Cryptocurrency is a virtual currency that is secured by cryptography – a type of encryption – which makes it nearly impossible to counterfeit or to double-spend. Crypto relies on an immutable (unchangeable) database, or digital ledger, known as a blockchain to record respective ownership. Each part of a cryptocurrency purchase, sale, or transfer is recorded on the blockchain. The blockchain is maintained by a network of computers that must all come together to confirm a transaction in order for it to be recorded in the digital ledger. The process by which the network reaches this decision is called a consensus mechanism. In many cases, blockchains are decentralized, meaning that there is no single authority that controls them.

Bitcoin was the first mainstream decentralized cryptocurrency and remains the most popular. In order to trade crypto, you first need a cryptocurrency wallet in which you can hold it. A wallet can be set up using a wallet application on your mobile or PC where you can buy and sell bitcoin or even send it to a friend.

Characteristics and advantages

On the one hand, it may seem that the cryptocurrency is an ordinary electronic money, to which we have become accustomed. In fact, if you dig deeper, it turns out that there is practically nothing in common between them.

To begin with, this is an absolutely decentralized system. Each client’s cryptocurrency portfolio is a small bank that no outsider can manage. As every year there are more and more customers, and the system is spreading all over the world, it turns out that millions of computers with wallets installed in them represent a powerful financial network. This system works without interruptions throughout the day and night, and does not need to be controlled, as it is completely independent. This happens due to a special algorithm created by a person under the pseudonym Satosi Nakamoto, which allowed to automate the process, making the system more open and eliminating the presence of unauthorized persons.

To compare this currency with any other, both real and virtual, is simply impossible. If for any other currency there is a special table where you can see how much it costs and what the commission is, then the bitcoins do not have a commission, and their cost is determined by the momentary demand, so the price calculator does not work here.

The cryptocurrency is not linked to any other world currency. Another important advantage of it is complete anonymity under any conditions. Other types of payment systems are losing a lot with cryptocurrencies, because they are not fundamentally new money. In addition, there are no powerful banking systems that provide work, since in this case this is achieved through the synergistic interaction of the cryptocurrency users’ computers. That is, all customers are connected by themselves to a single network.

Types of cryptocurrency

The cryptocurrency list is growing every year. Of course, Bitcoins are still the most popular, but now Litecoin, Ethereum and others join them. They all work roughly on the same principle. A few years ago, the first stock exchange was created for the sale and purchase of cryptocurrencies. Now there are several exchanges of this type, and their number continues to grow.

Therefore, it is recommended to carry out mining with the help of special equipment, since not all common computers can support such loads.

HOW DOES MINING CRYPTOCURRENCIES WORK?

A miner is a service provider to the network of other users of a cryptocurrency. Basically, the miner ensures that every transaction made in the network is entered in a so-called distributed ledger. All miners agree on a single valid ledger.

So no user can fake transactions, since the information on them can not be changed afterwards, as it is stored in a publicly accessible ledger. For this service, one miner receives a block reward in the respective cryptocurrency after each block. 

WHAT IS THE “BLOCKCHAIN”?

As the name implies the blockchain describes  a chain of blocks. Each block represents a record of all transactions made during the block time in the network of the currency. Depending on the cryptocurrency, all blocks have a constant block time or the block time varies dynamically. So the blockchain grows over time, as more blocks get added to it.

WHAT IS AN ASIC MINER?

The acronym “ASIC” stands for “Application Specific Integrated Circuit” ASIC Miners are highly specialized computers designed for mining cryptocurrencies.

In most cases, an ASIC consists of multiple hasboards, processors and passive heatsinks, and a controller board that drives the hashboards and connects to the Internet.  Commercial fans ensure sufficient cooling, because the hashboards sometimes have a considerable power consumption.

CAN I MINE CRYPTOCURRENCIES MYSELF?

The answer is simple: Yes, you can! All you need is a miner, power and internet connection via Ethernet cable. ASICs are designed for the mining process, so handling them is easy via a web interface.

WHAT DOES “AFFILIATE” MEAN?

An “Affiliate” is a partner who promotes a company’s products and services by making recommendations. In practice affiliate links are shared in social media, which link directly to the website of said company. In return the partner receives a part of the proceeds. The affiliate program of Crypto Supply, for example, pays 2% of its sales to its partners. All sales made via an affiliate link are tracked automatically and the affiliate receives a monthly payout of his or her share.

WHAT IS A MINING POOL?

If you want to mine cryptocurrencies you usually need a mining pool. Why? In reality with many miners competing for the block reward the statistical probability is very low to collect the reward with your individual miner. In a pool, many miners join together for mining. The payments are then paid proportionally to the hashpower of the respective miner. A merger with many miners allows constant payouts as the probability increases that one of the many miners “solves” a block.