Frequently Used Cryptocurrency Concepts
The global market has witnessed the impact of cryptocurrencies in recent years. Cryptocurrencies are slowly capturing the financial markets and growing faster than expected. Investors are learning new methods of using and earning Cryptocurrencies. With advanced technology, it is getting easier day by day to trade these currencies for other financial assets. The highly efficient trading bots like the Crypto CFD Trader are helping investors gain better results. Refer this post for more information on Crypto CFD Trader.
In this article, we will elaborate few frequently used cryptocurrency related concepts that will help us understand these new currencies better.
1) Adaptive Scaling: The cryptocurrencies are designed to work in large as well as small scales. This is known as Adaptive Scaling of cryptocurrencies. To ensure the cryptocurrencies work in adaptive scaling they use the different measures as limiting the supply or crypto coins over the time or lessening the rewards the miners get by mining the crypto coins.
2) Cryptography: The encryption method used to secure the cryptocurrency transaction and keep the users anonymous is known as Cryptography. Cryptography is a very important concept in cryptocurrency as the aim of cryptocurrency is to provide secure transactions.
3) Decentralized: Almost all of the other currencies apart from the cryptocurrencies are controlled by a centralized authority. Cryptocurrencies, on the other hand, are completely independent of any third party like banks or the governments. The cryptocurrency transactions are not controlled by any of these institutions and hence are becoming popular amongst the investors.
4) Digital: The traditional currencies like the Dollars or Euros are physical objects, like the banknotes or coins. The cryptocurrencies, on the other hand, are digital objects. The cryptocurrencies, therefore, are also known are Digital currencies as they are stored in Digital wallets and exchanged or transferred digitally over the internet.
5) Open Source: Cryptocurrencies are open source meaning the developers can design API’s without joining any network or paying any transaction fee to anyone. Open Source means anyone can use it.
6) Proof-of-work: Most of the cryptocurrencies make use of the thought Proof-of-work. A proof-of-work system utilizes a difficult to compute but simple to verify puzzle to restrict the cryptocurrency exploitation during mining. It is much similar to solving a difficult “captcha” requiring lost of computing power. There are other systems like proof-of-stake that can also be used.
7) Pseudonymity: The cryptocurrency owners store their digital coins into a digital wallet that is encrypted. The coin owner’s identification is an encrypted address that they can control. It is not linked to any person’s identity. Hence the connection between the owner and his coins is pseudonymous instead of anonymous. The ledgers are open to everyone and thus they can be used to gather information about the users of the network.