Quick Guide: What Is Cryptocurrency, Why Use It, and How Does It Work

If you’re reading this article, it’s likely that you’ve at least heard of crypto-currency (aka “the currency of the future“), but may not know all the technical ins and outs. 

And if you think your knowledge is up-to to date on the subject, read this blog post for a clear and in-depth understanding of everything related to crypto & blockchain technology.

What is a cryptocurrency and why use it

Crypto & BlockChain

Cryptocurrency is a digital or virtual currency that uses cryptography for security. 

A key feature of cryptocurrency is that it is not regulated by any central authority, making it theoretically immune to government interference or manipulation. They are decentralized, meaning they are not subject to government or financial institution control. 

The most well-known cryptocurrency is Bitcoin, but there are many other types of cryptocurrency including Ethereum, Litecoin, and Ripple.

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Crypto Advantages

Crypto has several advantages over traditional fiat currency, including 

  • increased security
  • anonymity
  • Transactions are also faster and cheaper than traditional methods, as there is no need for a middleman such as a bank.

Crypto Disadvantages

However, cryptocurrency also has some disadvantages. For example, incredibly volatile, meaning the price can fluctuate wildly from day to day. This makes it difficult to use for everyday purchases, and you may lose money if you don’t know what you’re doing.

Cryptocurrency is still in its early stages, so if you’re thinking about investing, it’s important to do your research and understand the risks involved.

How does cryptocurrency work?

Cryptocurrency is a digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of this security feature. 

A defining feature of a cryptocurrency, and arguably its most endearing allure, is its organic nature; it is not issued by any central authority, rendering it theoretically immune to government interference or manipulation.

They are not subject to government or financial institution control. The most important characteristic of a cryptocurrency is that it is not subject to inflation. Cryptocurrencies are often traded on decentralized exchanges and can also be used to purchase goods and services.

Why do cryptocurrencies cause a disruption in the current financial system?

Cryptocurrencies have caused a major disruption in the current financial system for a number of reasons. 

For one, cryptocurrencies are decentralized, meaning they are not subject to the whims of governments or central banks. This makes them much more resistant to inflation than traditional fiat currencies. Additionally, cryptocurrencies are global, meaning anyone can use them regardless of their location. 

Finally, and perhaps most importantly, cryptocurrencies are much more secure than traditional forms of payment due to their use of blockchain technology.

How to buy cryptocurrencies?

There are a few ways to buy cryptocurrency. The simplest way is to buy Bitcoin (or another currency) with US dollars using a Bitcoin exchange like Coinbase, CoinSwitch, or Gemini.

You can also use a credit or debit card to purchase cryptocurrency on an exchange, but this will usually result in higher fees.

Another option is to use a peer-to-peer (P2P) marketplace like LocalBitcoins and AirTM, where you can buy and sell Bitcoin directly from other users. 

This option usually has lower fees, but there is more risk involved, as you are trusting the other person to send you the Bitcoin.

You can also earn cryptocurrency by mining it. 

Mining is how new Bitcoins (and other cryptocurrencies) are created. Miners are rewarded with cryptocurrency for verifying and adding transaction blocks to the blockchain.

Blockchain Network

A blockchain is a digital ledger of data that is distributed across a network of computers. This network is typically made up of volunteer nodes, or users, who each maintain a copy of the ledger. 

When data is added to the blockchain, it is verified by the nodes and then added to the ledger in chronological order. This makes the data immutable, or unable to be changed.

Blockchains can be used to store any type of data, but they are most commonly used to record financial transactions. 

Bitcoin, the first and most well-known cryptocurrency, uses a blockchain to track ownership and transfers of virtual currency. Other cryptocurrencies also use blockchains to record transactions.

Blockchains have the potential to disrupt many industries beyond finance. For example, they could be used to track ownership of assets such as land or art, create tamper-proof medical records, or streamline supply chain management.


What is cryptocurrency?

Cryptocurrency is a type of digital asset that uses cryptography to secure its transactions and to control the creation of new units. Cryptocurrency is decentralized, meaning it is not subject to government or financial institution control.

Why use cryptocurrency?

Cryptocurrency offers a number of advantages over traditional fiat currency, including greater security, anonymity, and decentralization. Transactions made with cryptocurrency are also generally faster and cheaper than those made with fiat currency.

How does cryptocurrency work?

Cryptocurrencies are built on blockchain technology, which is a distributed database that records all transactions made on the network. Blockchain technology is used to verify and approve all transactions made with cryptocurrency, which helps to ensure the security and anonymity of the system.

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