Cryptocurrency was created specifically to replace current money, which in today’s world is represented by paper bills or metal coins. They all have a certain value and are backed by the government’s gold reserves. However, there may be difficulties in transactions between different countries due to differences in exchange rates. This led to the idea of creating a completely new kind of electronic currency.
How do crypto-currencies work?
We all understand that crypto-currency is digital currency then it is natural to have a question in mind “how this currency is secure?” Because it is digital and in this way anyone can copy this and can easily make many more out of it. The solution would be for this problem is that every transaction will be recorded on a computer as a document, commonly known as a “ledger”. But if this data is only maintained by one person or a computer then it will become easy to tamper with. So, to resolve this problem we have a solution that the ledger will be stored in every computer which was involved in the transaction in the form of a “public ledger”
About Cryptocurrency In 2022, What Are Digital Coins?
- What is Cryptocurrency?
Before we consider the main advantages and disadvantages of this type of money, it is worth understanding the basic definition of the concept and also learns the central purpose of electronic money. Cryptocurrency is electronic money that is not printed or minted, unlike current money. Their main purpose is to pay and carry out transactions on the World Wide Web.
The existence of electronic currencies is due to the fact that the system reliably protects customers’ funds and guarantees the security of transactions. It is this security that attracts new customers and users.
- Varieties of Cryptocurrency.
There is currently a huge selection of cryptocurrencies, and there are more than 4,000 types of electronic money in total. All cryptocurrencies are divided into large groups designed to perform certain transactions in different payment systems. The most common and popular options are Bitcoin, Ethereum, Binance coin, Exmo coin.
What is it used for?
As said above, electronic money has the same principle as regular money. Their main function is to pay for goods and services online. However, the possibilities of cryptocurrency are much greater than those of traditional paper and metal money. Cryptocurrency offers, among other things, the following opportunities:
- When using cryptocurrency as a payment unit, the user becomes independent of government interest rates and exchange rates. Electronic money is regulated independently within the network, thus avoiding a crisis in the use of this currency.
- Cryptocurrency eliminates the need to transfer money to different types of currencies. All electronic money can be used on the World Wide Web for all kinds of transactions and purchases.
Also, if necessary, electronic money can be easily exchanged for another currency or real money.