Cryptocurrency: basic principles and features of earnings

Most people who have used electronic payment systems at least once have heard of this type of virtual money, like cryptocurrency. At the same time, not everyone can explain the principles of operation of this digital asset and, moreover, earn with its help. However, given the high popularity of using cryptocurrency – that it is in simple words that every Internet user who uses the network not only for entertainment, but also for earnings, should know.

Payment History

The first ideas about creating a completely new principle of e-currency accounting appeared in 1992 with the ex-employee of Intel Timothy May. He and a few like-minded people wanted to create a completely anonymous means of payment, thanks to which it would be possible to avoid state participation in any financial transactions. In 1998, another group of activists put forward a proposal to create a free monetary system free of taxes (See  Billionaires will not pay taxes ). At about the same time, the concept of BitGold appeared, which could outrun the emergence of Bitcoin, however, due to a number of problems, it was introduced only in 2014.

In fact, Bitcoin became the first popular cryptocurrency. The launch of the payment system took place in 2009. At the same time, one of its main creators, Satoshi Nakamoto, has not participated in the project for several years. Although it owns about a million bitcoins, which is equivalent to more than a billion US dollars for 2017.

Work principles

The main principle of making money and making financial transactions using cryptocurrency is the lack of a centralized system for storing foreign exchange reserves. The evidence of the presence of a certain amount of means of payment by the user of such a system is a special account – the blockchain. And the electronic money itself is stored in the wallets of their owners, who make the exchange between themselves. Instead of the usual monetary units provided by the gross national product of specific states or gold, the cryptocurrency consists of several entries:

  • sender’s addresses;
  • remittance amounts;
  • addresses of the recipient of cryptocurrency.

Confirmation of an application for transfer of a virtual payment means is carried out using a special cipher key, which only the owner of the electronic wallet knows about. Codes can be stored on any carrier, including hard drives, flash drives and even virtual wallets, in the form of a file wallet.dat. And to perform the operation, the owner of the cryptocurrency is enough to use a pair of keys – private, the size of which is equal to 256 bits, and 512-bit open.

Popular old and new virtual cryptocurrency 2017

new cryptocurrency 2017

The number of cryptocurrencies today has almost reached hundreds. And the most popular among them are:

  1. Bitcoin (BTC) , the most common cryptocurrency, which costs up to $ 1200. Capitalization of the currency is about $ 20 billion;
  2. Ethereum (ETH) . The popularity of cryptocurrency increased after the permission of the owner of the payment system, the trading and investment network eToro, to trade on the stock exchange ETH / USD. The cost of one ethereum is now about $ 32;
  3. Dash (DSH) is a relatively new project, the capitalization of which reaches $ 7111 million. The price of cryptocurrency is about $ 100;
  4. Monero (XMR) is a system included in the TOP-5 of virtual money systems due to the high level of security and anonymity of the operations performed. Price currency – $ 18.

The fifth most popular cryptocurrency can be called Ripple (XRP) . The principle of operation of this means of payment is based on trust between users and a high rate of exchange. To perform the operation, just one click. The unit price is about 0.6 cents.

Cryptocurrency mining rules 2017

cryptocurrency mining

The process of obtaining a cryptocurrency participant in the system is called mining. It is based on the existence of an electronic journal that stores information about all transactions in the corresponding system. Data on transfers get to users who must choose a combination that opens access to cryptocurrency.

Thus, for the Bitcoin system, each participant (miner) can receive up to 25 bitcoins in each block using a secret key. But, since the struggle for access is conducted simultaneously by several users, the whole amount is divided between them. The process of obtaining cryptocurrency takes place on the computers of miners without the use of centralized servers.

Pros and cons of the system

The advantages of using cryptocurrency include:

  • the openness of the code, which allows you to start creating virtual coins to any Internet user (see How to make money online );
  • the anonymity of all transactions and the lack of control over transfers by banks, governments or other entities;
  • minimal inflation. On average, most of the cryptocurrency since its release has only increased in price;
  • security of information that cannot be copied or stolen.

However, cryptocurrencies have certain disadvantages. These include the lack of guarantees and a high level of exchange rate variability. In addition, in some countries, operations with cryptocurrency are officially prohibited. And the profit from mining, large enough when new means of payment appear, decreases with time.

Features of earnings

There are three ways to make money using cryptocurrency:

  1. Mining, that is, the use of the power of your computer to determine the secret code and create new virtual money. In this case, you can use someone else’s computing equipment. Such a system is called cloud mining and implies the rental of more powerful computing equipment to increase the speed of obtaining cryptocurrency;
  2. Earnings on the stock exchange, involving the conversion of virtual currency into real money;
  3. Bitcoin taps – getting cryptocurrencies for viewing ads or introducing a specific code (captcha).

The last option is passive – that is, it does not require additional actions by the user. However, the amount received with its help, an order of magnitude lower. Therefore, bitcoin cranes should be used only as additional income .

Use of cryptocurrency in Russia

Interest in e-money earned through mining has recently grown among domestic Internet users. At the same time, some Russian payment systems began developing their own cryptocurrencies. To buy or sell a cryptocurrency, you can use a reliable and proven exchange service Bankcomat. Although the legislation of the Russian Federation today prohibits the use of bitcoins and other virtual means of payment for goods and services.

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