Cryptocurrency / crypto / crypto-currency

Cryptocurrencies are digitally created money whose owners and the transactions conducted with the money are registered and operated by a network that includes countless individual computers.

Cryptocurrencies are mostly the former cash substitutes and independent remittance systems (such as PayPal) can be considered an evolutionary love child. The most famous of them is Bitcoin, but there are thousands of altcoins, i.e. digital currency similar to Bitcoin, in circulation today. 

Cryptocurrencies do not exist in physical form at all, but only and exclusively in virtual form, money that exists as a digital token. These means of payment are also referred to as cryptocurrencies despite the fact that a currency and the foreign exchange does not cover exactly the same concept. 

Since they are money, they can be bought on the markets like their classical counterparts, fiat money such as the dollar or the euro, so there is their exchange rate, and you can pay with them in more and more places. Of course, there are still few areas in the world today where even the corner greengrocer accepts Bitcoin or other cryptocurrencies.

As the fintech. The true characteristic of cryptocurrencies appearing as part of the revolution is that unlike traditional currencies or electronic payment solutions (e.g. bank cards), they do not have an issuer, their owner cannot be known. They do not belong to the authorities of a single country, central bank, nor under his supervision. Of course, the usual liability, guarantee, and damages rules do not apply to them either.

This is because cryptocurrencies are mathematical algorithms based, digitally created means of payment. All their characteristics (their owners and the transactions carried out) are not kept in central databases, but in a network that includes countless unique and equal computers, and the system is operated through it. 

The operating model of this network is a blockchain, which allows for easy exchange of different values and recording of transactions. The history of time-stamped, encrypted transactions is recorded and further expanded by independent and peer-to-peer computers, to which anyone can connect. All transactions are divided into units and stored in blocks of a specific size. Each block contains the address line of the previous block, which again contains a series of transactions and points to its predecessor, and so on: hence the name blockchain. This process also runs when someone pays with cryptocurrency.

This is important not only because there is no single central authority or computer that can control a cryptocurrency market by itself, but also because the computers that perform mathematical operations in the process to confirm the transactions of the cryptocurrency network and increase its security, “pay” they also receive, usually in the form of registered cryptocurrency. Therefore, the continuous issuance of cryptocurrency also takes place through this process. That's what it's called for mining.

According to the above, the issuance of cryptocurrencies, which by definition also has a significant effect on their exchange rate, can best be interpreted as a process regulated by an unknown algorithm. That's what it's all about exchange rate risks because of this, the actors and regulatory authorities of the traditional financial world generally regard these means of payment with strong skepticism. We should also pay attention to this, just in case speculative we would be thinking about buying cryptocurrency. 

The good reputation of cryptocurrencies is not improved by the increasingly frequent thefts either. Because when our cryptocurrency stored in electronic form is stolen from our hacked wallet, we have no one to turn to. There is no organization or institution that would compensate us, in contrast to the protection that our bank offers us, for example, in the event of the loss of our bank card or the theft of our bank card data.