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What is cryptocurrency?

Cryptocurrency is counterfeit-proof electronic money that can be stored in e-wallets and transferred from one wallet to another.

Cryptocurrency is a kind of digital currency based on different encryption methods. The system’s work is decentralized, that is, distributed throughout the network. At first, it may seem that cryptocurrency is similar to common e-payment system, but it is not. There is a fundamental difference: the presence of P2P architecture and lack of emission center means that each e-wallet is a separate mini-bank. Numerous e-wallets on individual computers in different parts of the world form a large bank that operates automatically seven days a week. And every person, who has an appropriate knowledge and skills, can independently invent its own currency. If people will trust it, it can be a means of world settlement.

The main thing is that “digital coins” are not tied to a particular person or company, and it represents a sequence of digits. And only if you know this sequence of digits – the code, you can withdraw coins. But in case of code’s loss or computer failure, you simply lose coins and cannot recover them. Currently, present cryptocurrency is pseudonymous and all transactions are public. To establish an identity of user is possible if you have additional information. The cryptocurrency’s credibility has increased significantly lately, in the first place, due to the possibility to purchase goods and pay for it without the knowledge of any government agencies, such as Internal Revenue Service. But I think that special agencies will find a way to prevent financial frauds, if necessary, in the near future, which are not uncommon. The main obstacles on the way to cryptocurrency proliferation are: 1) a lack of understanding and trust of people, who are used to paper money; 2) underdeveloped infrastructure; 3) anonymity, which is a definite advantage and, at the same time, undermines confidence in “e-coins”, being an excellent field for dubious organizations, drug dealers and so on.

The most popular cryptocurrency is Bitcoin. There are other popular ones, for example – Litecoin, NameCoin, DogeCoin, Ripples. Currently, there are more than 200 kinds. BTC-E, Mcxnow, Vircurex, Cryptsy, for Bitcoin - Bitfinex, BTC China, BitStamp are considered to be the biggest cryptocurrency marketplaces.


  • October 10, 2016 6:05 PM MSK