you can use cryptocurrency to buy general goods and services, although many of us invest in cryptocurrency just like they invest in other assets, such as stocks or precious metals. Although cryptocurrency may be a novel and exciting asset class, buying it is usually risky because you want to do a lot of research to fully understand how each system works.
how does cryptocurrency work?
cryptocurrency may be a digital, encrypted and decentralized exchange medium. Unlike the dollar or the euro, there is no central organization to manage and maintain the value of cryptocurrencies. On the contrary, these tasks are widely distributed among users of cryptocurrency through the network.
Bitcoin is the main cryptocurrency, which was first proposed by Satoshi Nakamoto in a paper entitled "Bitcoin: Peer-to-Peer Electronic Cash System" in 28. Nakamoto described the project as "an electronic payment system that supports encryption proof rather than trust".
this encryption certificate belongs to a transaction that is verified and recorded in a program called blockchain.
what is a blockchain?
blockchain is an open distributed ledger, which records transactions with codes. In practice, it is a touch checkbook, which is distributed on countless computers all over the world. Transactions are recorded in "blocks" and then linked together on the "chain" of previous cryptocurrency transactions.
Buchi Okoro, CEO and co-founder of Quidax, an African cryptocurrency exchange, said, "Imagine a book in which you can write down everything you spend every day." "Every page is similar to a block, so the whole book, a pile of pages, may be a blockchain."
With the blockchain, everyone who uses cryptocurrency has his own copy of this book to make a unified transaction record. The software will record each new transaction because it happened, and each copy of the blockchain will be updated with the new information at the same time, so that all records are consistent and accurate.
in order to prevent fraud, each transaction is checked with one of two main verification techniques: labor certificate or equity certificate.
how can you mine cryptocurrency?
mining is a way for new cryptocurrency units to be released to the earth, usually in exchange for verification transactions. Although ordinary people can mine cryptocurrency in theory, it is more and more difficult in a labor certification system like Bitcoin.
"With the development of Bitcoin network, it becomes more and more complex and needs more processing power," said Spencer Montgomery, founder of Uinta Crypto Consulting. "Ordinary consumers want to be prepared, but it's too expensive now. Too many of us have optimized their equipment and technology and cannot win in the competition. "
please remember: labor proves that cryptocurrency needs a lot of energy to mine. It is estimated that .21% of the world's electricity is used to power bitcoin farms. This is roughly equivalent to the electricity used in Switzerland in one year. It is estimated that most bitcoin miners find themselves using 6% to 8% of their mining income to hide their electricity bills.
Although it is impractical for ordinary people to earn cryptocurrency by mining in the labor certification system, the demand for high-performance calculation in the equity certification model is low, because the verifiers are randomly selected and support the quantity they hold. However, it does require you to have only one cryptocurrency to participate. If you don't have cryptocurrency, you have nothing to gamble. )
how do you use cryptocurrency?
You can use cryptocurrency to make purchases, but this is not a mainstream payment method. Some online retailers such as bedding, furniture, electronic products, jewelry and clothing accept Bitcoin, which is far from normal. However, this may change in the near future. Payment giant PayPal recently announced the launch of an alternative service that allows customers to buy, hold and sell cryptocurrencies from their PayPal accounts.
"This is huge," Montgomery said. "If PayPal is regarded as a bank, they will become the 21st largest bank in the world, and they are providing access to all or any users. They are making it easier for people to send their cryptocurrency. "
before cryptocurrency is more widely accepted, you will solve the current restrictions by exchanging cryptocurrency for gift cards. For example, in eGifter, you will use Bitcoin to buy gift cards from Dunkin Donuts, Target and Apple, and choose other retailers and restaurants. You can even load cryptocurrency into an open credit line to form a purchase. In the United States, you will sign in a BitPay card, which is an open credit card that can convert encrypted assets into dollars for purchase, but for example, you need to pay a fee when ordering cardboard and using it for ATM withdrawal.
You can also use cryptocurrency as an alternative investment option other than stocks and bonds. "Bitcoin, the most famous cryptocurrency, may be a safe and decentralized currency, and it has become as useful as gold," said David Zeiler, cryptocurrency expert and deputy editor-in-chief of Money Morning, a financial news website. "Some people even call it' digital gold'."