If somebody said a word “crypto” or “cryptocurrency” a couple of years ago, you would look at him/her questioning, “what is crypto.” It is hard to believe, but not that long time ago, only a small group of people was aware of such thing as a cryptocurrency. Usually, these individuals were closely related to technologies sphere. Today, the situation is completely different. If to ask any young person, who at least a little bit know about modern technologies, the question “what is crypto”, he/she will find a couple of words to explain the meaning of this word. However, the knowledge about cryptocurrencies of such people is superficial. They don’t understand the real crypto meaning and have no idea how all this works.
This article has a goal to provide a simple but detailed explanation of crypto meaning. If you are new in the world of digital money, it is a good decision to start your education from this piece of writing. Here, you will get to know everything about crypto meaning, cryptocurrency history, its mining process, its utilization, and its legality.
What is crypto, or how to define “cryptocurrency”
It is possible to explain crypto meaning in several ways. There is a complicated definition for people, who understand quite a lot in technologies, and there is a simple definition that can be understood by any average person. It is essential to provide both of them.
What is crypto in general? It is a virtual currency that exists in the digital world. It is impossible to see or touch cryptocurrency, because, basically, it is a result of complicated computer operation. What is crypto if to define it more precisely? In accordance with a complex definition, crypto is a limited number of entries in a database that anyone can’t change without accomplishing particular conditions.
To understand the crypto meaning, it is essential to understand its purpose. Many people don’t understand what cryptocurrency is because they don’t understand its purpose. They just can’t get why something like this exists. When it was just created, it was impossible to buy something using virtual money. Even now, there is a limited number of places where it is possible to pay for things using crypto money directly. The main purpose of crypto is to be a medium of exchange. This doesn’t sound logical at first sight, but it makes sense.
For the long period of time, people were looking for safe methods to send real currencies using new technologies. However, there are many opportunities to get the personal credit information, and steal money. Cryptocurrencies aren’t only well protected, but it is also quite fast to exchange money using them. Every operation with cryptocurrencies includes a file that is sent or received. This file includes the personal wallets addresses of the participants of operation and the number of coins that should be passed. This is basic cryptography that protects virtual money. Only people who created crypto coins, miners, are able to confirm these operations. When an operation is confirmed, it becomes impossible to reverse it.
What is crypto? It is a decentralized system that any person or small group of people can’t control or manipulate. This is the main reason why cryptocurrencies are so popular, and why they are so important. However, it is also essential to understand that the number of digital currencies is enormous, and they have many similar things, but they also can have something unique.
Yet, what is crypto without blockchain? Cryptocurrencies exist and function thanks to such thing as blockchain. Generally, blockchain is a ledger that records all the operations with digital money. Yet, this ledger doesn’t belong to one individual or small group of people, but it belongs to everyone, who works with cryptocurrencies. Such approach protects virtual money from manipulation.
What is crypto from a historical point of view?
One of the great methods to understand the crypto meaning is to read about the history of its invention. The first cryptocurrency that appeared was Bitcoin. Today, it is the most popular and most expensive digital currency in the world. Before its creation, people made many attempts to create such thing as a virtual currency in the 1990s. However, everything that was created eventually resulted in failure. The reasons for these failures were various starting from the problem with fraudsters and finishing with financial issues.
However, the major reason for the failure was very simple. Any of these cryptocurrencies didn’t bring anything new. They carried on using a third party system. Nowadays, the operations with digital money are between two people. In that days, it was possible to send something only using the help of the third party, which was some trusted company.
Fortunately, in 2009 everything has changed, and crypto meaning became the one that we know it now. A group of programmers with a leader Satoshi Nakamoto presented their cryptocurrency Bitcoin. It had a totally new system that was called “peer-to-peer.”
This decentralized system could solve the main problem of any network, double-spending. It means that it was impossible to send something without relying on a third party that kept the information about the transactions. Otherwise, it would be impossible to find out whether some file is sent only once or several times. Peer to peer system allowed getting rid of the third party thanks to the ledger that is available to any person.
What is crypto from a mining point of view?
One more thing that can help to answer the question “what is crypto” is the explanation of the mining process. Miners are one of the most important things when it comes to cryptocurrencies. Their job is to solve complex cryptographic tasks or puzzles. To do this, they use special hardware, software, and a lot of electricity.
Crypto meaning of every cryptocurrency depends on the puzzle that is solved to get one its unit. The complexity of these puzzles also can be different. Moreover, it is growing in terms of the larger number of individuals that want to solve it. For this reason, it was quite easy to mine Bitcoin cryptocurrency a couple of years ago. It was enough just to have a good computer. However, right now, if you want to become a miner of such popular digital currency like Bitcoin, it is necessary to be ready to invest in its mining process large sums of money.
What is crypto from the legitimacy point of view?
To be aware of the crypto meaning isn’t enough if you really want to work with some cryptocurrency and generate good profit with its help. One of the very serious questions that are asked together with “what is crypto” is about its legitimacy. For many people, who don’t understand crypto well, cryptocurrency seems to be quite a strange thing that doesn’t deserve trust.
Nowadays, digital currencies are very popular, and they become even more popular every day. However, authorities of all countries weren’t ready for such thing as digital money. They have no idea how to regulate the situation with earning money with the help of crypto coins by average people and various companies. This new sphere is a great chance for fraudsters to cheat on people.
However, authorities understand crypto meaning quite well, and they know that it is a bad decision to forbid cryptocurrencies because people will look for the ways to trade them. For this reason, they are creating various laws and rules that should control work with digital money and everything related to them.
If you also have a great desire not only to find out the crypto meaning but also generate profit with the help of virtual money, it is essential to get to know the cryptocurrency laws that exist in the country you live. Moreover, it is essential to read the news related to digital coins because the regulatory system of most of the countries is on the stage of the development now. However, if you are an average trader, there are little chances that you will have some problems with the law.
What is crypto and how can you work with it?
When you already understand the crypto meaning, it is the right time to start working with some cryptocurrency. There two important things that it is necessary to know:
- Storage of the cryptocurrencies;
- Trading of the cryptocurrencies.
When you are asking the question “what is crypto,” it is impossible to avoid the question of cryptocurrency wallets. Without having a wallet for storing digital currencies, you can’t have them. There are several types of wallets. They are quite different especially in the level of security.
- Desktop wallet;
- Online wallet;
- Mobile wallet;
- Hardware wallet;
- Paper wallet;
Some of the wallets are created for one cryptocurrency when others can store several of them. If you are interested not only in information about the crypto meaning, but also want to buy a couple of units of some digital currency, you should carefully study the question of crypto wallets, and make the best choice.
What is crypto when it comes to trading? It has been already mentioned that every cryptocurrency is a medium of exchange. For this reason, to buy or sell units of some digital currency, you should join some exchange platform. There are many of them on the web. The best decision is to use the most popular exchanges, if you are worried about security, such as Upbit, OKEx, Bitfinex, and others.
Most popular cryptocurrencies
The last thing you will learn reading this article about crypto meaning is the names of the most popular cryptocurrencies in terms of market cap.
- Bitcoin Cash;
- Stellar Lumens;
Their crypto meaning is similar, but each of them deserves special attention if you want to understand and trade them.