How does Cryptocurrency work? Should you really invest in Crypto?

What is Cryptocurrency?

Cryptocurrencies are digital currencies with no physical form. Neither a coin nor a bill. There is an innovative idea of Decentralization behind these currencies.

All the currencies around the world are regulated by the government. There is an authority that controls those currencies like the RBI of India. Cryptocurrencies work on the opposite idea, i.e., having no authority or a centralized power.

This is why more people are inclining towards investing in cryptocurrencies. You can use these to grow your money, make online purchases, regulate online transactions, etc. If you worry about the security of your wallet and transactions, then rest assured.

Cryptocurrencies are secured by cryptography and are nearly impossible to be counterfeited.

How does Cryptocurrency work?

As I mentioned, cryptocurrencies are not controlled by a central authority. Since these are decentralized, cryptos run through computers and servers. The exchange happens via peer-to-peer servers where no middleman is required.

This makes a cryptocurrency utterly void of any authority. Neither any bank nor any government has the power to impact its circulation of value. However, a government can ban its usage across the country. You know what I mean, dont you?

However, coming back to the topic - Cryptocurrency works on a distributed ledger which we call Blockchain. This ledger stores all the information regarding transactions, holders, etc.

The cryptocurrency we use are available in units that are specifically mined. Powerful computers that do powerful mathematical calculations generate these coin units. But, as retail users or buyers, we don't need to mine crypto. We can easily buy, sell, and hold crypto coins from brokers.

What makes Cryptocurrency different?

To understand why cryptocurrency is so unique and revolutionary, we need to understand two terms that form the core of it -

• Blockchain Technology
• Cryptography

1. Blockchain Technology
Blockchain, in simple words, is a database or say, a ledger that stores all the information of cryptocurrencies. Well, not only database, this technology is the very core of crypto.

Cryptocurrency itself is built on the blockchain. Blockchain consists of 'blocks' (blocks of data) and 'chain' (blocks linked together). Hence, blockchain consists of numerous blocks which are connected through chains and the data is scattered among them.

2. Cryptography
Blockchain is known for its top-notch security and Cryptography is what makes it secure. Hashes (the cryptographic codes) link the blocks together. These hashes act as a high-security password which make the blocks impossible to hack and play with.
It is very-very-rare to listen a news stating - Blockchain based utility hacked! Have you heard of such news?

Why should you invest in Cryptocurrency?

Crypto is one of the newest and most popular investment options. Not to forget the returns it generates. People have become millionaires in a year or two. That too by just investing in cryptocurrency.

Also, we all know that ones portfolio must be diversified with all kinds of investment options. Never put all your eggs in a basket, as they say. Hence, it is logical & rational to include one or more cryptocurrencies in your portfolio.

If you are searching for a few specific points of why you should invest in cryptocurrency, hear them out

Crypto is an excellent long-term investment: Not all, but the few established ones like Bitcoin, Ethereum, Solana, etc. The way these touch new heights every now & then, your $1000 might become a million in only 5-10 years.

24*7 open market: Unlike the stock market, cryptocurrency markets are open every day, every minute. You wont have to sit idle Saturday and Sunday.

Decentralized: No authority owns your crypto; neither can someone monopolize its value & circulation. The investors have the sole authority of taking a crypto east or west.