Day by day the world takes another shape of a new development and technology. One of buzzing development in the world today is the “CRYPTOCURRENCY”. And that’s why I will be taking you through what and what it entails today. Just follow up to get the bit and bit details.
What is cryptocurrency?
Cryptocurrency is known as a digital or virtual currency protected by cryptography, making it nearly impossible to fake or spend twice.
Many crypto-blockchains are decentralized networks based on technology, distributed ledgers that are imposed by different computer networks. A distinctive of cryptocurrencies is that they are not issued mainly by a central authority, which theoretically protects them from government interference or manipulation.
Understanding Cryptocurrencies
Cryptocurrencies are systems that allow you to secure online payments, identified by virtual “tokens”, represented by the system’s internal accounting records. The term “cryptography” refers to the many cryptographic algorithms and cryptographic techniques that protect these leases, like elliptical curve encryption, public and private main pairs, and hash functions.
Types of cryptocurrency
The first blockchain-based cryptocurrency is Bitcoin, which is still the most famous and valuable. Today there are many thousands of alternative cryptocurrencies with different functions and features. Some are copies or forks of bitcoin, while others are new coins mined from scratch.
Bitcoin started in 2009 by an individual or group under the pseudonym “Satoshi Nakamoto”. As of August 1, 2021, over 18.8 million bitcoins are in circulation with a total market capitalization of nearly 858.9 billion, and the numbers are often updated. There are about 21 million Bitcoins, which prevents inflation and manipulation.
Some of the most competitive cryptocurrencies created by Bitcoin’s success, known as “Altcoins,” include Litecoin, Peercoin, Namecoin, Ethereum, Cardano, and EOS. By August 2021, the surplus value of all current eight cryptocurrencies will exceed 1.8 trillion. Bitcoin currently accounts for about 46.5% of the total value.
Advantages and disadvantages of cryptocurrencies
ADVANTAGES:
Cryptocurrencies promise to facilitate the sending of funds directly between two parties without needing a trusted third party like a bank or even a credit card company. Instead, these funds are secured through the use of public and private keys and various incentive systems, like Proof of Work or may be Proof of Stack.
In modern cryptocurrency systems, a user’s “vault” or account address contains a public key, while the private key is known to the owner and is used to sign transactions. Fund transfer is completed with minimal processing fees, allowing customers to avoid high fees charged by banks and financial institutions for electronic transfers.
DISADVANTAGES
The semi-anonymous ways of cryptocurrency transactions make it easier and suitable for several illegal activities, such as money laundering and tax evasion. However, cryptocurrency proponents often exaggerate their anonymity, offering privacy benefits like protection for whistle-blowers or workers living under oppressive regimes. Some cryptocurrencies are mostly private than others.
For instance, Bitcoin is a relatively poor option for doing illegal activities online, as the forensic analysis of the Bitcoin blockchain has made the authorities catch and prosecute criminals, which are difficult to track.
Special consideration
Bitcoin and other cryptocurrencies are critical blockchain technologies for attractiveness and functionality, which are used to keep an online record of all transactions used, thus providing a completely secure, shared and agreed upon ledger data structure. From a node across the network or from a computer that maintains a copy of the ledger. Each new block created from each node must be checked, which makes it almost impossible to refute the transaction history.
Many experts believe that blockchain technology has great potential for use, such as online voting and crowdfunding. Large financial institutions like JPMorgan Chase (JPM) reduce transaction costs by simplifying the payment process. A digital cryptocurrency balance stored in a central database can be lost or corrupted by your hard drive if a private critical backup is not available. At the same time, no central authority, government or even company has access to your money or personal information.
Cryptocurrency criticism
Since market prices for cryptocurrencies depend on supply and demand, the speed with which one cryptocurrency can be exchanged for another can vary widely, as many cryptocurrencies have very high designs.
Bitcoin has seen some rapid rise and fall in value, rising to 17,738 per bitcoin in December 2017 and dropping to 7,575 in the following months.
There are concerns that cryptocurrencies like bitcoin are not rooted in any physical assets. However, some research has indicated that the cost of Bitcoin production, which requires increasing amounts of energy, is directly related to its market value.
Crypto-blockchains are very secure, but other aspects of the cryptocurrency ecosystem, including exchanges and wallets, are not immune to hacking. In the 10-year history of Bitcoin, many online businesses have been hacked and robbed, and sometimes “coins” of millions of dollars were stolen.
However, many observers see potential benefits in cryptocurrencies, such as the ability to protect value from inflation and facilitate trade, ease of transmission and distribution compared to precious metals, and banks, power plants, and governments.
What is cryptocurrency in simple terms?
Cryptocurrencies are systems that allow you to secure online payments referred to as virtual “tokens”.
How do you get cryptocurrency?
Any investor can buy cryptocurrency through cryptocurrency exchanges such as Coinbase, Cash App, and more.
What is the purpose of cryptocurrencies?
Many experts believe that blockchain technology has great potential for use, such as online voting and crowdfunding. Large financial institutions like JPMorgan Chase (JPM) reduce transaction costs by simplifying the payment process. Let’s look at the ability to do so.
How does cryptocurrency make money?
Cryptocurrencies allow secure online payments defined by virtual “tokens” represented by the system’s internal accounting records. Investors make much money from cryptocurrencies by mining bitcoins or just selling their bitcoins for profit.
What are the most popular cryptocurrencies?
Bitcoin is one of the most famous cryptocurrencies, followed by other cryptocurrencies such as Ethereum, Light Coin, and etc.
Cryptocurrency is said to be one of the fastest growing way to make a genuine income to your bank account. This article is for educational purpose and not financial advice on Cryptocurrency. Don’t forget to drop your questions if any, and also like, share and subscribe to our channel.
