Cryptocurrency is a means of payment that exists only on the internet. It has no paper form and its value is independent of the state.

Usually, to transfer money from one person to another, you need an intermediary - a bank. Cryptocurrency is different: the bank is not involved in the exchange. Cryptocurrency is built on a blockchain system, a chain of blocks of information. They are used to transfer digital money from person to person without an intermediary.

The first digital coin, bitcoin, appeared in 2009 and since then, the number of cryptocurrencies has grown.

We tell you how a cryptocurrency, or blockchain is structured, what its price depends on, how to get it, and how to use it at the source.

What is blockchain?

Blockchain is a way of storing information on a chain. Transaction records of participants in the network are encrypted, distributed to other participants, and formed into linked blocks. If someone tries to make changes to obtain currency in an unfair way, such as rewriting an existing transaction or creating a new one without the consent of the other participants, the system will compare this information with other databases and block the transaction.

It is like having your branch of the bank on your computer.

For the transactions to work, you need to keep the network up and running - the miners do that. They give the system their processing power to produce new blocks and coins and receive a percentage of the transactions. It is up to the blockchain creator to determine how many resources a miner must provide to be rewarded. All participants in the cryptocurrency issue are given equal rights and opportunities.

The developers put a limit on the issuance of cryptocurrency in the system - for example, only 21 million bitcoins can be produced.

Forms of cryptocurrency
Digital currency is divided into coins and tokens.

Coin. This is the monetary unit of a cryptocurrency that runs on its blockchain. It can be mined by mining - providing the system with the computing power of your computer. Coins can be transferred to other blockchain users and sold for regular currency. Some companies accept them as payment for goods and services. For example, Microsoft sells its Windows operating system and Xbox game console for bitcoins.

Some coins run on a rewritten bitcoin blockchain. They are called altcoins - alternative versions of bitcoin.

Token. This cryptocurrency monetary unit is created from an existing blockchain. They cannot be mined but can be bought or received for the activity. Tokens cannot even in theory be paid for; they are used to give the user access to the functions of the platform. If a coin is a note, a token is a ticket. But if you put a token on an exchange, it can be exchanged for regular money at the current exchange rate.

Tokens can be used as an investment tool and proof of business rights, and they can be used to participate in votes or surveys.

Tokens have more features, but tokens are more valuable to investors: they are more difficult to create.