Platforms intermediating Bitcoin and other cryptocurrencies for trading are called cryptocurrency exchange . With Bitcoin becoming available for trading in 2009, these exchanges have also managed to raise it in parallel with increasing interest in cryptocurrencies.
What is this Bitcoin?
The question of what Bitcoin is remains a question many people are curious about today. At this point, Bitcoin can be briefly defined as any official institution, central bank or cryptocurrency with no relation to an authority.
While each of the Bitcoins introduced to the market changes hands thanks to trading transactions, Bitcoin mining is carried out in order to increase the number of Bitcoins. For this purpose, Bitcoin miners solve complex and long passwords through high-performance computers and Bitcoin production takes place. The number of Bitcoins is limited to a maximum of 21 million, of which 17 million are produced today. In addition, the functioning of Bitcoin is considered incomplete without addressing the blockchain technology it uses.
What is blockchain?
Blockchain technology is fundamentally inspired by the mixed tree known as “Merkle tree”. In 1980, Ralph Merkle patented this data architecture and was used for data validation on computer systems. This system is used to verify that no data has been changed during the verification and transfer of information within a computer network consisting of at least two computer hardware. In addition, it prevents the sending and processing of incorrect data specified to the system.
The blockchain basically emerged in order to maintain and verify the integrity of the information shared or to be shared. In 1991, the Merkle Tree (Merkle Tree) was used to create a highly secure blockchain, each with a series of information records linked to its predecessor. The most recent record in this chain included the previous data in the chain, and this is how the blockchain mechanism worked.
The first blockchain database was designed by a person or persons named Satoshi Nakamato, who announced Bitcoin with a notice in 2008. This database contained a history of high-security information exchange, utilizing a network between two computers to record time and date changes and verify them. The system, independent of a central authority and able to manage it automatically, thus formed the basis of Bitcoin.
How does blockchain work?
- The blockchain records all data exchanges. All of these records are called a “registry” in the cryptocurrency universe, and each data exchange counts as a transaction. Each verified transaction is added as a block in the book.
- The peer-to-peer distributed system is used to verify each transaction.
- Once the authentication process completes successfully, it cannot be changed to every new transaction blockchain entered into the system and will be permanently added.
What is the cryptocurrency exchange?
Cryptocurrency exchanges are platforms that enable trading of this type of money. However, these exchanges have the possibility of trading only in the listed cryptocurrencies. The most important feature that is separated from the traditional stock exchanges is that it does not have any intermediary in the market. Transfers are made from user to user and directly. These exchanges can also be defined as online systems where the investor can buy, sell or transfer cryptocurrencies with “real” money.
It is extremely important to select a platform that is reliable and preferred by many users for trading over cryptocurrencies. Cryptocurrencies can be acquired by depositing the desired amount of money into the account and issuing the desired amount of purchase order.
Another important point in the selection of these exchanges is the platform’s portfolio, i.e. the cryptocurrencies it lists. Therefore, choosing the stock exchange with which that cryptocurrency is listed is an effective factor. If it is desired to buy cryptocurrency in Turkish Lira, care should be given that a suitable stock exchange is selected accordingly.
How do cryptocurrency exchanges work?
Cryptocurrency exchanges are the exchanges that gather individuals in the position of buyer and seller under a single roof and in which trading takes place. Some commission fee is charged to the users for the transactions to be made in these stock exchanges. Commission amounts may vary depending on the cryptocurrencies and the cryptocurrency exchange you use.
The working system of the stock exchange works according to the supply-demand curve. In order to sell cryptocurrencies, someone entering the system has to give the sales order and the person making the purchase has to make the transaction on the basis of that value. Thus, the transaction is performed successfully.
An account is created on the cryptocurrency exchange site selected for this transaction and the member uploads money to his/her account. The member then orders the purchase of the selected cryptocurrency at the desired price. When a sales order is entered into the system in response to this order, the said transaction is realized. At the end of cryptocurrencies buying and selling transactions, the user can withdraw the money he/she has obtained by transferring it to his/her account.