How does cryptocurrencies function?

A prerequisite for the functioning of a cryptocurrency is the consensus of all those involved in the network on the legality and correctness of balances and transactions. If there were differences between two nodes on the network in just a single account balance, the system would collapse. However, Best cardano dex have some there are rules in the network that should prevent this through appropriate programming.

Cryptocurrencies are not considered legal tender in some countries. In the form in which they exist today, they are not yet a serious currency. Bitcoin is also not particularly suitable as a medium of exchange due to its high volatility, among other things. While you can buy a condominium for a Bitcoin today, tomorrow it will only be a small car.

Still, the crypto trend seems to be heading in that direction. The reason for this could be analyst forecasts from JP Morgan, who estimate the possible future value at up to 146,000 US dollars. Many experts also believe that the intensity of fluctuations will decrease with increasing market maturity.

There are now some well-known companies that accept Bitcoin as a means of payment. In addition to Amazon, PayPal has also been accepting Bitcoin payments since January 2021. Visa and Mastercard have announced that they will be expanding their platform to include payments in cryptocurrencies. But they want to limit their offer to so-called “stable coins”. These are linked to a currency or a commodity such as gold and accordingly fluctuate less. With increasingly easier processing by well-known and renowned payment service providers, the acceptance of crypto currencies as a means of payment is likely to increase significantly in the future.

The fight for the monopoly of money has begun

Facebook wants to introduce its own digital currency, which can be sent via WhatsApp and counted as global money. Central banks are resisting the competition and do not want to give up their currency monopoly. Probably that they will succeed in doing this in cooperation with the governments – at least in industrialized countries. In emerging and developing countries, the hurdles are not so high, so the introduction and acceptance of digital currencies is more likely. In the race for power, numerous central banks are working on their own digital currency. The Chinese government announced that it wanted to be the first country with its own digital central bank currency. The “electronic yuan” CBDC (“Central Bank Digital Currency”) is already being tested in several cities and on an online platform.

This is how cryptocurrencies work

Cryptocurrencies do not exist in the form of coins or bills. They only exist virtually. They work on the basis of blockchain technology, a form of data processing and storage in which blocks of data records are continuously strung together. This creates a steadily growing block chain. Each data record is clearly identifiable and provided with a time stamp.