Cryptocurrency: how this realm operates

Cryptocurrency and money

Have you ever thought about what money really is, how much money there is and where it comes from? Is cryptocurrency money or is it just a fad? What is the difference between Bitcoin and the Dollar? Let’s dissect the definition of money and answer these and some other questions.

Bitcoins in the physical


  1. Essence and history of money

  2. Where do cryptocurrencies come from?

  3. Who participates in cryptocurrency emission

  4. Differences between cryptocurrencies

  5. Differences between Bitcoin and the Dollar

  6. What affects cryptocurrency prices?

  7. Cryptocurrency—money of the future

  8. How to invest in cryptocurrencies

  9. The world is moving toward crypto

  1. Essence and history of money

Money is a universal equivalent to any good or service. It substantially simplifies everyday life and gives freedom.

Throughout history, money has always existed in different forms:

  1. The first money ever was actually items: shellfish shells on Pacific ocean islands, animal hides in Slavic countries, and so on. These natural currencies had approximate value, which was lost over time due to a number of objective reasons.

  2. Gold was the first universal holder of value which was determined by weight, and its authenticity was easy to verify. Gold was used all around the world and didn’t lose value as time went on.

  3. But gold supplies were limited, which started slowing down development. The problem was solved by introducing paper bank notes and metal coins. Those, too, became a wrench in the wheel: maintenance cost extra resources.

  4. Today, bank notes and coins are gradually being replaced by electronic money, less demanding in terms of maintenance. But electronic money, too, turned out to be imperfect: unending emission speeds up inflation, traceable capital is no friend to anonymity.

  5. This is why cryptocurrency came into being: it has the advantages and no shortcoming of the previous forms of money. Cryptocurrency is invulnerable to manipulations and counterfeiting, its price relentlessly goes up (in the long run), and it is anonymous.

  1. Where do cryptocurrencies come from?

The first cryptocurrency, Bitcoin, launched in 2009. Today their number exceeds 900. But a lot of people still have no idea as to where cryptocurrencies come from or who needs them.

Bitcoin was designed as a digital analog of gold. And it is produced in a similar way—it is mined in digital space using computers.

Mining is the generation of new blocks and maintaining a distributed cryptocurrency chain. Dedicating computing power to new transaction blocks, miners get rewards in the form of cryptocurrency units.

Mining is the process of crypto token production

  1. Who participates in cryptocurrency emission?

Anybody can participate in mining. What’s needed is capable equipment: computers or laptops with sufficiently powerful processors and graphics cards, or ASIC devices.

In order to start mining, you have to choose a fork, a pool, a miner, to set up and launch equipment, and create a crypto wallet.

Forks are altcoins or cryptocoins based on Bitcoin’s foundation. When choosing a fork, mining profitability is calculated with the encryption algorithm factored in.

Forks in a nutshell

  1. Differences between cryptocurrencies

Cryptocurrencies differ on hashing algorithm, mining difficulty, attack resilience, required number of confirmations, etc.

Every cryptocurrency has its perks.

  • Litecoin uses the Scrypt algorithm, whereas Bitcoin—SHA-256.

  • Bitcoin network block generation time is 10 minutes, whereas Ethereum—14.5 seconds.

  • Namecoin is both a cryptocurrency and a system or alternative DNS servers.