A Cryptocurrency is a form of digital money that is encrypted. And enormous computing power is required to crack digital cryptography. So much so, that trying to break it is usually not profitable for hackers.
Bitcoins are exclusively available online and are kept in electronic wallets. All transactions are encrypted and recorded in a digital ledger. Unlike a traditional database, however, the records are stored on a network of hundreds or thousands of computers at a time.
Let's start with the word “crypto”, which derives from the word cryptography. Over 4,000 years ago, in ancient Egypt, cryptography was used to send data and communications such that a third party could not read them. Only the receiver (and possibly the sender) has the correct key to decrypt and read the information.
Bitcoin
Bitcoin was created in 2009 by a person or group of people who, under the pseudonym Satoshi Nakamoto, invented Bitcoin to create a currency that was free from government interference and better suited to a digital world. Bitcoin is still the largest Cryptocurrency, but thousands more have been created since then. There will only be 21 million BTC, making this digital currency rare and valuable. This also makes Bitcoin very interesting to trade.
When investing in cryptocurrencies, we cannot ignore the importance of Bitcoin. The price of BTC largely determines the price of the other coins. Understanding the fundamentals of Bitcoin will help you better understand other currencies and the crypto markets as a whole.
Blockchain Technology
When we talk about cryptocurrencies, we often come across the term blockchain. This is the technology that makes most cryptocurrencies work. In simple terms, it is a system that tracks financial transactions and records them in a digital record. The main difference from traditional banks and currencies is that Cryptocurrency transactions are recorded on a network of multiple computers rather than in a centralized location.
Blockchain for Beginners
Here's an example. Suppose you want to keep track of all the expenses you make when you travel with four friends. In the traditional financial system, one person would control the account book and be in charge of updating all expenses. With a blockchain system, the four friends have a copy of the account book. Everyone can see the costs and transactions, and this can only be updated with the agreement of the four friends. Thus, no one can cheat the system anymore. It is fair and transparent.
The Potential of Cryptocurrencies
Although cryptocurrencies are still in their infancy, they offer enormous potential. The secure blockchain technology is useful as a means of payment, but not only that. The system lends itself to exchanging all sorts of things over a super-secure network.
We are already beginning to see that some blockchains are used for other types of transactions. This has led to the emergence of other tokens based on Cryptocurrency technology, which are created using existing blockchains, such as Ethereum, for example.
Tokens
If you are interested in investing in cryptocurrencies, you should know what tokens are. Simply put, they are digital assets that typically run on the basis of a blockchain development services. There are different types of tokens for different purposes, for example, non -fungible tokens (NFTs) to buy digital art, or utility tokens to access a product or service.
The differences between tokens and cryptocurrencies are sometimes very diffuse, but the main one lies in their structure. Cryptocurrencies are an embedded part of a blockchain infrastructure, while tokens are not embedded, but are instead regulated by software protocols called “smart contracts.” You can invest in both cryptocurrencies and tokens on the BUX Zero platform. Both have growth potential, but they also tend to be more volatile than stocks and ETFs.
