In this technologically advanced world where technology has made its way into every part of our life, it was quite evident that people would find a new interest in the world of digital currency. Currency is now not at all limited to the real world but has made its mark in the digital world as well and which brings us to our next topic of discussion about what makes cryptocurrency the future of money.
[1] What is cryptocurrency? Simply put, a cryptocurrency is a form of digital money that uses encrypted algorithms to function as an alternative payment method. The reason behind using encrypted technologies is to function both as a currency as well as a virtual accounting system. You need a wallet if you wish to use cryptocurrencies. Not just any wallet, but a cryptocurrency wallet, which may be PC or mobile phone software or a cloud-based device.
Maintaining a crypto wallet is very important because it contains access and backups to your entire cryptocurrency investment and once you lose it you will be losing your entire investment.
[2] What are the popular cryptocurrencies? Cryptocurrency has many names and the most popular ones are – Bitcoin, Litecoin and Ethereum. Bitcoin is widely accepted in the form of cryptocurrency which is why they have become very expensive. In 2021 the value of bitcoin was about $68,000.
[3] What is Bitcoin? Even though the use of bitcoin has grown over the years and is now used as a synonym for cryptocurrency, one needs to understand both of the terms are different. Bitcoin is a digital currency where the record of transactions is maintained and new units are generated by solving new puzzles.
[4] How does cryptocurrency work? To understand the concept of cryptocurrency a little bit better we need to familiarize ourselves with a few terminologies.
- Blockchain. It is a digital ledger which records transactions that are related to a range of assets such as – money, house etc. Only authorized users have the access to use the blockchain.
- Decentralization. It means that the rise and fall of a cryptocurrency cannot be controlled by any other authority. Since everyone has access to the same information that cannot be changed, users do not need to place their trust in a single organization.
- Cryptography. It is a technique that uses encryption to protect data from unauthorized access.
Now that you have a better understanding of this idea, know that there is no government or other authority that controls cryptocurrencies. The majority of them work as a result of mining. Let us understand the concept of crypto mining by learning a little bit more about bitcoin mining.
[5] What is Bitcoin mining? By resolving mathematical riddles, new bitcoins are created through the bitcoin mining process. Once the puzzle has been solved, the miner is rewarded with a fresh bitcoin. The greatest advantage of bitcoin mining is that the transactions are confirmed on the cryptocurrency’s network which makes them trustworthy.
[6] What is a mining pool? As easy as it may sound, bitcoin mining has grown to become very sophisticated by using complex machinery to boost up the mining operations and resulted in the formation of mining pools. Mining pools are collective groups of cryptocurrency miners who pool their resources across a network to increase the likelihood of profitable mining.
What are the negative flaws of bitcoin mining? Even though bitcoin has gained popularity among its peers as being the safest and most secure-based transaction, bitcoin mining has three great negative flaws. They are –
- Electricity. The mining system needs to run 24/7 and for that, it consumes a huge amount of power. It can run up to a substantial bill but in the end, the total cost accumulated can be very high.
- Mining Systems. Bitcoin mining cannot be done on regular computers. Customized hardware is available in the market which is specifically designed for the bitcoin miners. The price range of such machines could vary from $4000 – $12000.
- Network Infrastructure. An internet connection which is available 24/7 without any interruptions is very crucial for the bitcoin mining process.
Bitcoin has been globally accepted worldwide but still in some countries due to its decentralized nature and the rate of high-power consumption the process of bitcoin mining has been restricted.
Conclusion
The world of digital currency is vast and just because it has shown its positive side does not necessarily mean it won’t be afraid to show its negative side. The world of cryptocurrency is filled with positive and negative aspects.
One must be very careful and should think twice before investing in a digital currency platform. If done safely and securely it could generate huge amounts of revenue. So be careful and do your research before investing in the field of cryptocurrency.
