Guide to Cryptocurrency: What Is It and How Does It Work?
Cryptocurrency is popular worldwide now. The term cryptocurrency is not new, especially for the millennial and gen z generations who may know more about technological developments and investments. Then what is cryptocurrency, how does it work, and what are the types?
What is Cryptocurrency?
Cryptocurrency is a digital currency that has many utilities. For example, it can be used as a safer transaction tool, which makes it difficult to be counterfeited. Crypto is actually a currency that is quite the same as any other currencies around the world. The difference is, the technology used to create cryptocurrency because it doesn’t have a physical form. In cryptocurrency, everything is completely virtual.
Even though it doesn’t have a physical form, this digital currency is still legal as a medium of exchange. Cryptocurrency can be stored in ‘digital wallets’ which are available on mobile phones or other computer devices. In addition, cryptocurrency owners can also use digital currency for buying and selling transactions.
How Cryptocurrency Works
The way cryptocurrency works is the result of an agreement between people who make a transaction guaranteed by a secret code as security. This system is also known to us as blockchain. However, to invest in crypto we must have strong knowledge and analysis of the crypto market itself.
Some Popular Cryptocurrencies
After knowing the answer to what is cryptocurrency and how they work, next is information about the types of cryptocurrencies. Currently there are various types of cryptocurrencies, including:
1. Bitcoin
Bitcoin was the first popular one. It is not the first created cryptocurrency, but it is the first successful and popular digital currency that ever existed. Bitcoin first appeared in 2009 through someone named Satoshi Nakamoto.
By November 2019, more than 18 million Bitcoins have been traded with a total market value of around US$146 billion. To date, more than 50% of cryptocurrency is Bitcoin.
2. Litecoin
Litecoin first appeared in 2011 when the digital currency was released globally. Litecoin is also used as a peer-to-peer or P2P digital currency that can generate new blocks and form blockchain more quickly.
Therefore, Litecoin allows users to make transactions more quickly without the need for a powerful computing system.
3. Dogecoin
The first Dogecoin was released in December 2013 as a derivative of LiteCoin. Dogecoin has a Shiba Inu dog mascot that lives up to its name. This type of cryptocurrency is known to be the friendliest, because it always carries out positive activities, such as charity and donations.
Because Dogecoin has a much lower value than Bitcoin, this type of cryptocurrency is often used for small transactions, donations, and tipping.
4. BitcoinCash
BitcoinCash is included as one of the top cryptocurrencies currently available and it was first launched in August 2017. The reason BitcoinCash was launched was because there was a group of Bitcoin users who disagreed with the rules imposed by Bitcoin.
Then this group of users broke away and created their own digital currency called BitcoinCash. This group also made various improvisations which they thought were better than bitcoin as the first cryptocurrency.
Understand About Cryptocurrency?
That’s an explanation of what cryptocurrency is, how it works, and its types. Cryptocurrency now is used as a digital currency or asset that many people now use as a tool for faster and safer transactions or investments.
