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What is cryptocurrency? How does crypto work?

cryptocurrency how does crypto work
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Cryptocurrency has become a mainstream buzzword in recent years, but making sense of digital money and how crypto works can still seem complicated for many.

In this guide, we will explore the basics of cryptocurrency and walk through different types, focusing specifically on stablecoins. By the end, you'll have a strong understanding of this emerging financial space and how stablecoins offer a gateway to the crypto world.

At its core, cryptocurrency is a digital form of money secured through cryptography. It allows peer-to-peer transactions without the need for an intermediary like a bank. Cryptocurrencies use blockchain technology, a distributed ledger that records all transactions in a transparent way.

Blockchain works by linking transaction "blocks" together in chronological order using cryptography, making the record immutable. This builds trust without the oversight of a centralized authority. But first, let’s explore why cryptocurrencies were created!

How are cryptocurrencies created?

Cryptocurrencies are the new types of money in the digital ecosystem. They provide more benefits than traditional fiat currencies, especially for payments and exchanges, with the power of blockchain technology, and therefore, they are promising the future of money.

Most major cryptocurrencies, like Bitcoin, are generated through "crypto mining," where high-powered computers compete to solve complex algorithms and verify transactions. As a reward, miners receive new cryptocurrency. This rewards network participants and introduces currency into circulation.

The difficulty of the puzzles is designed to limit the release of new coins and regulate supply. A maximum number of coins is set for each cryptocurrency, and miners help distribute this over time as the network grows in usage. This keeps the system working smoothly.

Cryptocurrency vs. traditional fiat currency

Central banks are in charge of regulating traditional fiat currencies like the US dollar. Despite not having a physical backing by nature, governments declare them to be legal tender, giving them value. In contrast, cryptocurrencies operate independently without central control.

Their value comes from market forces of supply and demand rather than government decree. As blockchains allow for censorship-resistant transactions, cryptocurrency offers users autonomy over their money in a way not seen before.

Additionally, they offer major benefits in global payments, e-commerce payments, crypto batch payments, cross-border payments, and cryptocurrency exchanges compared to fiat currencies, as they do not need central authority with the decentralized finance solutions.

What are the advantages of cryptocurrency?

Here are the benefits of cryptocurrencies:


No single entity controls the network, making it censorship-resistant.


All transactions are recorded on the public blockchain, giving users more oversight.


Anyone with an internet connection can send funds anywhere globally. This is especially impactful for the unbanked and those underserved by institutions.


Cryptography and consensus mechanism rules secure transfers and prevent counterfeiting. When handled properly, cryptocurrency thefts remain low compared to traditional currency losses.


Transactions can settle nearly instantly, bypassing the waiting periods of traditional wire transfers. This improves liquidity.

Limited inflation

Most types of cryptocurrencies have capped or predictable supplies that are inflation-resistant compared to fiat currencies subject to monetary policy changes.

what is cryptocurrency

Is cryptocurrency safe?

When stored securely with recommended best practices, cryptocurrency can be as safe, if not safer, than holding money in a bank. The risks come down to individual security hygiene.

Private keys, passwords, or recovery phrases should be kept strictly confidential. Malware and phishing scams pose threats if unsuspecting users compromise digital safety. If you want to learn more, you can check out “Secure Your Crypto Assets."

Additionally, as a crypto wallet, hardware wallets that isolate private keys offer heightened protection against hacking or data breaches when compared to software or exchange storage. Overall safety improves as networks mature and user education progresses over time.

How do I store cryptocurrency?

There are types of crypto wallets that offer secure options to store cryptocurrency. These include software wallets, hardware wallets, paper wallets, and more. Software wallets store crypto on a device, like your phone or computer.

Hardware wallets use external devices to securely generate, control, and store private keys offline for heightened security. Paper wallets, on the other hand, let you print a private key on paper to access funds without technology.

Exchange wallets hold funds for you on services while you are actively trading. But it's risky to store large holdings for the long term. Hardware security modules protect institutional-sized storage with bank-grade vault protocols.

The security method depends on your needs; hardware is recommended for long-term HODLing, while software fulfills daily use cases best. Make sure to never store cryptocurrency on an exchange long-term for advanced security.

What can you buy with cryptocurrency?

Today, thousands of merchants worldwide accept crypto as a payment option directly. Practical use of crypto include electronics, fashion, furniture, and more, both online and increasingly in-store.

Other than things to buy with cryptocurrency, crypto can also be exchanged for traditional currency at ATMs, moved between counterparties or traded on exchanges to realize gains.

Major platforms that plug into the crypto economy for games, apps, and other virtual items also see significant usage of digital money, signaling its mainstream viability despite the volatility challenges that remain.

A secure and regulated euro stablecoin like EURK is ideal for convenient crypto commerce due to its stability. EURK is a reliable stablecoin that has multiple reserves in Switzerland and the Dominican Republic. Additionally, a secure crypto service provider Cryptobunq audits and issues it.

Last but not least, EURK also offers stability, transparency, security, and high liquidity as a secure stablecoin. You can easily buy EURK and use it to buy goods and services, or transfer EURK, sell EURK, or use it for your crypto payments. EURK offers diverse options with the power of stablecoin.

What are the types of cryptocurrency?

The crypto universe contains a wide array of currencies. Some, like Bitcoin, are designed as stores of value, while Ethereum functions as the fuel for decentralized applications. Then there's a class of cryptocurrencies tailored for fast payments called stablecoins.

EURK is a securely audited stablecoin that has secure reserves. It offers transparent transactions that are fast and secure.

Here's a quick overview of the major cryptocurrencies and some types:


The first and largest cryptocurrency, functions purely as a digital gold alternative.


It enables smart contracts on its blockchain and serves as a gas for decentralized applications.


Stablecoins are cryptocurrencies designed to minimize volatility through various mechanisms while retaining blockchain features.

Meme coins

Newer cryptocurrencies that gain popularity through hype on social media alone rather than real utility.

Central bank digital currencies

Central bank digital currencies are the digital forms of national fiat currencies akin to cash, like the digital yuan.

how does crypto work

How do I get started with stablecoins?

Stablecoins promise the best of both the crypto and fiat worlds by providing blockchain efficiencies alongside currency stability. They do so through collateralization that pegs their value, usually 1:1, to reserve assets like fiat, bonds, or commodities.

There are benefits of cryptocurrencies, however olatile crypto markets retaines blockchain virtues like censorship resistance, transparency, and programmability.

EURK, being a 1:1 euro-backed stablecoin, offers transparent transactions. Cryptobunq, a secure crypto service provider, securely issues and audits it.

Transparent auditing helps build trust in a safe cryptocurrency by verifying that reserve assets match the circulating supply. EURK provides easy access to crypto through a regulated stablecoin backed by real currency reserves.

If you decide to invest in stablecoin, the first step is choosing a stablecoin that suits your needs, like liquidity, features, or oversight. You can trust EURK in this regard.

Second, deposit funds at a crypto exchange that lists your coin of choice and trade it like any other crypto. You can check out “How to buy euro stablecoin?” for more detailed information.

From there, you can use it for payments, earn interest through lending protocols, or hold it as a worthwhile inflation hedge compared to savings accounts. If you are a beginner or an expert who wants to learn more, you can check “crypto trading strategies” and “trade stablecoins” for more information.

Which stablecoin should you choose?

Factors to weigh include the collateral backing reserves, jurisdiction and auditing of the issuer, market size and liquidity, and intended usage. Forward-looking options adhere to compliance while promoting transparency and decentralization ideals, like EURK.

For EU investors and traders, a regulatory-compliant stablecoin tied to their home currency provides familiarity and advantages. Overall, stablecoins are a prudent on-ramp for both experienced crypto aficionados and those just starting their blockchain finance journey.

Whether you are a newbie or an expert crypto investor, EURK offers great benefits for both your individual and crypto needs. You can trust the power of the euro stablecoin with EURK.

The bottom line

Our increasingly digital world means new opportunities are arising at the intersection of finance and technology. Stablecoins represent the best chance yet for cryptocurrency to gain mass adoption by smoothing out volatility concerns.

For their users and the greater economy, they could unlock unprecedented access, efficiency, and autonomy. With proper oversight and continued innovations like usability, traceability, and reserves, stablecoins and crypto at large are positioned to significantly impact our financial system for the better.

A stablecoin like EURK is ideally suited to incorporate robust blockchain technology in a familiar and regulated framework. Become a partner and explore the benefits EURK offers for your business. Integrate stablecoins into your business with EURK!

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Digital assets are subject to a number of risks, including price volatility. Transacting in digital assets could result in significant losses and may not be suitable for some consumers. Digital asset markets and exchanges are not regulated with the same controls or customer protections available with other forms of financial products and are subject to an evolving regulatory environment.

Disclaimer: The information contained in or provided from or through this website is not intended to be and does not constitute investment, financial advice, trading advice, or any other type of advice.In no event will EURK or its affiliates, or any of its or their respective service providers, be liable to you or any third party for any use, interruption, delay or inability to use the software, lost revenues or profits, delays, interruption or loss of services, business or goodwill, loss or corruption of data, loss resulting from system or system service failure, malfunction or shutdown, failure to accurately transfer, read or transmit information, failure to update or provide correct information, system incompatibility or provision of incorrect compatibility information or breaches in system security, or for any consequential, incidental, indirect, exemplary, special or punitive damages, whether arising out of or in connection with this text, breach of contract, tort (including negligence) or otherwise, regardless of whether such damages were foreseeable and whether or not we were advised of the possibility of such damages.

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