basis of its network. By the way, the role of an analogue of silver in the world of cryptocurrencies is assigned to Litecoin.

What is the backing of cryptocurrencies

It is worth noting that digital currencies are not backed by anything: neither gold and foreign exchange reserves, nor the economy of a particular state. The only thing that determines their value is demand. The higher it is, the more expensive you have to pay for a certain currency unit. In addition, the creators of certain cryptocurrencies most often set the emission volume in advance, upon reaching which the coins will no longer be issued. For example, Bitcoin has 21 million coins.

Capitalization, price and ratings

You can see the list of the most popular cryptocurrencies on specialized sites. An example is coinmarketcap.com. Here, in the form of a table, the top most common cryptocurrencies are shown, their price, market capitalization, price chart and other indicators.

Also on our website we have our own, where you can find out their current value in relation to the dollar, ruble, hryvnia, view charts.

By the way, in December 2017, the total capitalization of cryptocurrencies exceeded $500 billion. And in January 2018, it completely exceeded the figure of 800 billion. In March, this figure has already dropped to 360 billion. Bitcoin is also leading with a figure of $150 billion.

To find out the rates of a particular currency, you should use one of the currency converters presented on the network. For example, en.cryptonator.com

Legal regulation of cryptocurrency

Different countries today have different attitudes towards cryptocurrencies. Japan officially recognized bitcoin as legal tender in the spring of 2017 and exempted it from consumption tax when sold. More recently, it began to be treated as a unit of account in Germany as well.

Favorable attitude towards cryptocurrencies in Switzerland. In the US and Canada, they are treated as valuable property, and in Bulgaria they are treated as a financial asset. The UK views digital money as a foreign currency. Iceland forbids its citizens to buy tokens on exchanges, but mining, on the contrary, welcomes it.

Cryptocurrency banned in Russia? - No. While officials are pondering the age-old question “to be or not to be”, everyone here conducts operations with crypto-tokens at their own peril and risk.

Russia is going to adopt an appropriate law on cryptocurrencies this year. In January, the Ministry of Finance published the preliminary text of the bill, according to which mining will be classified as an entrepreneurial activity, and cryptocurrencies will not be able to be legal tender.

In the so-called "gray zone" there is a cryptocurrency at the present time in Ukraine. Back in 2017, 3 bills were submitted to the Verkhovna Rada to regulate this area, but so far none of them has been adopted.

What will happen to cryptocurrencies in 2018

What will happen? – Further growth and development. This snowball is unlikely to be stopped by anyone. Some cryptocurrencies can sink into oblivion, others will come to replace them. The top 10 cryptocurrencies may change - stronger systems will push those who have stopped in their development. However, digital money will no longer be able to disappear from our lives. Even if some states ban them. In general, today we are talking more about the regulation of cryptocurrencies, and in 2018 active steps will continue to be taken in this direction.

Cryptocurrency is a digital currency that is created using cryptographic methods, uses blockchain technology and is decentralized. Cryptocurrencies may use other technologies, such as smart contracts, etc.

Moreover, often the main goal of creating cryptocurrencies is the introduction of new technologies. This is a scientific explanation that may seem complicated. And now everything is the same, but in detail and in simple words.

Cryptocurrency is simply data (blocks of data) that is obtained in various ways. You don't need to know about hashing, private keys, etc. For transactions with crypto-currencies, this is absolutely not necessary.

But if you are interested in the question “What is a cryptocurrency?”, then it is not enough to know only the definition itself, you need to know the basics. Below we will talk point by point about what you really need to know if you are seriously interested in cryptocurrencies.

Deciphering the main terms

Here are all the terms that are most common and you need to know them.

Fork- a branch project that uses the basic developments of the parent project. In cryptocurrencies, this is the name of new projects that have appeared on the basis of old ones.

Altcoins- a common name for all cryptocurrencies that appeared after bitcoin.

ICO- issuance and sale of cryptocurrencies by the developer to raise funds for the further development of the project.

Blockchain- a chain of data blocks that are stored independently of each other on different computers. More about blockchain.

Transaction block Blockchain is made up of these blocks. One block is not equal to one unit of crypto currency (this error is very common), for one block they can give from one to hundreds of crypto units.

Mining- the process of mining (calculating) new blocks and receiving rewards for them.

Asiki (ASIC)- devices designed specifically for mining.

Hashrate- this indicator measures the efficiency of mining on a particular computing device.

Pure cryptocurrencies and platforms

Definition "pure cryptocurrencies" we have not met on other sites, but by this concept we mean cryptocurrencies in their purest form, which have one function: an analogue of money. Platforms have many other features, often cryptocurrency is just an addition to them. The most striking example of Bitcoin and . The first is just a pure cryptocurrency, the second is a platform. In simple terms, in the first case, there can be no practical application other than use as a digital asset, and in the second case, practical application is quite possible (creating applications, etc.).

When you are interested in a particular cryptocurrency, you need to clearly separate platforms from pure crypto. Platforms are more promising in the long run, because what can bring real benefits, most likely, can have a large value. Apart from Ethereum, the most notable examples are NEM and Cardano. These are multifunctional platforms that can be used very widely.

How to know what is a pure cryptocurrency and what is a platform? Very simple. Read the descriptions on the official websites of the projects, or on our website. We make sure to indicate all the important information about each cryptocurrency.

What are tokens and coins?

Most people confuse tokens and coins. Everyone knows that this is the name of a unit of cryptocurrency, but what is the difference between a token and a coin? In simple words, everything is very simple. Coins are separate currencies that are based on the blockchain and can only play the role of money. Tokens are units that can exist without a blockchain, they have a wider functionality, they can be consumables, they can be used in applications.

Take the Ethereum platform as an example. There are Ethereum (ETH) coins, and there are a very large number of tokens that only work on this platform. For example, EOS, TRON, ICON and others. They are usually independent projects and only use already created technologies.

In some cases, it is still more interesting, as for example with the NEO cryptocurrency. In general, NEO is a promising platform. There are NEO coins, and there are Gas tokens, which are used in smart contracts and for creating applications on this platform. Coins and tokens are traded on exchanges independently of each other, since they have different tasks.

How do you get cryptocurrency?

There are several ways. It is possible that there will be others in the future. The main one is mining, everyone has heard about it. During mining, new blocks are calculated and generated, for which a reward is paid. About mining you need to know the following:

Not all cryptocurrencies can be mined;
Each crypt has its own algorithms, which have different requirements for computing power and hardware configuration;
Mining can be profitable.

A number of cryptocurrencies do not support mining at all, coins are issued there either at the start of the project, or in stages. For example, Cardano cannot be mined. Other projects may use other algorithms to obtain coins, such as "harvesting", etc. In some projects, owners of masternodes (servers necessary for the network to work) receive remuneration.

If you are interested in the extraction of cryptocurrencies, and not their purchase, then each project needs to be studied separately. Most cryptocurrencies have their own mining features.

How to store and buy cryptocurrency?

Each cryptocurrency has its own wallet. You also have the option to use hardware wallets (flash drives). A number of projects support the use of paper wallets. There is already absolute security here, since paper media cannot be hacked or the password stolen, but they are only suitable for long-term storage. Transactions are carried out after scanning a QR code or manually entering a code from letters and numbers. The downside is that if you lose this paper, you will also lose money.

You can buy and store cryptocurrencies without the use of wallets and other means. To do this, it is enough to have an account on one of the cryptocurrency exchanges. This option is suitable for those who are not going to buy cryptocurrency and store it for several months or even years. In addition, it can be quickly sold or exchanged on the stock exchange.

But there are also disadvantages. Unpleasant stories with exchanges happened, from their hacks, to cases when the owners simply disappeared with money. What can be advised here? Do not work with little-known exchanges that attract low or no commissions at all. If you buy cryptocurrency and plan to keep it for several months, then it is better to withdraw it from the exchange. Yes, you will lose a little on commissions, but it will be much more reliable this way.

You can buy cryptocurrency on exchanges or at exchange offices. There is an option to buy directly from individuals, but we do not recommend this, there are too many scammers. We also note that many cryptocurrencies cannot be bought for rubles. This leads to the fact that you will lose a lot of money on commissions, especially in cases where a particular crypto cannot be bought at all with ordinary money.

And if the cryptocurrency exchange does not work with rubles, then the scheme will be as follows: buy dollars, buy bitcoins, buy the desired cryptocurrency. Yes, you can’t just take and buy cryptocurrency. Or rather, you can, but not all. Many crypts are exchanged exclusively for bitcoins.

Regarding exchange offices… Their disadvantage is that it is often impossible to make large transactions through them, usually there are rather low limits. They have different commissions, you need to watch the course yourself, but in general, this is the easiest way to buy cryptocurrency. Even if it seems to you that it is expensive at the exchange office, it is far from a fact that buying through the exchange will be cheaper. But it is worth noting that the offer of cryptocurrencies is very limited in exchange offices, usually these are only the top and most popular projects (Bitcoin, Ethereum, Litecoin, etc.).

Today, perhaps, there is not a single area in life that has not been touched by new information technologies. Even finance, in fact, can now be virtual. What is meant? Let's talk about currency. It is customary for us to perceive this concept as a certain monetary unit of any state. So, in our country, the national currency is the ruble. The currency can also be collective. This is the euro. There are many classifications for this concept. But what is a cryptocurrency, in simple words, it’s harder to tell.

The concept of cryptocurrency

Digital or has a great demand among users of the Internet space. Immediately it is necessary to distinguish between the concepts of electronic currency and the system of Internet money. The main difference is that the real currency, for example, rubles, is the equivalent of the latter. This is how Yandex.Money and Qiwi systems work.

And the Webmoney system has its own electronic currency, which works only within itself. That is, when money is transferred to the wallet of this system, they turn into its own currency.

A separate niche is occupied by cryptocurrency. This is a digital currency, the exchange, issue and accounting of which are based on cryptography, that is, encryption. To summarize what has been said, what is a cryptocurrency in simple terms and how does it differ from other types of electronic currencies? Unlike money in electronic form, such as Yandex.Money, it does not have a physical embodiment. And unlike electronic currencies, such as Webmoney, cryptocurrency is decentralized, that is, it is not controlled by a single server that belongs to a bank or any organization.

How did the cryptocurrency appear?

Cryptocurrency first appeared in the Bitcoin payment system. This happened in 2009. The system was developed by a group of people or a person under the pseudonym Satoshi Nakamoto. It was constantly refined, changed, and Bitcoin is still dynamic.

In 2010, the first purchase for bitcoins was made. One of the Americans bought two pizzas for 10 thousand bitcoins. Note that initially Bitcoin cost $0.1, and then soared to $1,300 for one and even higher - up to three thousand US dollars in the summer of 2017.

What is the basis of cryptocurrency?

What is the basis for the existence of cryptocurrency? To explain what a cryptocurrency is in simple terms and what underlies it, let's compare crypto coins with gold coins.

Like the stock of gold, the number of crypto coins is limited, this is a kind of protection against emission. Cryptocurrency was originally created using a technology that will not allow it to fall. Bitcoins, like gold, cannot be counterfeited. Like gold, you can buy cryptocurrency or even mine it yourself. Again, as with real gold, the number of bitcoins is limited (21 million coins are available in total, more than two-thirds are already in circulation by users).

The algorithm for creating virtual money is based on the following:

Each computer hosts a public database.
To make a transfer, a key is used that is created only once.

what is it in simple words

Bitcoin is the very first type of cryptocurrency. What is cryptocurrency in simple words? These are bitcoins, since they became the first cryptocurrency. In principle, bitcoin can be called in another way a computer program that creates a virtual currency. The principle of operation of bitcoin can be compared with the principle of operation of torrents. Several people immediately install the program on their PCs, and then transfer files between themselves without anyone's control. The difference from torrents is that not files are transferred, but “virtual glasses”.

At ATMs, bitcoins can be exchanged for real money. They can also pay for goods and services.

Ethereum (Ethereum) as a kind of cryptocurrency

In 2013, a programmer from Canada, Russian by origin, Vitaly Buterin created a new kind - the Ethereum cryptocurrency. What it is? In simple words, this is, in fact, another analogue of bitcoin, but with new features. The Ethereum platform can be used to create new cryptocurrencies. On Ethereum, as well as on Bitcoin, you can engage in mining.

Mining, or How to make money on cryptocurrency in simple words

The process of mining cryptocurrency is called mining. It comes from the word "mine" - "to excavate." The method, of course, is different from gold mining. To implement mining, they take a motherboard, a server or other power supply, a hard drive, a monitor, and video cards. A special mining program is selected and installed, then it is launched, then a fork and a pool are selected, and the mining process itself begins.

Further about that in simple words, the program installed on your PC will create tasks that it must solve. For this action, the computer will receive virtual money. So, for bitcoin, the program issues no more than 3600 crypto coins per day.

Each time, the tasks that the miner's PC must perform become more complicated, and miners have to create more powerful machines to solve them. The main point is that whoever decides first will get bitcoin. To date, there are a huge number of so-called "farms" - machines for solving the problems of the program.

How to exchange cryptocurrency?

There are two ways to exchange cryptocurrencies. Further, in simple words, this is a cryptocurrency exchanger. In the virtual space, there are special services for the exchange of such money. In other words, exchangers. First of all, when choosing one, pay attention to the course and commission.

Advanced users put exmo.com in the first place. Here you will need to enter your email address and create a password. If we want to exchange bitcoins, we go to the "exchange" menu. Specify the number of bitcoins that we want to exchange. The system will show us the course. Click "Exchange" to finish.

Another exchanger is 60cek.com. Similarly, we go through the registration, confirm via mail and activate the account. Next, we also enter the number of bitcoins for which we want to exchange. You can immediately transfer to a card in a bank. To do this, enter the card number, full name of the owner and other data.

The third most popular exchanger is blue.cash. We register in the same way as in the previous versions. Click "Exchange", enter the number of bitcoins that we want to change. You can withdraw exchange money to "Yandex. Wallet". To do this, you need to specify the wallet number and mail.

Exchange as a means of cryptocurrency exchange

The exchange is very popular among Russian miners. The exchange works with 6 types of currencies:

You can perform exchange operations using payment systems:

VISA/MASTERCARD.
"Yandex money".
webmoney.
QIWI.

The commission is 0.2 percent of the transaction amount.

On the official website of the exchange, click the "Start" button. Thus we start the system. We go through the registration in the "Profile" - "Verification" section. Here you will need a passport. You need to download a scanned copy of it.

The site works in English and Russian. In the tab "Trading" you can see the exchange rate.

EXMO works with both regular and cryptocurrencies.

LiveCoin is an exchange created in 2014. Supports the following trading pairs:

BTC/EUR.
BTC/USD.
BTC/RUR.
EMC/USD.
EMC/BTC.
LTC/BTC.
LTC/EUR.
LTC/USD.

On this exchange, you can not only buy or give away currency, you can simply exchange it. The site is in English and Russian.

Cryptocurrency in Russia

There is no unequivocal position in our state regarding cryptocurrencies. But still, most compare them with financial pyramids. What is a cryptocurrency in Russia? In simple words, it is called surrogate money.

The Ministry of Finance has prepared amendments to the legislation on punishment for the use of cryptocurrency, transactions with it.

In Russia, the concepts of cryptocurrency and blockchain are separated. If the first is treated sharply negatively, then the situation is different with the second. viewed as a technology. It is proposed to develop the blockchain for further use in the banking system or registries. Currently, the use of cryptocurrency by legal entities is considered as a counteraction to the legalization of proceeds from crime.

Cryptocurrency in plain language is virtual money that has no physical expression. "Coin" - a unit of cryptocurrency, this word is literally translated from English as a coin. How are cryptocurrencies different from regular money? Electronic currencies in the standard sense (for example, rubles, dollars, euros, yuan) are one of the forms of real currency, money issued by states, their central banks. To replenish an electronic account with such money, you must have physical, printed banknotes. Cryptocurrency is not issued by the state and has no material counterpart. Such money is issued on the network and is not subject to regulation by countries, their legislation, or other supranational governments.

Anyone can mine cryptocurrency. This process is called "mining" from the English word "mine" and implies the extraction of minerals. To receive the first cryptocurrencies, it was enough to have a computer with special software installed and Internet access. Now this process has become somewhat more complicated, since all currencies have a limit on the number of coins set by the script, both per day and the total amount, and for successful mining it is necessary to have more and more power to solve the problems of processing blocks of information (transactions).

A crypto coin is, in simple terms, a block of encrypted data, an entry on the user's computer that has a connection with the previous one and information about the transaction.

Such money does not have a centralized storage center, as well as an emission center, and can be located on the wallets of users around the world.

Cryptocurrencies have an open code, thanks to which everyone can become a miner, that is, earn on cryptocurrency. Unlike transactions with ordinary electronic money, transactions with cryptocurrencies are completely anonymous, which, by the way, has led to the use of cryptocurrencies in illegal business.

Cryptocurrency, as mentioned earlier, is independent of the control center. It is not produced or controlled by any institution. Thanks to this, it is reliably protected, because all the program code is distributed over the computers of millions of users, and not on a single server. Therefore, counterfeiting, hacking and other types of cryptocurrency fraud will not work.

Cryptocurrencies also have disadvantages. So, each owner is personally responsible for howling money, in case of their theft, it will be difficult to prove anything, and there is no one to turn to for help. Virtual money is very volatile, in other words, subject to sharp fluctuations due to various factors. They may also be at risk of being banned in certain states under the threat of prison terms and fines. The complexity of mining cryptocurrencies is growing, and therefore mining is gradually becoming an inaccessible type of income.

What are cryptocurrencies

Currently, there are several dozen popular cryptocurrencies.

The founder in this direction was bitcoin, which in 2009 was sold for a couple of dollars, and by 2017 it had grown in price to $10,000. Initially, bitcoins were used mainly in computer games, and the number of miners was small. However, a year later, interest in this money increased significantly due to anonymity, security and decentralization. Today, bitcoins can be bought and exchanged on various exchanges, used to pay for goods and services, and transferred to other users.

In addition to bitcoin, you can name a whole list of currencies: namecoin, peercoin, litecoin and others. However, according to experts, they are unlikely to achieve such success as Bitcoin in the near future.

Cryptocurrency: how to earn

There are several types of earnings on cryptocurrency.

In simple terms, this is the extraction of cryptocurrency. To receive coins, you need a special farm, consisting of a computer with special software and a powerful video card, or a whole network of such computers.

The cost of the farm is quite high, new networks currently pay off for a long time, and constant equipment upgrades are required.

2. Cloud mining

A good way out, if there is no money for large investments, is cloud mining. Its essence is that you buy capacities on other farms, your own equipment is not required. Investments pay off much faster, certain technical literacy is not required, you can choose the most suitable one from many different tariffs, it is possible to earn several currencies at the same time. However, on rented farms there is a commission for the withdrawal of cryptocurrency, such centers are subject to hacker attacks, there are many scammers in this market. Hashing24.com, hashflare.io, www.genesis-mining.com are examples of rental sites.

3. Buying and reselling on the exchange

Cryptocurrencies can be bought on the exchange. And the essence of earnings lies in its subsequent resale and gain due to the difference in rates, both during market fluctuations and on different exchanges. The difficulty lies in the fact that the scheme for withdrawing currencies and replenishing the account of such exchanges is not simple, there are high commissions, it is necessary to devote a lot of time to the process, constantly monitor rates. The advantage will be a large selection of different currencies, the start amount, which can be determined independently, due to the volatility of cryptocurrency rates, you can win up to one hundred percent a day on promising coins such as ether, bitcoin. Exchange examples: bitfinex.com, exmo.me, poloniex.com.

4. Purchase and storage of cryptocurrency

Buying a currency is suitable for those who are ready to make investments for the future, and do not count on quick earnings. In simple terms, the meaning of this method is to acquire virtual money at a low rate in anticipation of growth. This option is suitable for those users who are not ready to monitor exchange rates on a daily basis, but have the opportunity to invest a certain amount for a period of six months or more.