Understanding Cryptocurrency Types, Functions And Advantages

Understanding Cryptocurrency

Cryptocurrency is a hot topic these days. The term cryptocurrency is not new, especially for Millennials and Gen Z, who are more familiar with technological developments and investments.

Cryptocurrencies are commonly known as digital currencies and can be used as digital transactions and investments.

Cryptocurrency prices and features vary widely. To learn more about this cryptocurrency, let’s discuss the definition, types, functions , characteristics , advantages and disadvantages, to tips and differences with the stock market.

Understanding Cryptocurrency

Launching from Investopedia, cryptocurrency or crypto currency is a digital or virtual currency that is guaranteed by cryptography. With cryptography, this digital currency becomes almost impossible to counterfeit.

Records of all transactions are stored on the blockchain. The Blockchain is widely distributed between one computer and another and is connected in a widespread network, so it is not centralized in one place, otherwise known as decentralization.

Simply put, crypto is a digital currency that can be used to make transactions between users without the need to pass through a third party.

In addition to using virtual currencies as a trading tool, many users use virtual currencies as a means of investment. This is due to fluctuations in the value of virtual currencies.

Again, the law of supply and demand applies. This means that the more people invest in cryptocurrency, the more valuable it is worth. In Indonesia, itself, crypto assets classified as digital gold have gained legality through the Commodity Trade Supervision Agency (Bappebti).

After we have heard the word crypto / blockchain, of course it will be a little confused with the new words. You can read a book called “Why? Cryptocurrency & Blockchain” this book makes it easy for beginners to learn crypto from scratch with words that are very easy to understand.

Types of Cryptocurrency

Many of you are probably familiar with Bitcoin. Yes, the popular cryptocurrency today is one of the thousands of cryptocurrencies circulating in the community.

More than 2,200 cryptocurrencies and all of these are available for purchase, and the high interest in these currencies is the reason why cryptocurrencies are growing in popularity. Here are some frequently used cryptocurrencies.

  1. Bitcoin (BTC)

The oldest and most popular Cryptocurrency is Bitcoin. In fact, many people knew the name Bitcoin before the virtual currency. This digital currency was first introduced by Satoshi Nakamoto in 2009.

Since it first appeared, Bitcoin has become the currency of choice for many people because it can be easily exchanged for fiat currencies such as Rupiah and Dollar.

In addition, the transaction fees offered are relatively low and many e-commerce companies accept this currency as an economic medium of exchange.

  1. Litecoin (LTC)

This type is a hot topic besides Bitcoin. Without diminishing, the number of LTC currently circulating in the virtual market has increased by approximately 84 million. This proves that people are happy with Litecoin’s performance. Introduced by Charlie Lee in 2011,

Litecoin is actually a derivative of Bitcoin Core QT.

In other words, this currency is an “extended”version of Bitcoin. There are some differences with Litecoin. It’s cheap, fast, and convenient.

  1. Ethereum

In 2013, a 19-year-old Russian developer named Vitalik Buterin started developing Ethereum. Two years later, in 2015, Ethereum officially entered the crypto market as a digital currency.

Ethereum is very popular among the general public because it is relatively easy and fast to withdraw. In addition, Ethereum also has a great feature called smart contracts. This feature is a contract that protects both the seller and the buyer. These characteristics make Ethereum more flexible and allow it to be used outside of its function as a cryptocurrency.

  1. Dogecoin

Dogecoin was created by Billy Markus. The original intention was a joke, inspired by the famous meme Doge. However, Dogecoin has managed to attract the attention of many investors.

Combined with support from Elon Musk, who accepts payments for some Tesla products in Dogecoin. The price of Bitcoin is Rp 331,711,190.88 per coin, Ethereum is Rp 17,901,675. 79 per coin,Litecoin is Rp 651,651. 70 per coin and Dogecoin is Rp. 827.22 per coin.

Function of Cryptocurrency or Digital currency

As a legal means of exchange, cryptocurrencies have several features that are common or commonly used today. Here are some cryptocurrency functions you need to know.

  1. Purchase of goods or services

The first function of digital currency, of course, is a means of payment for the purchase of goods or services. So far, many stores and places of purchase, such as Overstock and Newegg, have imposed or accepted this digital currency as payment for the goods and services they sell.

In addition, this digital currency can also be used in various restaurants, hotels, travel applications and even today there are already universities that accept this digital currency as a means of payment.

However, not all types of digital currencies are accepted. So far, only Bitcoin is accepted for doing all this.

  1. As a form of investment

The second function of digital currencies is as a means of investment or form of investment. This form of digital money investment is almost the same as a typical investment that you can buy if it is cheap enough. After the price rises, it can be resold.

This digital currency is a fairly risky form of investment. At the beginning of its appearance, many people became rich by investing in this digital money while enjoying rising prices in the market. However, this form of digital investment is not as fast as it was a few years ago.

  1. Mining

The next function of digital currency is mining. Mining is a term that is based on the activity of “mining” to obtain the value of this digital currency. The term refers to the activity of solving cryptocurrency puzzles to improve cryptocurrency assets.

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