What is electronic money? How does cryptocurrency work?

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Cryptocurrency has been around for a long time, but it is not until the 21st century that it really explodes. This is considered a “financial fever” that brings many practical benefits to investors.

Introduction to Cryptocurrencies

History begin

Cryptocurrencies have emerged since the 90s when the era of information technology and digitization exploded. Cryptocurrencies originated from the novel idea of ​​commercialization. One of the famous founders at that time can be mentioned as: Flooz, Beenz, Digicash, etc. These companies almost all depend on the 3rd party transaction control and promotion system. And here it is. Common mistakes lead companies to “tragedy” and collapse.

It seemed impossible to develop, but cryptocurrencies were once again supported by investors with the appearance of E-Gold. This US-based business owns a monthly trading volume of up to billions of USD. Although it did not make the same mistake as its predecessor, E-Gold was attacked by hackers. Therefore, this company soon slipped and “evaporated” from the market.

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It was not until 2008, that cryptocurrency officially built its own empire with the birth of Bitcoin. The company’s cryptocurrency is applied blockchain technology. This method does not depend on 3rd parties and has high security, overcoming all conditions of the previous generation. Since then, cryptocurrencies have grown steadily and become the most popular “financial craze” in the market.

Also Read: Mavie Ultron

What is electronic money?

Cryptocurrencies or “cryptos” are made up of digital bits, also known as digitized money. Cryptocurrencies only work in an electronic environment used to pay expenses. To perform transactions, users must rely on 3 factors: Internet, computer network and electronic means of the issuer (3rd party).

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Electronic money does not exist as a physical substance but exists invisibly through the electronic medium. They are stored on: Internet, telephone, information and other electronic payment cards. This means that users cannot hold their own money.

Besides, electronic money can be understood as a payment method through a secure signature (currency pen). Like paper money, electronic money is a tool used to transact and accumulate value. Cryptocurrencies can be converted into paper currency at the request of the owner.

Cryptocurrencies are divided into 3 types as follows:

  • Fiat Currency : An electronic currency recognized by the Government. They are stored in ATM cards, bank accounts, e-wallets, etc. Fiat money has the same value as cash.
  • Virtual money : Is electronic money issued and controlled by organizations and businesses. Virtual currency is not recognized by the Government. They only work in a virtual environment that serves certain purposes. For example: coins in the game, coins, tokens used to buy products or services on websites, e-commerce sites.
  • Cryptocurrency ( cryptocurrency ) : This is a subset of virtual currency (most notably bitcoin ). Cryptocurrencies are based on digital platforms that are not regulated by the Government. The advantage of this cash flow is high security, no intermediaries, so it is safe.

Mode of Operation

Most cryptocurrencies operate on blockchain technology. This way of working will bring about safe and convenient transactions. Each coin is understood as a file stored in a digital “wallet”. Users can access their “wallets” with smartphones or other Internet-enabled devices. Archived files are operated from person to person thanks to blockchain.

What is Blockchain?

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Blockchain (roughly translated: block chain ) is a popular cryptographic technology that helps users complete transactions in safety. When users transfer money, it is recorded by this system in a virtual public book. This is like adding small blocks to a chain. In it, each block is considered a record of a transaction. Blocks when added to the chain make it more difficult to counterfeit the cryptocurrency.

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Cryptocurrencies are not created by governments or financial institutions like the dollar or readily available like gold. They are developed on a mathematical basis. Cryptocurrencies adopt a distributed network that allows the system to transact in a p2p (peer-to-peer) manner. This means that the transaction is executed peer-to-peer without the protection of a third party. Mathematical equations are used to link the account to the actual amount spent by the owner.

When participating in cryptocurrency trading you only need to log in with an email and an anonymous one. The electronic trading platform does not require you to provide your real name or register with a bank. You can generate cryptocurrency units by the task of “mining” (hunting cryptocurrency with a computer device).

Outstanding Features

  • Widely used in countries around the world such as: European Union, Japan, Germany, Switzerland, … and famous companies such as: Apple, Microsoft, Dell, … Electronic money used for payment transactions and circulation as legal money.
  • Do not issue too much to avoid the risk of inflation.
  • High liquidity, easy to use, convenient and fast.
  • An intermediary peer-to-peer exchange medium, operating in an electronic environment on an algorithmic basis.

Advantages and disadvantages of using cryptocurrencies

Advantages

  • Transaction anytime, anywhere: allows users to receive and send quickly with unlimited amount.
  • Low Transaction Fees: Cryptocurrency transactions usually have no fees or extremely low fees.
  • Safe and secure: all transactions are done quickly and securely, not easily copied and contain sensitive customer information. In addition, limiting fraud and not depending on 3rd parties in the transaction process such as credit cards.
  • Development in the e-commerce industry: users tend to use cryptocurrencies to pay when shopping online. Therefore, in recent years, cryptocurrencies have become a development factor along with e-commerce sites.
  • Transparent information, easy tracking: due to the use of blockchain technology, all information related to cryptocurrencies is available on the blockchain. So you can verify and track cryptocurrencies easier and faster.
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Limit

  • Difficult to predict: Due to the frequent fluctuations in value of cryptocurrencies, increase/decrease frequently. This is very risky for cryptocurrency holders.
  • Some countries have not yet accepted the use of cryptocurrencies for the following 3 reasons:
  • Many people still have the habit of using their national currency.
  • Many businesses are concerned about the erratic rise/fall of cryptocurrencies.
  • Cryptocurrencies are still illegal in some countries.
  • Cryptocurrencies use mathematical equations, so some transactions often fail.
  • E-money will be lost if electronic devices have problems such as: hard drives are damaged, data is lost, data is infected with viruses, etc. At the same time, users cannot recover and find back the lost money. .
  • It is a fertile ground for hackers and money-laundering criminals to commit illegal acts.

Cryptocurrencies are “fertile ground” that brings profits to investors. Hope the above article has helped you understand more about cryptocurrencies. If you have any questions or related problems, you can contact TinoHost for answers.

Also Read: Mavie Ultron

Cryptocurrency FAQ

Are there any reputable e-commerce products today?

Currently, cryptocurrency exchanges appear more and more and develop strongly. An electronic trading platform is a space that acts like a website. Here, users can perform transactions such as buying and selling cryptocurrencies. 3 reputable and popular electronic trading platforms today:

  • Bitcoin

The leading position in the cryptocurrency market is Bitcoin. This exchange was born in 2008, Bitcoin is the first version of the cryptocurrency with a market capitalization of up to 246 billion USD.

  • Ripple

Ripple launched in 2012, using an open source distributed system. Ripple’s market capitalization stands at $146 billion. Ripple was born to help users use services: Paypal, credit cards, banks, financial institutions, …, with low cost and fast processing speed.

  • Ethereum

This is the 3rd ranked currency on the cryptocurrency exchange today. Ethereum was officially released in 2015 and owns a market capitalization of 95 billion USD.

Is cryptocurrency legal?

For countries like: USA, Japan, UK, etc. cryptocurrencies like bitcoin are legal. However, with these nascent markets, cryptocurrencies have very different regulatory status.

In Vietnam, although bitcoin is not illegal, it is only used as a form of payment instead of cash. At the same time, any problems and problems related to scams, floor crashes when using bitcoin, you will not be solved.

Are Cryptocurrency Investments a Good Long-Term Investment?

Cryptocurrencies are difficult to make sure your investment in them is good or not. Cryptocurrency investment is profitable but also very difficult because it requires thoroughness and risk.

If you decide to pursue crypto investments, you need to spend some time monitoring the movements of your coins. Above all, before investing in cryptocurrencies, you must really understand the currency you intend to invest. Those who invest in cryptocurrencies who follow the movement or do not know how to evaluate the market will easily fall into losses.

How to invest in cryptocurrencies?

There are 3 ways to invest in cryptocurrency: Trade coin, long-term investment (hold), mining cryptocurrency.

Trade coin

  • Surfing trade: This form is suitable for those who have experience in trading coins. This type of trading helps users to profit from many small trades. For example: Every day you can place 10 -15 orders, each order earns 0.1% equivalent to 1-1.5%/day.
  • Short-term trade : This form depends on the technical analysis process. Each transaction can last from several hours or several days. Example: You analyze the BT/USDT chart and see that the coin will increase by 10% in 1-2 days. Then, you just need to place an order and wait for the results.
  • Trade according to the news : This form of trading is effective or not depends on your ability to stay up to date with news. For example: You follow the news to see a coin and plan to buy or burn the coin. At this point, you can buy or sell to get the best results.

Long-term investment (hold)

This is the easiest and most popular method of investing in cryptocurrencies. Your job is to wait for the right spot and then buy and hold for a year or two. When ddtj gets the desired profit, you can sell. This form requires users to have a high degree of patience and not care about short-term fluctuations in value.

Cryptocurrency mining (coin mining)

This is also known as virtual currency mining. The “miners” are based on computer systems, with their experience they will find ways to solve algorithms on the blockchain to find “digital gold”. The difficulty of the puzzles is proportional to the number of people participating in the problem solving process.

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