What is Cryptocurrency – As time progresses, the form of currency is not always physical like coins or paper money. There is also a new form of currency known as cryptocurrency. What exactly is cryptocurrency? How does it work? Let’s explore these questions one by one.
In today’s world, discussions about cryptocurrency are highly popular among young people. Many even consider cryptocurrency investment to be more profitable than stock investments. This growing curiosity prompts everyone to wonder what cryptocurrency is and how it operates.
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Let’s delve into the world of cryptocurrency, including what Bitcoin is. Detailed information can be found in the following explanation.
What is Cryptocurrency?
Generally speaking, cryptocurrency is a virtual currency whose security is guaranteed by cryptography. Cryptography makes it impossible to counterfeit or double-spend cryptocurrency. Thus, even though it is used virtually, there is no possibility of fraud that would harm its owners.
Why has cryptocurrency become popular recently? The reason lies in the fact that this digital asset is not tied to any central authority, such as a bank. By using a decentralized network powered by Blockchain technology, its distribution can be managed across various computers.
This decentralized system operates independently of governments and centralized authorities. No one controls your virtual assets when you own cryptocurrency. Moreover, various countries are now starting to allow the use of cryptocurrency. You can even use it for cross-border transactions.
How Does Cryptocurrency Work?
Cryptocurrency is powered by a technology called blockchain. This technology ensures the security of online transactions even without the involvement of third parties. Cryptocurrency is protected by various algorithms and encryption methods, referencing blockchain technology.
Do you know what blockchain technology is? Understanding blockchain is essential to grasp the functionality of cryptocurrency.
What is Blockchain?
First, let’s try to understand the concept of blockchain by its name. Essentially, a blockchain is a collection of blocks connected in an online ledger. Each block contains a set of transactions independently verified by every network.
When a transaction occurs, for example, between Person A and Person B, where A wants to send cryptocurrency to B, this transaction is represented online as a set of blocks. These blocks are then distributed to every node in the decentralized network. Once the network system approves the transaction, it becomes valid.
The block is then added to the online ledger, providing a transparent and immutable record of the transaction. Consequently, the cryptocurrency is transferred from A to B.
Popular Types of Cryptocurrency
How many types of cryptocurrency exist in the world? As time goes on, many new cryptocurrencies emerge. Among the numerous cryptocurrencies available, the two most popular ones are Bitcoin and Ethereum (ETH).
Satoshi Nakamoto is the person who pioneered Bitcoin, introducing the concept of cryptocurrency in 2008. Bitcoin became available in 2009 and remains the most popular cryptocurrency today, with its value continually fluctuating.
Currently, 1 Bitcoin is equivalent to $27,911.50 or around 418 million IDR. This is not the highest point. In October 2021, the value of 1 Bitcoin reached approximately 930 million IDR.
Another popular cryptocurrency is Ethereum, often referred to as ETH. Like Bitcoin, ETH also holds significant value. Currently, 1 ETH is valued at around 27 million IDR. In November 2021, during a surge in cryptocurrency values, 1 ETH reached approximately 67.3 million IDR.
How to Use Cryptocurrency
Each cryptocurrency coin has its own function. Not all cryptocurrencies are legally recognized worldwide. Legitimate cryptocurrencies, like BTC and ETH, can be used to purchase goods, trade, or invest. Additionally, coins issued by certain companies or platforms can be used for transactions on those specific platforms.
For legally recognized cryptocurrencies, you can use them just like regular money. The key is ensuring that Bitcoin or Ethereum is accepted as a form of payment.
In this ever-evolving era, it is essential to keep up with the times. To secure your assets, you might consider investing in digital assets like cryptocurrency. Today, you can purchase crypto from various local platforms.
After learning about cryptocurrency, you can start considering buying some. Always continue to educate yourself about cryptocurrency to determine which assets are the most profitable. This way, you can have safe and promising digital assets.