Crypto currency
A cryptocurrency is a virtual or digital currency that can be used to buy goods
and services; which implies there’s no physical coin or bill used and all the
transactions take place online. It used an online ledger with strong
cryptography to ensure that online transactions are completely secure. Here,
we have included all the details pertaining to cryptocurrency such as types,
how it works, uses, how to buy and store it.
What is Cryptocurrency?
It is a purely virtual line of currency that runs on the system of cryptography.
It functions as a decentralized medium of exchange where cryptography is
used to verify and facilitate each transaction. Cryptography also underlines
the creation of units of different cryptocurrencies.
This mode of exchange primarily runs on the blockchain technology – that
which lends cryptocurrencies decentralized status. It is a shared public ledger
that contains all the transactions that have ever taken place within a
network. Therefore, everyone on the network can see each transaction that
takes place and also view others balances.
How was the Idea of Cryptocurrency
Conceived?
The concept of digital currency gained considerable traction in the 90s tech
boom. Multiple organizations and programmers ventured to create a parallel
line of currency that would be out of any central authority’s reach. However,
ironically, the companies that tried to create this digital currency themselves
assumed the authority of verifying and facilitating transactions.
It not only defeated the purpose but founded the venture as well. Moreover,
the digital currencies back then were riddled with frauds and other financial
challenges. For a long time since then, this idea of digital currency was
considered a lost cause. This idea was falsified when Satoshi Nakamoto – a
programmer or a group of programmers – introduced and explained what
Bitcoin is in 2009, the first-ever cryptocurrency.
What is the Price of
Cryptocurrencies?
Name Market Cap (in USD) Per Token Value (in $)
Bitcoin $319.59B 0.001161
Ethereum $146.21B $1,220.80
Tether $66,241B $1.021
XRP $0.3427 $27.937
Bitcoin cash $1,867,486,940 $96.64
Bitcoin SV $795,984,070 $41.17
Litecoin $376.09M $71.26
Binance Coin $39.27B $244.06
EOSA $927,945,490 $1.37
Tezos $0.7315 $0.72
What are the Different Types of
Cryptocurrencies?
•Bitcoin
It is the first cryptocurrency that was ever introduced and is considered the
“digital gold”. It currently holds a market capitalization of $172.76 billion, the
largest of any other variant of cryptocurrency. A unit of Bitcoin can be broken
down into Satoshis, which is equivalent to the relationship of rupees and
paise.
Furthermore, the Bitcoin network is so designed that it can only have 21
million units of Bitcoin circulation at any point in time. This limited availability
is a primary component that drives its market price.
•Altcoins
This category primarily involves forks and alternate versions of Bitcoin, thus,
the name. However, some Altcoins are exponentially different from Bitcoin
and use varying algorithms. For instance, Ethereum, which is an altcoin, is
not a currency but a platform where entities can make their apps based on
blockchain.
Currently, there are more than a thousand altcoins. Some of the notable
altcoins are Ethereum, Factom, Litecoin, NEO, etc.
•Tokens
These are products of altcoins like Ethereum and NEO. These
cryptocurrencies do not have a separate blockchain but instead run on the
decentralized apps created via such altcoins. However, tokens carry
supremely low value compared to the other two types mentioned above,
because it can only be used to purchase items from such decentralized apps
or dApps.
Cryptocurrency Advantages and
Disadvantages
a) Protection Against Inflation: Inflation has led several currencies to lose
value over time. The amount of any coin is specified in the source code. As
demand grows, its value rises, keeping pace with the market and, in the long
term, preventing inflation.
b) Privacy: Cryptocurrency privacy and security have long been key concerns.
The blockchain ledger is built on many mathematical problems that are
difficult to decode. As a result, bitcoin transactions are more secure than
standard electronic transactions. To improve security and privacy,
cryptocurrency uses pseudonyms that are unrelated to any user, account, or
stored data that may be traced to a profile.
Self-Governed: The governance and upkeep of any currency are critical to its
development. Developers/miners hold cryptocurrency transactions on their
hardware and receive the transaction fee as a reward. Since miners are
compensated for their efforts, they keep transaction records accurate and up
to date, preserving the cryptocurrency's integrity and keeping records
decentralized.
d) Decentralization: One important advantage of cryptocurrency is that it is
mostly decentralized. Many cryptocurrencies are controlled by the developers
who use them and people who own a large amount of the coin or by a firm
that develops it before it is given to the market. Decentralization serves to
keep the currency monopoly free and in check by ensuring that no single
entity determines the flow and value of the coin, which, in turn, keeps it
stable and secure, not like fiat currencies, which are controlled by the
government.
e) Easy Transfer: Cryptocurrencies have traditionally been seen as the best
option for transactions. Cryptocurrency transactions, whether international or
domestic, are lightning fast. Because there are minimal barriers to overcome,
the verification takes extremely little time to complete.
Demerits Associated with Cryptocurrency
a) Some coins cannot be obtained in other fiat currencies: Some cryptocurrencies are only
available in a single or a few fiat currencies. This forces the user to first convert these currencies
into one of the major currencies, such as Bitcoin or Ethereum, and then to their desired currency
via other exchanges. This only applies to a few cryptocurrencies. This results in the addition of
superfluous transaction fees to the process.
b) Hacks: Although cryptocurrencies are extremely secure, exchanges are not. Most exchanges
save user wallet info in order to correctly operate their user ID. Hackers can steal this information
and get access to a large number of accounts. These hackers can quickly move funds from those
accounts once they have gained access.
c) No refunds or Cancels: If there is a disagreement between the parties involved or if funds are
sent to the wrong wallet address by mistake, the sender cannot retrieve the coin. Many people
can utilize this to defraud others for their money. Because there are no refunds, one can simply
be formed for a transaction for which they never received the product or services.
