How cryptocurrency works

Bitcoin, Ethereum, LiteCoin and etc. are the topics that have attracted a lot of attention in recent times. The crypto investment market is becoming more active than ever. The post will introduce how cryptocurrency works

What is a cryptocurrency?

Cryptocurrency is digital money, that is, money in the form of digital bits. Cryptocurrencies are only used in the electronic environment serving electronic payments through information systems including computer networks, Internet and electronic means stored in the database of the issuer (3rd party). This means, you can't handle it and can only be used on electronic media.

Cryptocurrencies are represented in the form of a monetary pen (a form of currency used by recording in the Bank's accounting books) on an account that the customer (buyer) opens at the issuer.

Or it can be understood that electronic money is a means of payment that is secured with a digital signature. Like paper money it functions as a means of exchange and accumulation of value.

If the value of paper money is guaranteed by the issuing government, then for electronic money, its value is guaranteed by the issuer by committing to convert electronic money into paper money as required by the owner.

How cryptocurrency works

When participating in cryptocurrency trading, you do not need to use your real name, nor do you have to register at any bank. What you need when you join crypto exchanges is an email and a self-set password.

Cryptocurrencies run on a public ledger called Blockchain - a table that records all the transactions that take place, is constantly updated and cannot be changed.

You will probably also hear about the term "mining" and this is how cryptocurrency units are created. Specifically, this is a process of processing and confirmation quickly on the electronic money network, or simply using a computer to hunt for the highest value cryptocurrency.

Investors will have to buy cryptocurrencies through exchanges, also known as brokerage firms, and store them on these platforms in exchange for other investors. To be able to buy cryptocurrencies, it is imperative that you use crypto wallets from exchanges.

Pros - Cons of cryptocurrencies


      Cryptocurrencies are generally considered a scientific and technological advancement in the monetary and financial field. Therefore, it has certain advantages compared to the current circulating paper currency in the market:

      Convenience in transactions: If you deposit money at banks, you may be limited to transfer, withdraw money in 1 day, with electronic money, you have the freedom to trade regardless of space, time.

      Cryptocurrencies cannot be counterfeited: Because they do not exist in physical form, and each cryptocurrency exists under a single sequence of encrypted bits on the Internet.

      High security, no identity revealed when transactions anonymously

      Very low transaction costs.

      Profitability is very high, especially for small value coins

      Safety and environmental protection.

      Has the potential to develop e-commerce.


Besides the advantages mentioned above, there are still some disadvantages to cryptocurrencies. This causes many difficulties for users such as:

      Using is not too easy: For those who are used to using technology, this problem is not too difficult. But for those who have little chance of exposure to technology, creating a cryptocurrency wallet and managing it is quite difficult. Not being careful is also deceived easily.

      Cryptocurrency prices often fluctuate up and down, which is difficult to predict. This is similar to the stock market ups and downs. Traders are at risk of losing or losing capital if they do not regularly monitor fluctuations.

      As a place for money laundering criminals: Perhaps this is the biggest downside. For the same reason, there are countries that don't yet accept coins as legal tender.

      Hackers are now the primary target of hackers and are also associated with other illegal activities

      Investing easily leads to financial bubbles on the Internet

Should we invest in cryptocurrency?

It is difficult to say whether to invest in cryptocurrencies at the moment or not, especially Bitcoin because the latter cryptocurrencies receiving more investment and preparation have surpassed Bitcoin.

If you have a small or medium amount of money, you can invest in a currency that has a low market value but is more profitable and faster than a coin of great value.

However, cryptocurrency is not an ideal choice for busy people because the price of money is constantly fluctuating. Without regular monitoring, profitability is very low, even losing quickly.


You SHOULD invest only when you have time to watch continuously because the volatility of cryptocurrencies is huge and you need to really understand the currency you invest.

You SHOULD NOT invest in a movement without fully understanding what cryptocurrency is and how to evaluate the market, because the risk of loss is very high if you do not really understand the currency you invest and know. seize the right opportunity.

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