Cryptocurrency is becoming an increasingly popular payment method in online casinos in Portugal, offering users anonymity, security, and speed of transactions. Unlike traditional payment methods, cryptocurrencies allow players to deposit and withdraw funds without the need to disclose personal information, making the process more appealing to those who value privacy. With low fees and fast transaction processing, cryptocurrencies like Bitcoin, Ethereum, and Litecoin are becoming an increasingly preferred choice among Portuguese gambling enthusiasts. Many online casinos in Portugal have already adapted their platforms to support these digital currencies, further easing players’ access to a wide range of gambling games. The cryptocurrency market can both fall and rise. It is now obvious that blockchain technology and digital money will become an important part of our lives sooner or later. This article will cover the basic terms of the crypto market for beginner investors who have long wanted to understand what a cryptocurrency is. In our article, blockchain, cryptocurrencies, bitcoin, tokens, NFTs, DeFi, crypto security and more will become clear for you. First, let’s start our article by answering the question of what crypto means. It is on CasinoReal.pt that you will find the best reviews on casinos that have cryptocurrency.
What is cryptocurrency?
Candidate investors who are new to the cryptocurrency market or want to enter should first enlighten themselves on the question of what crypto is, so that they know what they are investing in. Cryptocurrency is a digital money that is not backed by physical assets like traditional money. Cryptocurrencies are created using a special data encryption technology (cryptography). And since it is protected against decryption and decryption, it has a high level of security. Yes, this is where the name of cryptocurrencies comes from, which came into use after the article “Cryptocurrency” was published in Forbes in 2011. Until this published article, bitcoin, for example, was called electronic cash.
Crypto is decentralized as it operates thanks to the computational work of many independent computers called nodes. The element of crypto that is an alternative to traditional finance concentrated in banks is decentralization. Also you can play on cryptocurrency starting with just 1 euro, the page with 1 euro casino bonus will help you.
Most cryptocurrencies are based on blockchain. Cryptocurrencies exist only in digital (virtual) form. As can be understood, the scope of virtual cryptocurrencies and other assets is different. Crypto performs the following functions:
- Investment tool. To generate passive income;
- Capital accumulation method;
- Means of payment. Paying for goods and services in the real and virtual world;
In other words, you can invest in cryptocurrencies to:
- Earning profits from changes in the value of an asset;
- Possessing crypto to earn income from any company or to vote on its decisions;
- Paying for items like a cup of coffee or an electric car with cryptocurrencies;
- Paying with digital currencies to get additional features in games and some online services.
For now, let’s continue to get to know cryptocurrencies, now that we have learned what crypto money means in detail.
Why do you need crypto?
The main idea of crypto is decentralization and independence. Bitcoin, the first cryptocurrency, emerged in response to the historic global economic crisis of 2007-2008. The main causes of the crisis were:
- Mortgage default crisis in the US;
- Banks that created the mortgage crisis and uncontrollably issued unreliable investment instruments;
- Government overlooking effective bank regulation.
Early crypto enthusiasts tried to invent an alternative financial system that would not be controlled by governments and banks. After the crisis, the purpose of crypto money became more understandable.
Blockchain technology enables Peer-to-Peer money transfers (direct, without intermediaries). Since cryptocurrencies operate on blockchains, there are no untrustworthy intermediaries that can be manipulated.
What is Blockchain?
Blockchain technology is a digital database running on software. Its original purpose is cryptography, or the encrypting of data in a blockchain with records. Blockchain is the main technology of cryptocurrencies. Every crypto transaction goes through the blockchain. Different cryptocurrencies may have different blockchains, but most cryptocurrencies run on the Ethereum network blockchain.
The most famous banking system is SWIFT. It confirms transactions and updates data in banks’ databases. Blockchain SWIFT provides includes both these features.
How does blockchain work?
Blockchain works like a distributed database. Data records are distributed over a network of independent servers. Each server is a computer called a node, controlled by the user of this network. The list of transactions is called a block. Many of these blocks work like a chain, which is why this technology is called blockchain.
Multiple blocks form a sequence of blocks, which becomes a chain. The data encrypted in each block is immutable, just like the previous blocks. This system makes the blockchain a relatively secure database, as fraudsters cannot access data without leaving a trace.
This means that all data is processed by special software, smart contracts (programs that are automatically executed when pre-agreed conditions are reached). When a question arises about the legitimacy of a particular transaction, the users with the most presence in such a network decide whether everything is okay with the transaction.
The staking system emerged to motivate users to own a large number of assets that keep the network running. Staking is the locking of assets in a separate smart contract for a certain period of time. As a reward, stakers receive profits in the form of predetermined percentages of the locked token amount.
Staking is like a bank deposit needed to ensure the operation (maintain liquidity) where the bank rewards the customer with a percentage of the deposit amount.
How do cryptocurrencies work?
Cryptocurrency operates on a decentralized Peer-to-Peer Network, meaning transactions occur directly between users without the need for a central authority or intermediary such as a bank.
When a user wants to make a transaction, they use a digital crypto wallet that stores cryptocurrency. The transaction is transmitted to the network and verified by other users. Once verified, it is added to the blockchain, which contains a public record of all transactions on the network. The transaction is then considered completed and ownership of the cryptocurrency passes from one user to another.
So what is Bitcoin?
Bitcoin is a cryptocurrency that runs on its own blockchain. Bitcoin is the first cryptocurrency and the most famous. Bitcoin’s Whitepaper (a document explaining the principle of the crypto project) was published by Satoshi Nakamoto in 2008. And in early 2009, the Bitcoin network was launched.
Satoshi Nakamoto is anonymous. There are different versions of the identity of the creator of Bitcoin, right down to the fact that a whole group of developers is hiding under this pseudonym.
How many different cryptocurrencies are there?
Cryptocurrency may seem complicated. There are coins, tokens, altcoins, NFTs and other unexplained words. We will discuss the features of all of them in our cryptocurrency classification section and learn which ones do what. Here are the crypto types:
Coin
A coin is a cryptocurrency with its own blockchain. Blockchain is a complex technology that developers have spent a lot of effort and time to create. Coins that have their own blockchain include: Bitcoin, Ethereum, XRP, Solana, Tezos, EOS and others.
For example, ETH coin has its own Ethereum blockchain and carries out all transactions within this network. Ethereum’s architecture allows users to use this blockchain for many purposes, from closing business contracts to voting in elections.
Thousands of decentralized applications (DApps) have been successfully launched based on the Ethereum blockchain. Therefore, many crypto companies are joining the Ethereum blockchain to create their own cryptocurrency or implement other ideas. Such projects include Uniswap, 1inch, Aave, MakerDAO, Sandbox, Chainlink and others.
Token
Many cryptocurrency developers use existing blockchains to launch cryptocurrency.
For example, a non-blockchain cryptocurrency made on Ethereum is a token. Token holders basically get the following benefits:
- Management within the community;
- Profit share in the project;
- Reduced transaction fees.
Tokens are divided into several types:
Security tokens are tokens that give ownership of a financial instrument such as a stock or bond.
Utility tokens are tokens that represent the greatest value in their network.
Asset-backed tokens are tokens whose value is confirmed by a real entity that is not on the blockchain. For example, gold or government currencies.
Stablecoin
Stablecoins are assets whose value is pegged to a commodity (like gold) or fiat currency. They exist as more stable cryptocurrencies with much less risk of price changes. The most popular stablecoins (Tether, USD Coin, Binance USD, DAI) are pegged to the US dollar.
Some stablecoins may experience a lack of liquidity, causing the price of such assets to begin to differ from fiat currencies or commodities.
Altcoin
An altcoin is any cryptocurrency other than bitcoin. Since Bitcoin is the first, most trusted, and largest in terms of usage (and therefore most used) cryptocurrency, any other cryptocurrency is considered a Bitcoin alternative. That’s why they are called alternative coins, or simply altcoins.
NFT
NFT (Non-Fungible Token) is a non-fungible token. Unlike other cryptocurrencies, NFT tokens are unique in their own way and cannot be replaced by others. Each asset has its own digital signature, making the NFT unique.
NFTs also operate on the blockchain. That’s why NFTs are usually made up of music, images, photos, text, etc. It is used to transfer works of art to digital media.
DeFi
DeFi (decentralized finance) consists of many decentralized applications (Dapps) that provide financial services. DeFi aims to be an alternative to traditional finance. DeFi provides an ecosystem powered by the automation of various protocols (e.g. smart contracts) that allow users to reject the services of intermediaries such as banks and payment systems.
Major DeFi services include:
- Lending;
- Loan of interest-bearing assets;
- Derivative trading;
- Changing.
DeFi uses cryptocurrency as a payment method for transactions between users.
There are currently the types of cryptocurrencies mentioned above in the market. Each of them offers different opportunities and services to users, but their main and common point is that they are investment tools.
Crypto: advantages and disadvantages
Cryptocurrencies have become very popular in recent years, and beginners, as always, are eager to find out what is problematic about this phenomenon market in the first place. Everyone is aware of the potentially high income that can be earned by trading cryptocurrencies. However, there are some cryptocurrency advantages and disadvantages that you should know before investing.
Advantages of cryptocurrency
Cryptocurrencies offer users unique opportunities not available for traditional financial and investment instruments.
Volatility
Volatility is the change in the price of an asset over a period of time. If in the stock market, an asset’s deviation from the daily norm by more than 10% is considered high volatility, then in crypto these indicators can reach several hundred percent.
The cryptocurrency world fundamentally has high volatility, which is often associated with a lack of liquidity, a rapid change in trend, or the flow of capital from one project to another. This means that the value of a cryptocurrency can rise significantly or fall sharply within days or even hours.
High volatility attracts investors who get a high-risk but high-reward trading option. Traders use different trading tools such as crypto futures and margin trading to gain more from sector volatility .
Speed
Crypto transactions are much faster than bank transactions. It takes little more than a few seconds for the cryptocurrency to process transactions. However, this period is much longer for bank transfers between countries and financial systems, which cannot leave the past behind.
Disadvantages of cryptocurrencies
Like everything in this world, cryptocurrencies have some disadvantages that you should be aware of.
Volatility
High volatility makes cryptocurrencies a very risky investment. With a reckless approach to crypto investments, if it is based entirely on luck or someone else’s opinion, you can quickly lose your savings.
Therefore, volatility is both an advantage and a disadvantage of crypto. Before investing, you need to be sure of your decision: follow competent risk management, do not invest the last remaining or borrowed funds, follow the news of the projects in which you invest, and also take into account many other market-related factors.
lack of regulation
The main idea of cryptocurrency is decentralization and independence from the government and its rules. At the same time, government regulations are not imposed for evil purposes and generally prevent fraud. For example, several cryptocurrency exchanges have recently gone bankrupt due to lax regulations, and some of them were outright scams. Blockchain technology is revolutionizing the online casino industry by introducing transparency, fairness, and security. With blockchain, every transaction and gameplay is recorded in a distributed ledger that cannot be falsified or altered, ensuring absolute transparency and fairness of the game. This not only increases player trust but also facilitates the fight against fraud and unfair play. Moreover, blockchain enables the creation of decentralized casinos where players can bet directly against each other, minimizing the role of the intermediary. Thus, blockchain not only raises the standards of security and fairness in the gambling industry but also opens new opportunities for innovative approaches in organizing the gameplay.