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What Is A Cryptocurrency ?
To make it simple, cryptocurrency is a digital version of money where the transactions are done online. A cryptocurrency is a medium of exchange just like your normal everyday currency such as the USD, but designed for the purpose of exchanging digital information through a process known as cryptography.
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The Invention Of Bitcoin
The first ever-successful cryptocurrency emerged from the invention of Bitcoin, by Satoshi Nakamoto. This was then followed by the birth of other types of crytocurrencies competing against Bitcoin.
How Do CryptoCurrencies Work ?
Blockchain
The reason why cryptocurrenciesare such in demand right now is because Satoshi Nakamoto successfully found a way to build a decentralized digital cash system.
The Problem With A Centralized Network
Centralized
in a payment system is the so called “double spending”. Double spending happens when one entity spends the same amount twice. For instance, when you purchase things online, you have to incur for unnecessary and expensive transaction fees. Usually, this is done by a central server that keeps track of your balances.
What Is A Decentralized Cash System ?
DeCentralized
A decentralized system means the network is powered by its users without having any third party, central authority or middleman controlling it. Not the central bank or the government has power over this system.
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How Are The Cryptocurrencies Value Determined ?
The value of cryptocurrencies are dependent on the market, where the prices of various cryptocurrencies vary a lot and is one of the most fluctuating and volatile markets to date. The price of cryptocurrencies like any other products is dependent on demand and supply. If more people demands a particular currency and it is short in supply, then the value increases. More units are mined by miners to balance the flow. However, most currencies limit the supply of their tokens.
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