What is a cryptocurrency and how does it work?

Crypto guide for beginners - Part 1 - What is a cryptocurrency and how does it work_ - blog-min

This is the first article within Crypto guide for beginners.

Cryptocurrency is an important part of the web3 system. You may sometimes meet the shortened form of the word - crypto. It means that this digital currency is based on cryptography, advanced mathematical calculations, and equations. There are nowadays more than 20,000 different types of cryptocurrencies but all of them have one feature in common, they are decentralized. It means they are not governed by any centralized issuing authority (banks, governments, etc.).

Cryptocurrency in a nutshell

If we take the US financial system as an example, then you will see that the body which is responsible for issuing dollars is the Federal Reserve. After that dollars go to banks and other financial institutions and are distributed among people. Any banking card from a bank can be canceled by the centralized authority. At the same time if a banking card is lost or stolen, the same centralized authority can block and then reissue it, thus protecting bank holder’s funds.

Nothing like this is happening in web3. Cryptocurrency is created, exchanged, bought, and sold through peer-to-peer disturbed networks. 

Crypto is a completely digital means of payment, its value, with a couple of exceptions, is neither connected to any national currency nor to the price of gold or silver. It’s emitted or generated online and can be traded only digitally.

Blockchains record cryptocurrency transactions and are built in a decentralized way. No one can trust anyone in web3, because the transactions are in the majority of cases fully anonymous. That’s why to protect cryptocurrency from being faked or stolen heavy cryptography is applied. 

According to CoinMarketCap, there are around 23,000 cryptocurrencies hosted on over 1000 blockchains worldwide. Each cryptocurrency is designed in its unique way and is supposed to bring new features to existing ecosystems. Payments in crypto are instant or near-instant, depending on the blockchain. Also, they are available 24/7 from anywhere. And the most important part is that there is no third-party verification of transactions. Blockchain networks are self-governed, implying a ‘trustless’ system of verification. 

The biggest crypto by market capitalization, as well as the most important cryptocurrencies in web3 are Bitcoin and Ethereum. 

The first crypto is Bitcoin and its exact date of creation is January 3, 2009. For the first year, its price was around 0$ and not many people believed in it. However, nowadays Bitcoin is over $60,000 and its price is constantly growing. 

To be able to perform transactions with cryptocurrencies you require a crypto wallet. Modern crypto wallets offer multi-featured interfaces, convenient private keys storage, and safe transactions.

Spatium Feeless Wallet is a multi-currency crypto wallet. It makes crypto transactions affordable and cheap compared to many other crypto wallets. Spatium offers a revolutionary Feeless feature when transactions are paid in the crypto you send instead of the native crypto of the blockchain. Batched feeless transactions enable you to save up to 30%. 

Stay protected in web3 with Spatium Feeless Bitcoin Wallet. It’s easy to operate and securely to use. Spatium Feeless Wallet is free to download. It’s available on Android and iOS devices.  Visit our website to learn more about the wallet. Get it on your phone, test it, and enjoy your financial freedom!

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