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Crypto world is the world of future Find your way into it together with IFXBIT

Nowadays, everyone has heard something about cryptocurrencies. The volatile and dynamic world of cryptocurrencies is becoming a new reality of modern life. Digital money is a convenient payment system, innovation and business. Virtual currencies provide an opportunity to build a completely new world where freedom, privacy and the protection of human rights are of utmost importance. We summarized the most essential information about digital assets. This knowledge will be of use both to beginners and those who are well-aware of blockchains and cryptocurrencies.

What is cryptocurrency?

Getting to the root of the matter: the word ‘crypto’ is of Greek origin and means ‘secret, hidden’. However, conspiracy theories have nothing to do with it. The fact is that almost all cryptocurrencies, which are substantially digital money, are based on a blockchain. This system uses cryptographic encryption, one of the most reliable encryption methods that ensure integrity, anonymity and confidentiality of data.

Eric Schmidt, executive chairman of Google: “Bitcoin is a remarkable cryptographic achievement. The ability to create something which is not duplicable in the digital world has enormous value.”

Wait a minute. What is blockchain?

Blockchain

Technology of the future

A blockchain is a kind of register that keeps a record on the automatically updated data about all the transactions within a specific crypto community. At the same time, this information is kept by all members of the community, so the transaction history cannot be changed. Such a structure solves the problem of double counting when one and the same amount is accidentally taken into account several times or not taken into account at all. The blockchain does not have any administrators that would control the system. It simply counts all the records from each network user. Thus, neither government agencies nor banks can make any adjustments pursuing their interests. Digital assets cannot be blocked or confiscated.

How it works

Let's take a look at the principle of the blockchain system on the infographics::

Buy crypto

1.You want to transfer digital money and send the corresponding request to the common system indicating your unique key and recipient’s address.

2.Your request is processed by nodes - the computers that interact on a peer-to-peer basis. That is, there is no central node storing basic transaction information does not exist.

3.Checking the keys, the nodes confirm the data, encrypt it, and change the status of a cryptocurrency (it is transferred to another wallet).

4.When the data is confirmed, a separate block that stores transaction information appears.

5.The new block joins the chain of other blocks.

6.A transaction is completed: the cryptocurrency has reached the recipient.

How to use cryptocurrency?

There are several options:

Investment

The cryptocurrencies have been rapidly gaining popularity since their appearance. Alongside that, their price has also been rising. The demand for cryptocurrency mostly determines its cost. The more people want to buy virtual currency, the more expensive it becomes. The evidence from practice shows that the number of people who are willing to invest in digital money is constantly growing. The key feature of any cryptocurrency is that it is almost impossible to counterfeit them. All respected blockchain projects carefully monitor security of all transactions and apply efficient encryption methods.

Thus, cryptocurrencies can be a good instrument for investing.

Speculation

The principle of the “buy low, sell high” earning applies to cryptocurrencies as well as to conventional currencies. In this case, there are even more trading opportunities, since digital money has properties valuable to speculators such as liquidity and moderate volatility. Certainly, particular crypto assets can be extremely volatile at some point. However, along with high risks, they have considerable potential for profitability.

Payment for goods and services

Cryptocurrencies are digital money. Therefore, they can be used to pay for goods and services which has its own advantages:

Safety. As mentioned above, reliable encryption methods ensure security of cryptocurrency transactions.

Anonymity. No personal data is attached to your virtual wallet. In addition, you can create a new address for each new transaction. Thus, it will be impossible to track your operations.

Convenience and simplicity. To make a purchase with cryptocurrencies is easy as pie. With the help of digital money you can pay for practically anything from online shopping to university education. Moreover, you can also make donations to the charity. Interestingly, in the US state of Ohio, it is even possible to pay taxes with cryptocurrencies.

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