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What is cryptocurrency in simple words?

What is cryptocurrency in simple words?

Cryptocurrency has become extremely popular over the past few years, creating thousands of new ones, and various companies are exploring how they can be adapted to their needs and markets. But what is cryptocurrency – a question that plagues many? Why is this something special?

In order to understand the whole essence of cryptocurrency, you need to learn about the basic terms.

Cryptocurrency is a simple language combination of two words: cryptography and currency:

Currency

• This exchange channel allows people to turn their work into something of value that can be exchanged for goods or other services.

Cryptography

• This is the process of converting intelligible text into illegible text and vice versa for the purposes of privacy, integrity, and authentication.

Cryptocurrency

• Connect them together and you get a word that means a digital medium of exchange and uses encryption to ensure transaction security.

Block

• Each entry or series of entries on the blockchain.

Block reward

• When a person who adds a new block to the blockchain gets paid in bitcoins.

Blockchain

• Digital public register in which all transactions on the network are recorded.

Proof of Stake

• A consensus algorithm that allows miners to “bet” on their currency to check the block of transactions.

Proof of work

• A hash — is an algorithm that turns a large amount of data into a large number of fixed lengths, usually written in hexadecimal format — is so complex that it could only be solved with considerable work or power.

Cryptocurrencies are quantitative records in a database or ledger that no one can change or exchange unless certain conditions are met. Many are sure that cryptocurrency is a pyramid, but in reality, it is a complex process.

Cryptocurrencies are similar to virtual accounting systems and allow you to make transactions, as usual, with cash, credit cards or checks to make purchases, invest or accept payments. Already now we can say that cryptocurrency is the future of the world economy and many financial processes.

Transactions are recorded in digital blocks, and then cryptographically signed (hence, “crypto” currency), making them completely safe.

Cryptocurrency landing is a new way to invest

As the lending services move from financial institutions to the blockchain, new applicants challenge the inherited players with easy lending, universal forms of collateral and attractive interest rates.

The first surge in cryptocurrency services gained popularity in 2017 against the backdrop of the ICO boom. It is worth noting that ico cryptocurrency is no longer a popular way of investing in the digital asset market.

In the next bear market, several key players were able to create credit services, allowing investors to spend money without having to sell their crypto assets.

With the return of the bulls and the emergence of signs of market recovery, crypto lending continues to grow. Now one of the largest players in the industry has entered the credit space. Cryptocurrency lending is one of the most popular ways for investors to successfully enter the market.

The reason for the emergence of cryptocurrency lending platforms is simple – they solve a big problem for existing cryptocurrency users. Cryptocurrency owners are now able to use their crypto assets without the need to liquidate them. Thus, the myth that cryptocurrency is a bubble is no longer relevant.

Now crypto users who need access to capital can receive loans using their digital assets as collateral. This will change the rules of the game, since now you can get a loan backed by your crypto and use it to perform many tasks, from paying off debt to buying a house. All without having to sell any of your crypto assets.

Secondly, by placing their assets on a crypto-lending platform, crypto owners can now earn interest on their coins, while at the same time undergoing a long-term upward price movement. Thanks to such processes, many dispelled their doubts that cryptocurrency is a financial pyramid or a project of unknown hackers.

The crypto-lending process is quite simple. The borrower must pledge his cryptocurrencies as collateral, and in accordance with the agreed rate, duration and LTV, the cryptocurrency is issued to him/her.