VAT / 15.09.2021

Why Bitcoin has value. Where does the value of bitcoins come from? How it works in the case of mining

A bubble that will burst at one moment, leaving thousands at a broken trough, or a revolution in the world of electronic payments - the attitude towards cryptocurrencies is radically different today. Today you can hear about cryptocurrencies at every step, but not everyone fully understands what they mean and how to use them.

What is cryptocurrency - in simple words for dummies

The term stuck 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, cryptocurrency is similar to traditional electronic payment systems. However, the differences between them are actually colossal. And the first one is the way of issuing and storing money, which we will talk about next.

But first about the pros ...

As with any concept, there are also advantages and disadvantages here. 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 none 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, it 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 situation with cryptocurrency, 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 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 block found, a certain amount of cryptocoins is issued, which is received by the one who confirmed the block.

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

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

Anyone can build, figuratively speaking, 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 is swept by the cryptocurrency rush. Whole mining farms are being created that tirelessly generate more and more coins (coins).

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

By the way, it is worth noting that in certain 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 classic mining, coins are mined from such currencies:

Bitcoin;
Ethereum;
Litecoin;
Monero;
Dash.

Lack of 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. They all establish their own exchange rules, which they can change at any time. In any unclear 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 represented by banks, exchangers. Another nuance - 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 wallet and to which one the 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 exclude fraudulent transactions and maintain anonymity.

In the absence of intermediaries, the strictly established transaction fee also disappears. Transferring money is often possible, if not for free, then for a small fee.

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

What does cryptocurrency look like?

But in fact, nothing. There are simply no physical analogues. It is impossible to physically transfer cryptocurrency from hand to hand. In fact, these are only records of transactions carried out. Let's say Vasya transferred 2 bitcoins to Gaucher - 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 - Scrypt. Their transactions are confirmed using PoW (Proof-Of-Work, proof of work). Novacoin, in addition to PoW, also uses (PoS, proof of storage). Other cryptocurrencies like NXT only use PoS.

Other hashing algorithms worth mentioning are X11, X13, X15, N-Scrypt, CryptoNote, each with their own pros and cons.

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 ones:

Bitfinex;
Bithumb;
Kraken;
Bittrex;
Exmo;
Poloniex.

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

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

How to store cryptocurrency

For this, there are special cryptocurrency wallets. They come in many different types:

In the form of 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 physical media, similar to a regular USB flash drive.

If you buy coins on the exchange, you can keep them directly on the balance sheet 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 will hardly be possible to restore it.

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

Among the minuses, it is also worth mentioning the ambiguous attitude of different states to the existence of cryptocurrencies. Some consider them as a means of payment, for example, Japan, others either limit their circulation 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 increasing popularity of virtual money, more and more stores around the world are beginning to accept it as payment. Also, cryptocurrencies are increasingly used as an investment tool. However, given their increased volatility, this should be done carefully.

What cryptocurrencies are - 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 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 sharpened for 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.

Developers are doing their best to outdo each other. This is how cryptocurrencies appear for the 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 provided not only for money transfers, it already contains smart contracts. Also, on the basis of its network, decentralized applications are launched. By the way, Litecoin plays the role of an analogue of silver in the world of cryptocurrencies.

What is secured by cryptocurrency

It should be noted that digital currencies are not backed by anything: neither gold and foreign exchange reserves, nor the economy of this or that 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 in advance the volume of emission, upon reaching which the coins will no longer be issued. For example, Bitcoin has 21 million coins.

Capitalization, price and ratings

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

Also, our site has its 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 cryptocurrency capitalization exceeded the $ 500 billion mark. And in January 2018, it even exceeded 800 billion. In March, this figure has already dropped to 360 billion. Bitcoin is also in the lead with a figure of $ 150 billion.

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

Legal regulation of cryptocurrency

Different countries today have different attitudes towards cryptocurrencies. Japan officially recognized bitcoin as legal tender back in the spring of 2017 and exempted it from consumption tax on sale. More recently, in Germany, too, they began to treat it as a monetary unit of account.

Favorable attitude towards cryptocurrencies in Switzerland too. In the USA and Canada, they are treated as valuable property, and in Bulgaria - as a financial asset. The UK views digital money as a foreign currency. Iceland prohibits its citizens from buying tokens on exchanges, but mining, on the contrary, welcomes.

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

They are going to adopt the corresponding law on cryptocurrency in Russia this year. In January, the Ministry of Finance published a preliminary text of a bill according to which mining will be classified as entrepreneurial activity, and cryptocurrencies will not be able to be legal tender.

In the so-called "gray zone" there is a cryptocurrency now 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 cryptocurrency in 2018

What will happen? - Further growth and development. This snowball can hardly be stopped by anyone. Some cryptocurrencies can sink into oblivion, others will replace them. The top 10 cryptocurrencies may change - stronger systems will squeeze those who have stopped in their development. However, digital money will no longer be able to disappear from our lives. Even if they are banned by individual states. 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.

Hello dear readers of the blog site. The topic of today's article is cryptocurrency, which has attracted the attention of the public for several years. Below we will talk about its essence, mining, get acquainted with technology, exchanges and calculators.

In general, cryptocurrency is a recent phenomenon (it all started in 2009), but now it has already very densely won the interest of the "advanced part of humanity". Why? Well, there are many reasons. For example, how do you like the fact that such a payment system in general No and it can't be owner and even an administrator (self-governing system).

It also lacks or is very low commissions for translations, again due to the absence of the owner, who needs to unfasten in his pocket. In addition, most crypto systems are anonymous, which also attracts certain sectors of society.

And, of course, a very weighty magnet is opportunity to make money on all this, and not only . There is also such one - here they pay for the provision of computing power (for example, their own PC or a specially assembled computing system) for the extraction of monetary units and (transfers).

But first things first. Today we will talk about what a cryptocurrency is in general (I will try to explain in simple words, understandable to everyone), how it appeared and how it can be used today, what is its current rate, what is needed for mining, and where can I find the most accurate rate calculator?

What is cryptocurrency and why is it needed

Bitcoin (BTC)- the most popular monetary system now based on blockchain technology (we say crypto-currency, but we mean bitcoin). Actually, it all started with her in 2009. Now bitcoin has already gone beyond a startup and is accepted in many places as a means of payment (its real capitalization has approached $ 20 billion - this is no longer a bubble from scratch). Its exchange rate against the dollar is now very high, and those who bought Bitcoin at least a few years ago made very good money on it (see the screenshot at the beginning of the article with the rate growth graph).
Bitcoin Cash (BCC)- separated from the main branch of the bitcoin blockchain on August 1, 2017 and after a few days took the third place among all crypto-currencies in terms of capitalization. The split was due to the desire to get rid of some of the shortcomings of bitcoin in the new branch, namely to increase the number of transactions per second (increase the maximum block size) and security, as well as optimize the code to increase scalability and smooth growth in the number of participants.
Ethereum (ETH)- pronounced like ethereum (monetary units are called ethers).
1. The youngest (date of birth - summer 2015) and the most successful development based on blockchain technology.
2. Many people call it the development of bitcoins. The system works everything on that blockchain, but with significantly expanded capabilities.
3. Ethereum is positioned as a platform for "smart contracts" (any type of transactions without intermediaries with any types of assets - money, what else). Although, the system found its main application, of course, as a cryptocurrency.
4. The capitalization of this brand already exceeds the capitalization of Bitcoin, although it is much older than Ethereum. The prospects for further development are very bright, and not only as a platform for a crypto-currency.
5. Another feature of Ethereum is that the system needs mining to maintain security only at the initial stage.
- an offshoot from the main system, created by those who disagree with the new policy of the ideologues of Ethereum. By the way, this is also a very successful project with a capitalization of several billion dollars.
- this cryptocurrency (pronounced litecoin) was born in 2011 and became essentially a clone of Bitcoin, but with a number of improvements that made this system popular. Litecoin managed to solve the scalability problem inherent in Bitcoin, namely the limited number of transactions (operations, transfers) performed per second. As a result, transactions here go many times faster and this is what users like. If bitcoin is compared to gold, then Litecoin is silver (there are more reserves and the cost is lower).
Is another successful project that lags behind only bitcoin and ethereum in terms of capitalization. It is based on a distributed protocol (similar to blockchain), but seriously different from the usual (it looks more like a decentralized ledger). There is no mining at all, transfers are quite fast and with little or no cost. In general, Ripple is just a network protocol that anyone can use to make guaranteed transactions. But on its basis, a cryptocurrency called XRP was created, which is native to the system. In general, Ripple is much more than just money ...
Dogecoin (DOGE)- Another bitcoin replica (more precisely, litecoin) has been significantly revised. Dogcoin appeared in 2013, sort of as a joke (the name comes from Doge), but has become quite popular. It is distinguished by a very large (unlimited) number of monetary units (they are called Doge) and their extremely low cost (which is quite logical). The commission in the system is extremely low + this crypt quite often participates in all kinds of charitable events.
- one of the clones of bitcoin with a number of improvements. For example, in Pircoin, security has been significantly increased, as well as the mining process has been simplified, which reduces the total energy consumption of computing resources connected to the system. It is also distinguished from bitcoin by the lack of anonymity, significantly lower prevalence of this cryptographic currency, as well as high volatility (rate fluctuations). The prospects for the system are not as bright as those of those who occupy higher places in our rating.
- similar to the previous currency, but only here anonymity is implemented. You might also know it under the names Xcoin or Darkcoin. At the same time, there remained a lower energy consumption of mining, high security. The share of this system among other cryptographic money is not very large, but the capitalization is quite decent.
Primecoin (XPM)- a clone of bitcoin, in which, instead of enumerating numbers in search of the desired hash, miners (money miners) perform calculations that are more useful to science (they are looking for pseudoprime numbers). Also, the Primecoin system is ten times faster than its "parent", miners are paid depending on the complexity of the task, and the total number of monetary units was not initially limited, but their appearance is regulated algorithmically, which also makes this cryptographic currency similar to gold.
- the system works on the basis of the CryptoNote protocol and has its own characteristics. For example, it does not have a limit on the number of monetary units so that mining will always support the system. By the way, the peculiarity of mining this particular cryptocurrency is that it is desirable to participate in the calculations not only of video cards, but also of the processor. And it also has a very large amount of data transferred with transactions (almost an order of magnitude more than in bitcoin).

Naturally, this rating does not claim to be the ultimate truth. Everyone has their own preferences, nuances and desires. Someone wants to earn extra money on rapidly growing crypto-currencies, while others are interested in mining. Anonymity is important for someone, and for someone - increased security, speed of work or lack of commission. Look current rates of popular currencies on this page (in fact, this is also a kind of popularity rating).

Mining, exchanges and cryptocurrency calculators

In the process of working with information, cryptosystems require significant computer power. Since today bitcoin, ether, likecoin and other coins require huge computing power for their work. Where can I get them?

Mining - what is it

Most cryptocurrency systems provide for the process of extracting monetary units by carrying out resource-intensive calculations. This process (I have already written about this in some detail in the above article). Basically, the average PC owner can give away part of the power of the video card or processor of your computer for solving problems related to cryptocurrency. As a reward, he will receive certain shares of coins for each mined currency unit.

To make money on mining, you need to go to any site where other moneymakers are going, there are many similar resources on the network, download the program, install, determine the maximum power that you are willing to donate, and get down to work. The computer will do everything on its own, the person's business is observation from the outside.

Three or four years ago, when there was a tremendous growth in the popularity of bitcoins, and their rate was steadily moving up, experienced businessmen in the USA and Europe created so-called mining farms: they installed many special computers only for the production of cryptocurrency. Then there was a decline in interest, but now, against the background of the growth of the bitcoin rate, mining was again actively remembered.

Cryptocurrency exchanges - making money on speculation

The calculator looks like this:

First, we select the cryptocurrency, then we enter its amount. Individuals rarely operate with whole bitcoins; in most cases, its hundredths or thousandths are used. The second stage - we indicate the currency in which we want to see the converted value. Third, we get the result. Let's calculate how much ten bitcoins are worth in rubles:

The market rate is shown, if you wait a little, it will be updated, since the quotes do not stand still and change constantly. The arrow reflects the dynamics: the price rises or falls relative to the previous value.

Should you make transactions with coins?

Power structures most countries have a rather negative attitude towards bitcoins and other coins: this currency is too anonymous, it will not be possible to track money laundering or other criminal processes if you allow its public use. As a result, many online stores do not accept cryptocurrency.

If you have found direct use of coins, or if you want speculate on the stock exchange- you can rush into the maelstrom with your head and pump out huge capitals from the cryptocurrency (it is still not too late), but if you do not have the optimal form of using information money, you should not get involved with them.

You can get more information on working with Bitcoin and earning them in the publications below. Of them you will find out how:

For other crypto-money, materials are still in the writing plan.

Good luck to you! See you soon on the pages of the blog site

What is cryptocurrency

The money we are accustomed to is issued into circulation by the central banks of different countries. Their cost is influenced by the decisions of governments, the economies of countries, and international trade. Cryptographic currency is a fundamentally new instrument for mutual settlements. To generate coins, or mining, it is necessary to perform a certain mathematical calculation algorithm. Each crypto-unit is a sequence of blocks, and each of the blocks is a complex mathematical formula. To create a new coin, you need to generate a new chain of transaction blocks.

History of appearance

The emergence of bitcoin was a continuation of the development of the blockchain concept. This term translated from English means a chain of blocks. A group of programmers, led by Satoshi Nakamoto, introduced the concept of a cryptocurrency based on the principle of generating block chains, each of which is calculated according to a certain mathematical formula. To create a crypt, which is called mining, the computing capabilities of computers are used, in which video cards have the most powerful mathematical functionality.

What is the difference between digital currency and regular money

Unlike fiat money, the reproduction of cryptocurrencies is independent of countries, governments and international relations. The rate of cryptocurrencies in relation to other currencies is affected only by the complexity of their mining and the demand for it for making mutual settlements. Any programmer can issue cryptocurrency. Operations with bitcoin, created in 2009, began after 2011, when public electronic wallets appeared for storing it and ways of transferring it from one owner to another.

Types of cryptocurrencies

More than 700 of them have been created and are on the cryptocurrency market with a different rate and number of coins. The main one is the bitcoin cryptocurrency. The maximum possible amount in circulation is 21 million bitcoins. Its exchange rate exceeded $ 3,000 on May 27, 2017. As of July 21, 2019 (hereinafter) it is equal to USD 2732. Its capitalization exceeded $ 44 billion. All crypts on crypto exchanges are quoted relative to bitcoin. The most popular cryptocurrencies are:

Litecoin was launched in 2011;
derivative from Bitcoin, by Charles Lee;
ranks second in the list of btc forks after Namecoin;
has a limit of 84 million coins.

the electronic payment system appeared in August 2012;
based on the Bitcoin code;
the developers are Scott Nadal and Sunny King;
at the heart of Pircoin there is an additional cryptocode called PoS - proof-of-stake.

the first issue of coins in April 2011;
based on the Bitcoin code;
creates its own DNS server;
it is very difficult to mine namecoins.

entered the market on May 3, 2013;
author unknown;
identical algorithm for hashing data with Litecoin;
limit 336 million.

was created in 2013 based on Bitcoin;
the maximum number of coins produced can be 100 million units;
the annual tax of 5% in the system is automatically removed from the earned amount.

established in 2012;
its creator Jed McCaleb, continues the work of RippleLabs;
the system is open source;

NEM (New Economy Movement) means "new movement of the economy" or "movement for a new economy";
became known in 2015;
original open source;
using the POI (Proof Of Importance) algorithm, the user who will generate the next block is determined.

the launch took place on July 30, 2015;
authors Vitaly Buterin and Gavin Wood;
functions are not limited to electronic currency, thanks to the technology of smart contracts, they are used when registering transactions, when exchanging resources;

on the market since autumn 2016;
the development is carried out by a team of cryptographers from the most famous universities in the world;
based on a new confirmation protocol with zero knowledge (zero-knowledge proof or zk-SNARK);
absolute anonymity of this payment system.

renamed from Darkcoin in 2015;
is distinguished by the security and anonymity of the transactions;
DASH daily turnover is 7% of the total cryptocurrency turnover;
mining DASH does not require a lot of resources;

Electronic currency bitcoin

When Bitcoin was created, several ingenious principles of its mining were invented. Seeing how quickly the price and popularity of the firstborn grew, many unique services related to it appeared. Bitcoin's independence and rising value have prompted the leadership of several large countries, such as China, to use it as one of the reserve currencies. Now it is more difficult to mine bitcoins, the cost of electricity for their reproduction begins to exceed its market value.

What are forks

One of the advantages of bitcoin was the openness and public availability of its code. After it became clear about the financial viability of cryptographic currencies, varieties of digital currencies, copies of bitcoin or forks began to appear. Their number is already more than 700. A feature of cryptocurrency forks is an improved cryptographic code compared to bitcoin. They require lower mining costs and are therefore popular for small mining farms.

Distinctive features

The main feature of most cryptocurrencies is their generation based on the blockchain according to certain procedures. Blockchain implies the continuity of each subsequent coin of information from the entire previous blockchain. Cryptocurrencies differ in the program code, the initial and maximum emission amount, the complexity of mining electronic gold. Many special exchanges have appeared on the Internet, in which the value of cryptocurrencies is determined by the demand for digital coins.

Decentralized accounting of digital counting units

All these actions are carried out in a decentralized manner - anyone who wishes has the opportunity to connect to this process. A real crypt has only a creator, and there is no central authority for accounting and control over mining. All information about the serial number and the entire previous chain is in each block. On the fork market, offers of crypto-like HYIP projects appear, which are described in terms of cryptocurrencies and blockchain technologies, but are financial pyramids. In them, superior partners receive remuneration from sales.

Using cryptography

Many people are faced with cryptography when encrypting the entrance to wallets. There are two types of cryptography used when generating bitcoin. As a result of mining, a new coin is created in digital form. The message profile of its creation (hash) is generated with the first type of cryptography. The second type is used to encrypt an electronic digital signature for each part of the entire bitcoin chain. These signatures are stored on the wallets of bitcoin owners. The signatures are not repeated, and it is easy to verify the authenticity of the volume of the crypt that is on the wallet.

Independence from government or financial institutions

The emergence of crypto money and the growth of their popularity were so rapid that government agencies were not ready to understand and assess the scale of what happened. They are completely independent from national governments and banking structures. This decentralization is one of their main advantages, which prompts many countries to start using cryptographic currencies for international settlements and as reserve currencies. Bitcoin transactions are increasingly being carried out on the global financial markets.

Irreversibility of transactions

Among the few disadvantages of crypto money systems is the irreversibility of transactions. This follows from their complete independence from regulatory authorities. In the very operation of transferring bitcoins or other coins, fraud is impossible. This also imposes more serious requirements on the choice of partners for these operations, verification of their reliability, the absence of fraudulent activities when advertising goods and services on the Internet.

The presence of an upper limit on the total emissions

The instrument of preliminary protection of the issued cryptocurrencies from inflation is the limitation of the limit of their total emission. Miners should pay attention to this characteristic when choosing a fork. If the number of coins issued approaches its limit, this means an increase in the cost of mining, but also an increase in market value. Some crypts do not have an issue limit. This is an additional opportunity for them to issue due to the existing number of each miner.

Where to get cryptocurrency

It is possible to purchase, start using and make money on the crypt in several ways:

there is an opportunity to buy, and then, with an increase in market value, sell coins in exchange offices;
crypto-exchanges are designed to exchange fiat money for selected forks and trade them by buying at a decrease, and then selling at an increase in their market value;
the most financial and energy-intensive way is mining. It will require a decent investment of money, constant upgrading of farms, but the income from this will be high.

How does cryptocurrency work

To begin with, the client downloads an electronic wallet to his computer or smartphone, in which he stores the crypts. The purchase is carried out when contacting the exchange office, or to the crypto exchange. Having exchanged your fancy currency for a crypt, indicate your wallet to which it is credited. If you need to pay for goods or services in the wallet, there is a "transfer" function, similar to money transfers. Indicate in it the identifier of the recipient's wallet of the crypto-money, the amount, confirm the transfer. There are no restrictions for wallet owners.

Cryptocurrency mining - what is it

The process by which cryptocurrency is mined is different from mining gold or coal. Mining starts with assembling a farm. To accomplish this task, the motherboard of an ordinary PC computer, a server or more powerful power supply unit, a hard drive, a monitor, and several powerful video cards with additional cooling are taken. The speed, quantity, computing power of video cards will determine the mining power of the farm. Install a specialized mining program, launch it, select a pool and a fork, start the actual mining.

How to mine electronic money

At the first stage of mining, a fork is selected, or a type of cryptocurrency, for example, cryptocurrency sync. Selection criteria are:

profitability - the profitability of reproduction in comparison with costs;
liquidity in the market - the ability to quickly and profitably sell on an exchange or exchanger;
the complexity of the encryption algorithm places demands on the farm hardware.

The next stage is choosing a pool, registering your workers - mining computers - in it. An important characteristic of a pool is its commission, or the fraction of the block price that will go to you. Next, a miner is selected - a coin mining program:

cudaminer - for mining on Nvidia video cards (GPU);
cgminer - for mining on ATI video cards (GPU);
pooler cpu miner (minerd) - for mining on processors (CPU).

To start mining, you need to carry out a number of simple operations, the type and sequence of which depends on the chosen miner. The last step will require the withdrawal of the crypt. To do this, the wallet is downloaded from the fork site, and the earnings of the cryptocurrency are transferred to it for further resale on the exchange or exchanger. The income of people who are mining forks depends on the use of the computing power of video cards, the power of computers, and the correct choice of initial conditions.

Cryptocurrency exchange rates

Name	Date of creation, year	Capitalization, USD USA	Course towards dollars. USA




Ethereum Classic ETC

Advantages and disadvantages

round-the-clock earnings, available to everyone;
low transaction fees;
no taxation;
the use of crypts to pay for goods, settlements with customers from different countries;
ways to earn cryptocurrency are available to everyone.

The disadvantages include:

lack of regulators of release and turnover - the client himself is guilty of mistakes;
inability to return an erroneous payment;
there are risks of bankruptcy of the crypto exchange;
all cryptocurrencies have high volatility.

How to make money on cryptocurrency

There are several ways to make money on cryptocurrencies:

cryptocurrency mining, in which income depends on the capacity of the farm equipment;
their use as an object of profitable investment;
trading on crypto-exchanges - special services for buying and selling.

Investments

The growth in the cost of the ancestor of all cryptocurrencies has shown them to be promising as an object of accumulation and investment. The average growth of major cryptocurrencies in the first half of 2019 was 800%. Most high-yield investment programs cannot boast of such profitability. For miners, it is recommended to leave 50% of the income in the crypt. With an increase in the market value, the profitability of mining increases several times. This rule improves the efficiency of the entire process.

Cryptocurrency trading

The traditional trading method is used to make money on forks. To do this, you need to register on the cryptocurrency exchange. For example, it is proposed to consider the yobit.net exchange. When registering, a client is created wallets in rubles, dollars and all crypts, operations on which are carried out on the exchange. The client replenishes the account in monetary units. Then he creates an order for - indicates the desired purchase rate, the amount of the transaction. When there is a participant in the exchange - the seller of bitcoins at the rate you specified, a transaction takes place. Further, bitcoins are exchanged for any fork.

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In today's hype around ICOs, we often forget about the benefits that can bring... On the Internet, you can find a lot of tips for investing in a particular coin, and they are not always of high quality. Let's remember the main advantages of cryptocurrencies. At the same time, it is necessary to talk about the main problems of this market.

Bitcoin may be significantly impacted by the implementation of the first attempt to solve the scalability problem - Segregated Witness. In the Ethereum network, division may also occur after the adoption of a protocol based on proof of stake. This event will fundamentally change the role of miners in the Ethereum ecosystem.

It is clear that many users are simply looking for easy money and do not think about the distant consequences of such events. But blockchain technology has tremendous potential.may turn out to be a new stage in the evolution of economic decentralization, which began at the end of the 20th century. Cryptocurrencies can become a new form of money that does not know inflation, borders or any restrictions.

The future of cryptocurrencies is in the hands of their adherents, not investors looking for short-term gains. For those who have not noticed yet: a new era of real economic freedom begins.

Digital currencies have a number of important advantages over traditional money and popular financial and physical assets. What is the reason? The point is that cryptocurrencies solve numerous problems associated with the centralized nature of fiat currencies and other instruments. Let's list them.

There is almost no inflation in the cryptocurrency world. However, to some extent it is still present, since it is needed to financially stimulate miners mining blocks. Moving to a proof-of-stake protocol will further reduce inflation and increase the value of cryptocurrencies (the Ethereum network is expected to introduce a hybrid POW / POS by the end of 2017). The most important thing here is that the inflation rate is known and not hidden by anyone. In the case of the banking system, the inflation rate is unknown, and central banks can print any amount of money without consulting the public. This is one of the main reasons why cryptocurrencies are gaining more and more supporters.

Cryptocurrency remittances know no boundaries. Geographically located in Thailand, you can work for an American company. In this case, getting money from another country can be very difficult. But now this problem does not exist: cryptocurrencies do not recognize borders and can be transferred from point A to point B in a matter of seconds.

Another positive point is transparency. There is no way to trick this system or do anything without others knowing about it. This is why, although some attackers were able to exploit loopholes in Bitcoin and Ethereum, such loopholes were quickly closed by the joint efforts of developers and the community, thanks to the fact that everyone on the network could see what was happening.

If you need to send money to a recipient in another country, you will find that cryptocurrency is the best option. A regular money transfer is not only expensive, but also requires filling out a lot of related documents. Compared to SWIFT / SEPA, cryptocurrency transactions are almost instantaneous. Compared to VISA transfers, digital coins are still moving slower, but the developers are now actively addressing this problem.

Finally, your nobody can block or freeze. The only known case occurred last year when the wallets of the DAO crackers were frozen.

What determines the value of a cryptocurrency?

First, some cryptocurrencies are recognized and valued as assets. For example, Bitcoin plays the role of gold in the cryptocurrency space. It is believed that storing capital in it is beneficial.

Secondly, the value of the currency. It is known that even the currencies issued by central banks have some kind of capitalization. It is equal to the value of all banknotes in circulation. This indicator is also important for cryptocurrencies.

Disadvantages of cryptocurrencies

It should be noted right away that the main problems of cryptocurrencies can be solved by improving the source code base and legalization.

Indeed, there are difficulties with scalability. And they need to be solved so that additional users can be attracted to the ecosystem. The developers are already working on this issue and have proposed a number of solutions. In our time, unsolvable problems do not exist.

In developed and developing countries, there is a gradual legalization of currencies. Even the most conservative countries like Russia are working to bring this market out of the shadows. To date, the greatest progress in this direction has been achieved by Singapore and Switzerland.

Changing the protocol is a very long and complicated procedure. However, the protocol is gradually improving with the combined efforts of the community. Even in Bitcoin, Segregated Witness was eventually implemented.

Price volatility is a natural process accompanying the emergence of a new asset class. The change in price reflects how much the new technology is accepted by society.

Recognition doesn't happen overnight. This will take a long time, but now there is a constant influx of people into the cryptocurrency market. And it pleases.

System hacks occur and will inevitably occur in the future, but networks built on are constantly being upgraded to prevent possible attacks. Even Bitcoin has been stolen, but the network itself can and will deal with such problems.

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