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Understanding the Definition, Basic Concepts, Until the Cryptocurrency Transaction Mechanism

Understanding the Definition, Basic Concepts, Until the Cryptocurrency Transaction Mechanism
Understanding cryptocurrency in the digital age is very easy. Even for cloud people, there are no access constraints to get information about cryptocurrency. At the time of the first cryptocurrency launch in 2009, Bitcoin. Indeed, many people do not understand what cryptocurrency is. However, the presence of digital currencies is increasingly in demand as an investment instrument. This is because the value in cryptocurrency continues to experience fluctuations from time to time. For that, so as not to be out of date, you need to understand definitions, basic concepts, to the cryptocurrency transaction mechanism. Here are the reviews!

What is a cryptocurrency?
Cryptocurrency is a digital currency. Unlike conventional currencies, cryptocurrency is used for virtual transactions or internet-based networks. To maintain its security, cryptocurrency is protected by fairly complex passwords.

Cryptocurrency is decentralized. That is, there are no parties who become intermediaries in a transaction. Payments made using digital currencies take place on a peer-to-peer basis, that is, from the sender to the recipient. Nevertheless, all transactions carried out remain recorded in the existing system on the cryptocurrency network. The recording is carried out by cryptocurrency miners and will receive a commission in the form of digital money.

You can understand Blockchain like a master ledger that contains a database. Anyone can access this platform without making virtual money transactions.

The type of cryptocurrency currently available
Basically, cryptocurrency has started to be developed since 1990. However, about 10 years ago (2009) just became popular among the world community. Currently, there are several types of cryptocurrencies that are widely used, including DDKoin, Ethereum, Litecoin, Ripple, Monero, and the most popular is Bitcoin. Apart from the names of these currencies, there is still more than 2000 cryptocurrency now circulating throughout the world. You can check at the Coin Market Cap.

Bitcoin is the first cryptocurrency (coin mother) and the most popular today. By its creator, Satoshi Nakamoto, Bitcoin has only created up to 21 million coins according to the agreed protocol. This amount is predicted to not be mined entirely until the next 2140. You can trade with Bitcoin through a computer device without intermediaries from banks or other financial institutions. Bitcoin miners tend to be a minimal risk because they will not suffer losses due to counterfeiting or inflation like conventional currencies.

Cryptocurrency transaction mechanism
After understanding cryptocurrency, let us know the mechanism or how the transaction of the digital currency works. Interestingly, cryptocurrency transactions offer a high degree of flexibility because they can be done anytime, anywhere, from anywhere in the world. Simply armed with a smartphone or PC that is connected to the internet, you can trade several virtual money without going through an intermediary. Even transactions using cryptocurrency can be completed in minutes without worrying about downtime.

For example, when you will send money to a recipient. Both parties will be given information regarding the amount of the transaction. Also equipped with a digital signature through a private key into the cryptocurrency system used. These confirmed transactions are then stored permanently. No party can change, hijack, or even falsify these records.

Because it is permanent, all transactions using digital currency cannot be canceled for any reason. For that, you who just set foot to know cryptocurrency should have to be wiser before making a transaction.

How to determine the value of cryptocurrency?
Because cryptocurrency was created with uniquely encrypted cryptography, so its value is very dependent on market mechanisms.

Please note, the value of each type of cryptocurrency is the same as financial products in general. Where when demand is high enough while miners are few, the value of cryptocurrency will increase. For example, Bitcoin has only provided 21 million since it was first created so that it has a relatively higher value compared to other types of cryptocurrency.

In other words, the value of cryptocurrency is fluctuating, which can quickly increase or decrease based on user availability or trust. The value of cryptocurrency is also influenced by FOMO.

Keep in mind at this time, the top rank in cryptocurrency activities is Bitcoin with a market capitalization of USD165.9 billion, and followed by Ethereum, which has a capitalization value of USD19.8 billion.

Transaction activities using cryptocurrency
You who have been mining cryptocurrency can use the virtual currency for several types of transactions. Starting from buying and selling on the Crypto Exchange Market by exchanging with fiat money, the current cryptocurrency exchange market can be found in America, namely the Intercontinental Exchange (ICE), Chicago Mercantile Exchange (CME), and the Chicago Board Options Exchange (CBOE).

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