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What are cryptocurrencies and bitcoins?

Interest in the loudest financial innovation of recent years, Bitcoin, not only does not subside, but, on the contrary, is growing rapidly. Over the short period of cryptocurrency existence, Bitcoin has gone from creation to practical adoption. True, not all countries are ready to recognize the superiority of digital money over fiduciary currencies, but this, as the worlds leading financiers believe, is temporary.

So what are cryptocurrencies and bitcoins? What is the basis of this phenomenon, and according to what laws does it work? The excitement around Bitcoin continues, and the system is replenished with new users every day, creating a vast ecosystem of digital currency.

What are cryptocurrencies and bitcoins?

 The term "cryptocurrency" originated when it was necessary to describe the virtual money created with the latest technologies using cryptographic systems. In English, this word sounds like "cryptocurrency", which means: "crypto" is a cache or secret place, and "currency" is translated as currency. Therefore, cryptocurrency, according to the translation, is secret money, which is not far from the truth.

The very fact of the existence of cryptocurrency suggests that todays financial system needs new types of currencies and the conditions for their turnover. According to financiers with alternative views of the traditional system, cryptocurrency fits perfectly under the term democratic money, since no government can control or restrict it, although some are trying to create a regulated apparatus to control the circulation of digital money.

Bitcoin, in turn, is the first cryptocurrency that appeared in 2009, and its creator was Satoshi Nakamoto, whose identity is still shrouded in mystery. The term "Bitcoin" itself consists of two words: bit is the minimum information unit, and coin is an ordinary coin. Bitcoin became the first embodiment of the bold fantasies of programmers and cryptographers who created a cryptocurrency that conquered the world.

Almost every user of the network, one way or another, has come across the term "Bitcoin" on the Internet. Often, knowledge about the first cryptocurrency is superficial, and includes information about a Bitcoin wallet and several satoshi mining faucets. So what is Bitcoin? It is a cryptocurrency that has launched a process of deep restructuring of peoples ideas about financial calculations, and money in general.

Blockchain: the backbone of all the basics

 Those who have heard about Bitcoin probably know about the blockchain system as well. It is thanks to the technology of distributed ledgers that Bitcoin exists, this is the technical basis. The blockchain system operates on the principle of sequential generation of information blocks by solving complex mathematical algorithms with special devices called miners. Each block contains data about the previous block, and about all transactions carried out during the entire existence of the network.

It is worth mentioning that financial institutions are interested in blockchain technology, researching and implementing it into their systems to improve functionality. So it turns out that the official authorities are not interested in which cryptocurrency is the most profitable, the blockchain is important to them, since it is really capable of qualitatively improving financial systems. Moreover, some organizations are trying to create their own cryptocurrency for internal use.

Features of cryptocurrency and Bitcoin

 The astounding popularity of Bitcoin, which has swept almost the entire world, continues to grow at a tremendous rate, helping people to realize the flawed banking systems. After all, they monopolized the financial sector, setting limits and restrictions in the form of service fees. The lucky ones who once tried to transfer money in the blockchain system are already looking with apprehension and displeasure at banking structures, realizing that this is not what humanity needs. They can be understood, Bitcoin, as a cryptocurrency, has a lot of advantages over ordinary money:

    Decentralization. People were accustomed to the idea that everyone is controlled by someone, creating a hierarchy of managers from the lower class, ending with the President of the State. This is called a centralized regulated system of hierarchical relationships. Accordingly, the financial system follows the same laws. But Bitcoin breaks the usual structure, since it is a decentralized system, when each member of the network is a co-managing holder of the cryptocurrency. And in which countries are they struggling with cryptocurrency, and why, you know? Well talk about this later.
    System transparency. A big plus for ordinary people, and not a very good factor for a government apparatus with corrupt officials, is the complete transparency of the blockchain system. Having only the address of a cryptocurrency wallet, you can track all transactions with its participation. Interestingly, information about the movements of finances cannot be deleted or changed, the data on a once made transfer will forever remain in the blockchain system.
    Wide range of Bitcoin wallets. The user is available as full-fledged virtual wallets for cryptocurrency as a separate program, installed on a computer and online services that provide digital money storage services.
    Confidentiality. It is stated above that the blockchain platform, on the basis of which Bitcoin operates, is open to collect information, but to create a wallet, you do not need to provide personal data, which allows financial transactions to be carried out in a confidential manner. By the way, the main criticism against Bitcoin is based on the confidentiality of transfers, thanks to which terrorism is allegedly sponsored and illegal transactions are carried out. This is the main reason why some countries are struggling with cryptocurrency. Although there is practically no evidence in which cases illegal actions were carried out, with the exception of two or three situations.
    High level of protection. The blockchain system is practically invulnerable, because the time to create a new information block is not enough for any unauthorized manipulation. There are no known cases of hacking of the blockchain platform. Undoubtedly, scammers withdraw cryptocurrency, but this is due to the fault of the owners of crypto exchanges, exchangers or Bitcoin wallet services.
    If you raise the question of what is the most profitable cryptocurrency, then first you need to remember its independence as a factor that directly affects the development of digital money. Bitcoin, like other digital currencies, is not affected by external factors, because virtual money works on different principles than fiduciary currencies. Politics, economics, financial sector, stock markets, oil and precious metals prices, none of these have almost any effect on the value of Bitcoin. But the changes in the source code of the blockchain platform, which the developers from Bitcoin Core conceived, have already affected the cost of Bitcoin.

So, what is it really, cryptocurrency? Should digital currency be considered the next stage in the financial evolution of society? It is worth, these are the views held by members of the cryptocurrency community.

Attitude towards Bitcoin and cryptocurrencies

 The attitude towards digital currencies is mixed. When Bitcoin first appeared, the majority were skeptical about virtual currency, which was fully reflected in its value. Bitcoin was treated as an experiment, few people understood the essence and purpose of this phenomenon. Moreover, no one knew that two years after its creation, the bitcoin rate would rise to $ 1,300 apiece. Of course, the cost dropped after a while, but Bitcoin is still the most profitable currency that distributed ledger technology can offer today.

Over the seven years of the systems existence, there have been several major scandals related to Bitcoin. The fact is that at first the network was often used to carry out illegal financial transactions: arms, drugs, even people. At least, such accusations were heard from the law enforcement agencies of some countries. But after serious investigations, the criminals were detained, and the Bitcoin system continued to function.

Despite such incidents, Internet users continue to be interested in the question of what cryptocurrency and bitcoins are. This is not due to the confidentiality of financial transactions, but to the independence of the system from official financial structures and central regulators. People want a way to work with e-currency on favorable terms, while having a decent level of security.

States also treat cryptocurrencies differently. Bitcoin is supported in Australia, New Zealand, Singapore, Germany, most US states and the Netherlands. The states of these countries not only allow the circulation of Bitcoin and several more forks, but also support financial and technological companies that develop software to popularize Bitcoin.

Here is a list of which countries are struggling with cryptocurrency:

    First of all, this is Russia. Three years ago, government and financial structures did not react in any way to the circulation of digital currency in the country, but when the situation began to get out of control, the authorities introduced some restrictions on mining and movement of cryptocurrency, explaining their position by the same threat of terrorist financing.
    Indonesia still bans the circulation of digital currency on its territory, although recently we can see a softening of attitudes towards Bitcoin.
    China also at first categorically rejected the possibility of mining and trading cryptocurrency, but after a year of vain attempts to limit the spread of digital money, the leadership of the Middle Kingdom agreed to a partial lifting of the sanctions.

So what are cryptocurrencies and bitcoins? Many netizens and professional financial analysts are confident that this is, without exaggeration, our future.