What Is Cryptocurrency? A Simple Explanation, Why It’s Needed, and How It Differs from Regular Money
However, many still don’t understand what they are and how they work. In this article, the Bitmore team will simply and accessibly explain:
- What is cryptocurrency?
- Why do we need it, and how is it better than regular money?
- Where do you store crypto, and how do you use it?
If you’re curious about transaction speed, anonymity, usability principles, or security, we suggest checking our other materials. But first, let’s tackle the basics of cryptocurrency.
What Is Cryptocurrency and How Does It Work
Definition
Cryptocurrency is a digital (virtual) form of money that only exists online and has no physical notes or coins. Its main distinction is decentralization: there’s no single bank or country controlling it. Instead, all transactions and confirmations happen through a worldwide network of computers.
Blockchain Technology
The foundation of cryptocurrency is the blockchain (chain of blocks), where every transaction is recorded in a “block” of data. These blocks are linked together and verified by thousands (sometimes millions) of network participants. The blockchain acts as a public ledger, accessible to all but impossible to alter retroactively (without an enormous computational effort).
Examples of Cryptocurrencies
- Bitcoin (BTC) – the first and most famous cryptocurrency, launched in 2009.
- Ethereum (ETH) – a platform for smart contracts and decentralized applications.
- USDT (Tether) – a stablecoin pegged to the US dollar (1 USDT ≈ 1 USD).
Bitmore focuses on well-known and trustworthy assets (BTC, ETH, USDT), not dealing with questionable “altcoins” or sanctioned jurisdictions.
Why Crypto Is Needed and How It Differs from Regular Money
Independence from Banks
Fiat currencies usually come from governments and are controlled by banks. Cryptocurrency, however, functions without a central authority, offering:
- Faster transfers (24/7, no weekends).
- Lower fees (especially for international payments).
- Easy access (just a phone or computer with internet).
High Volatility
Crypto prices can fluctuate sharply, attracting traders and investors seeking to profit from these movements – but also implying risk. Stablecoins like USDT address this by maintaining a stable value (1:1 to the dollar).
Storage and Smart Contracts
Cryptocurrencies are stored in wallets (software or hardware). Some, like Ethereum, allow “smart contracts” – self-executing agreements without intermediaries.
Where Cryptocurrency Is Stored
Unlike physical cash, crypto only exists in digital wallets, which may be:
- Software wallets (on your computer or phone).
- Online wallets (websites that hold your keys – you must trust the platform).
- Hardware wallets (physical devices resembling a USB stick – the safest for long-term storage).
To buy or sell crypto, you need to have a wallet and be able to transfer funds using the correct address. Bitmore helps clients quickly exchange crypto for fiat (USD, EUR, GBP) minus the hassle.
How to Use Cryptocurrency in Real Life
- Investing and Trading: many buy BTC or ETH hoping the price will rise for profit.
- International Remittances: sending money abroad can be faster and sometimes cheaper than using a bank.
- Paying for Goods and Services: some businesses already accept crypto, convenient when fiat is unavailable or expensive.
But remember volatility. If you need to exchange crypto for cash or vice versa, Bitmore ensures ease of use, anonymity, speed, and transparent conditions for quick, safe deals.
Tips for Beginners
- Study the basics: understand the differences among BTC, ETH, USDT.
- Avoid risking large sums until you grasp the fundamentals.
- Choose a reliable exchange like Bitmore, with no hidden fees or shady altcoins.
- Secure your wallet: store big amounts in tested solutions, not random websites.
- Watch the market: prices fluctuate, so follow the trends.
Conclusion
Cryptocurrency isn’t just some complex magic for IT “gurus,” but a new form of digital money, providing freedom, speed, and independence from banks. It’s used for fast international transfers, investment opportunities, or even payments where fiat isn’t accessible or optimal. However, keep volatility in mind and approach it responsibly.
If you want to simply and safely buy or sell BTC, ETH, or USDT (TRC20, ERC20), try Bitmore. We offer transparent conditions, minimal formality, and handle transactions in 35+ cities. Subscribe to our Telegram and Instagram for interesting news: exchange rates, advice, and market updates!