Cryptocurrency, or “crypto”, has been around for a while. Although it’s popularity is slowly on the rise 📈, there are many who still don’t completely understand blockchain and what it offers. What exactly is it❔ How does it work❔ Is it secure❔
In this article, we’ll answer all of these questions, plus a few more, and give you a basic understanding of what exactly crypto is.
❓ WHAT IS CRYPTOCURRENCY?
Decentralized means that the crypto isn’t issued by a central government or bank authority the way fiat currency 💵 is. Instead, cryptocurrency is created, exchanged 💫 and overseen by a distributed peer-to-peer network 🖧.
📱 As crypto is digital, it isn’t pegged to a fiat currency like USD or HKD, nor is it determined by a precious metal like gold.
💻 Cryptography is the mathematical technique used to secure each unit of cryptocurrency and ensures it can’t be copied.
Most crypto exists on a blockchain platform (see below for more info on blockchain tech).
❓ HOW DOES CRYPTOCURRENCY WORK?
While there are thousands of cryptocurrencies, many are designed to provide some kind of new feature or function on a given blockchain platform. In a secure peer-to-peer network, users can trade or transfer value globally 🌐 and almost instantly, 24/7 ⏲️. It does this without the need for a middleman like a bank 🏦 or payment processor 💱.
📈 Complete list of cryptocurrencies
Below, you can find all of the major cryptocurrencies listed by market capitalization.
❓ WHAT IS BLOCKCHAIN TECHNOLOGY?
👉 Blockchains can be used to track or record almost any type of asset, from goods and services to patents, smart contracts, and more. It’s transparent, meaning the transactions on a public blockchain are accessible to anyone. Unlike a physical system of record keeping, the record of transactions is designed to be permanent and immutable.
This use of blockchain tech began in 2009 with the development of Bitcoin (the “granddaddy” first generation cryptocurrency that started it all). Blockchain tech is evolving rapidly and a number of different industries are exploring its potential applications.
❓ WHY IS IT CALLED “BLOCKCHAIN”?
🗄️⛓️🗄️ A blockchain is theoretically unchangeable because it’s system is built from blocks 🗄️ of data that are chained ⛓️ together in chronological order (hence the name “blockchain”).
👀 All transactions are visible to everyone on the network. Blockchain technology relies on cryptography to secure these transactions and, in the case of many types of crypto, to mine coins and tokens (see below for more info on crypto mining).
❓ HOW IS BLOCKCHAIN SECURE?
🔒 Blockchains, and the cryptocurrencies they support, are considered secure because they employ a “trustless” system for the verification of transactions. Blockchains run on a decentralized network of computers, called nodes 🖧.
This is achieved through a form of consensus confirmation called peer-to-peer, that drives faster and more secure transactions.
👉 This distributed and self-governing nature of a blockchain makes instances of fraud and duplication difficult.
❓ HOW DOES CRYPTO MINING WORK?
⛏️ Crypto mining is the highly competitive method where crypto miners use specialized computer hardware systems 🖥️ to conduct complex, mathematical cryptography which confirms each transaction on a blockchain. This particular process is called “proof of work” (PoW), and requires miners to complete billions of calculations in order to verify a block of transactions.
🔌📈 PoW crypto mining is very energy intensive. There are concerns that the types of crypto that rely on this method may be harmful to the environment 🌎. Consequently, another consensus mechanism which many cryptos are beginning to adopt (such as Ethereum) is “proof of stake” (PoS). It is a greener, less energy-intensive option that requires validators to simply hold and stake tokens.
❓ HOW DOES BLOOM WORK WITH CRYPTO?
🦉 All you need to do is download the Bloom app, register an account, link your Visa card and shop anywhere using your credit or debit card.
👉 You will earn Bloom Coins by simply using your Visa card 💳. The more you use your card, the more Bloom Coins you will earn.
💰 The Bloom Coins you earn can be spent within the app 🎁 and converted into cryptocurrency!
The information provided on this website does not constitute investment advice, financial advice, trading advice, or any other sort of advice and you should not treat any of the website's content as such. Bloom does not recommend that any cryptocurrency or NFTs should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions.