On this episode of Getting Rich, Carmen Perez breaks down the components of cryptocurrency.
CARMEN PEREZ: Confused about cryptocurrency? You’re not alone. Hi, everyone. I’m Carmen Perez. And in this episode of Getting Rich, we’re going to break down what exactly cryptocurrency is. From Bitcoin to Dogecoin, cryptocurrency is on fire. But what is it? And how does it work? At the most basic level, cryptocurrency is a completely online form of digital currency regulated by users.
Now, the main difference between money and crypto is that the value of cryptocurrencies are not regulated by the government. But instead, a network of volunteers regulate the value by using a shared database called a blockchain. A blockchain is the record of every single transaction within a cryptocurrency, such as Bitcoin. Records of these transactions are stored and grouped together in blocks. The data stored in these blocks are protected with complex puzzles called cryptograms.
Before a block can be added to the blockchain, a user has to solve the cryptography. And this is called mining. The thing is solving a cryptogram is not easy. And it requires a pretty powerful computer. But the incentive is the miner who validates the block of transaction first gets rewarded with a cryptocurrency transaction fee. While crypto is complicated, it’s definitely a very interesting and viable investment. Always remember, crypto is highly volatile and really risky. So proceed with caution.