And I mean LITERALLY explain like I’m 5, I literally know nothing of the technical terms and such
In: Economics
Cryptocurrency is basically a digital record of who owns how much. You “own” it by having the key (password) that allows you to send it to someone else.
People make money by investing in it simply because of supply and demand, just like any other asset. If I buy a gold ingot today and tomorrow its value becomes greater (due to increased demand or lower supply), I can sell it tomorrow for a profit.
Another way to make money with cryptocurrency is by “mining it”, which means lending some of your computer (today, specialized mining computer) power to the cryptocurrency network. This is how cryptocurrencies work—they are distributed networks that use lots of computers working together to create a secure record of who owns how much cryptocurrency. Miners’ computers guess at a solution (basically how to properly order transactions) until they solve it. The reward for a solution is a predetermined amount of the cryptocurrency, which can then be sold.
Other cryptocurrencies have slightly different technologies as well, but mining is the original, created with Bitcoin.
Here’s a good ELI5 description: https://www.eli5base.com/topic/?title=Bitcoin
Latest Answers