With the growing popularity of cryptocurrencies like Bitcoin, it’s hard to browse news and not see an article about Bitcoin or a different cryptocurrency. Although cryptocurrency has become a popular topic, it also comes at a cost. In 2017, mining Bitcoins worldwide cost more power than what 159 countries used last year. Some sources have reported that cryptocurrencies like Bitcoin will use up the world’s power supply by the year 2020, but others report this is false. Though very unlikely, mining for various cryptocurrencies has become a popular way for some investors to make money. So what is a cryptocurrency and how does it work?

First, understanding what a cryptocurrency is and how it works is the first step to becoming an investor. A cryptocurrency is a digital asset that is worth the equivalent of a national currency, but does not have a physical form. The buyer would pay the equivalent amount of cryptocurrency to a national currency.

In order to obtain a cryptocurrency, you can buy and sell them close to the way stocks work. In general, it’s a buy-low-sell-high type of system. On the other hand, a person can also obtain a cryptocurrency by mining.

Mining is the way that a currency is generated. The basics of it are a computer uses a chip to solve complex math problems called blocks. When mining first began, computers used their Central Processing Unit (CPU) to solve these problems. As time went on, people figured out that Graphics Processing Units (GPUs) were able to solve these problems at a faster rate. Though faster, they used more energy and produced more heat than using This eventually turned into chips being made specially for mining cryptocurrencies in order for them to solve problems even faster.

Whenever a miner joins a cryptocurrency’s network, a key generates for that miner. That key is what a person will use to transfer cryptocurrency between systems for both buying and selling. By simply transferring funds this way, it makes it easy to buy products online and in the same way, sell online.

With the increased mining of cryptocurrency, the difficulty of the math problems that the miner has to solve increases. This results in computers taking more time to solve the problems, and as a result, takes longer to mine the cryptocurrency. When a person successfully mines a block, the miner receives that cryptocurrency as a reward.

To ensure the security of the coin, the system that is mining confirms the transaction on the network that it has finished mining the block. After this, the system then moves on to another block and starts the process over again.

“It is very difficult to value Bitcoin—it’s a completely different asset class, people call it a commodity, but unlike the price of oil or gold, as the price goes up, there isn’t really a way to increase the supply,” cryptocurrency researcher Dr Garrick Hileman said.

As for the future of cryptocurrencies like Bitcoin, many believe that the “bubble may burst.” This means that the Bitcoin market will collapse and the investors in this currency will lose most of the value, thus causing investors money. Companies like Microsoft and Steam both have this fear, so they do not accept cryptocurrencies like Bitcoin as payment. With the price of Bitcoin and other cryptocurrencies like Ethereum and Lifecoin soaring in value, this could potentially be the future of cryptocurrency. These could one day be the currencies that people all across the world could use to pay for everyday items like clothes and groceries.