Cryptocurrency is a digital currency which can be used to transfer assets from person to person in a decentralised way. Decentralised means it is not regulated by any banks or central authority. Today, there are more than 1500 cryptocurrency, out of which some are coins and tokens. coins can bought in two ways , they may be mined through solving some complex equations and as a reward you get coins or they may be bought from exchanges.
The word Cryptocurrency comes from two word crypto and Currency
- The word “crypto” can mean several things, depending on context.
It originates from Greek κρυπτός which means “hidden” or “secret”. It is very often used as the preifx “crypto-” to indicate that something is hidden, invisible or secret.
- The word Currency means
A currency is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins.
HOW CRYPTOCURRENCY WORK.
There are different technologies on place but I am gonna centralized on the two different ones: Blockchain and Tangle.
Blockchain: Is like a huge library which allows people to see the registry of every transaction made by anywallet, hence verify each one made. Also allows other computers to help on the calculation of every transaction, (mining)
Tangle: This can be considered as Blockchain 2.0, is a premined technology which has the same characteristics of a blockchain but the difference is that allows every wallet owner or coin sender to make their own transaction and two more others; which takes away the load of hashing to the miners.
HISTORY OF CRYPTOCURRENCY.
There's a common misconception that cryptocurrencies came into the picture after Bitcoin was invented. This isn’t entirely correct. There have been many failed attempts in the 90s to create digital currencies. These were in vain because they were under the control of a trusted third party, which couldn’t rule out the possibility of fraud and rues between the company employees and bosses. Cryptographers later learned that a third party approach to cryptocurrencies might be the reason for this failure.
Then in early 2009, Bitcoin was invented by Satoshi Nakamoto, whose identity is unknown to date. Bitcoin was a huge hit because of the decentralized approach it adopted, wherein transactions happened on a peer-to-peer basis without any servers or central controlling authority. After the advent of Bitcoin, various other crypto enthusiasts began inventing their own cryptocurrencies imitating the decentralized approach of that of Bitcoin. Some of the famous cryptocurrencies include Ethereum (ETH), Ripple (XRP), Litecoin (LTC) among many others.
First cryptocurrency which was ever made was Bitcoin which was way back in 2009 by a person or a group named Satoshi Nakamoto. It gained popularity only in 2013,and that made its prices reach moon.
The main reason behind its ever increasing price was limited supply, they are only 21 million and everyone wanted to get hold of it and so there was a surge in demand and hence the price shoot up. Advantages of using cryptocurrency is that they are secure, immutable and cryptography is used to encrypt them. They can be instantaneously transferred across the globe with minimal transaction charge and that makes them better than fiat currency.
They are not or cannot be handled by any banks or central authority which makes all the transactions privacy oriented. These are developed on the basis of consensus algorithm. cryptocurrency can be bought from exchanges which can be stored in many places such as wallets, exchange wallets, hardware storage.
There is no physical presence of the coins and they are all digital. Cryptocurrencies are also distributed across the whole network so if one part fails then too the data is not lost and we have our data which gives trust and also the whole transaction is anonymous. Their is always one more term attached to this which is Blockchain,
Blockchain, is chain of blocks hashed together or we can say it’s a distributed database. All the transactions of the cryptocurrency are stored in this blocks. This blocks have specific size.
Bitcoin blockchain are mined every 10 minutes where in transactions occurred during that period are stored in that block.A new block then will be created which will be connected to previous block through the hash of previous block stored in the current block.
Mining is done by the miners where in they solve some complex equations and they are rewarded by some bitcoins. The transactions once confirmed stays in blockchain for lifelong and they cannot be changed and a user can access them when and whenever needed. Also, double spending is eliminated as the transactions once confirmed cannot be repeated.
MOST POPULAR CRYPTOCURRENCY
Most popular crypto-currencies:
1, Bitcoins
It is undoubtedly the undisputed leader for decentralized digital currencies, also called Cryptocurrencies.
2, Litecoin
It is the silver in the gold standard of Bitcoin. Litecoin comes in the 5th place. Litecoin even shares a lot of similar properties to the Bitcoin.
3, Monero
Monero Means Money · Private, decentralized cryptocurrency that keeps your finances confidential and secure.
4, Dash
Dash is an open source cryptocurrency. It is an altcoin that was forked from the Bitcoin protocol. It is also a decentralized autonomous organization run by a subset of its users, which are called "masternodes"
5, Zcash
Zcash is cash for the new age. A simple, secure digital currency that protects your privacy. For everyday purchases, sending money to a friend and other uses.
6, Dogecoin
An open-source peer-to-peer digital currency, favoured by Shiba Inus worldwide. At its heart, Dogecoin is the accidental crypto movement that makes people smile.
7, Ethereum
- It is the digital token that started the rise of the initial coin offering. Ethereum is second in the market capitalization ranking.
8, Ripple
It is a centralized real-time gross settlement system, currency exchange, and remittance network. Ripple uses history to summarize the data into a single value and compare it on the verification server to provide a consensus which is very much like the Block chain technology but it isn’t exactly the Block chain technology.
9, Bitcoin Cash:
Bitcoin Cash is a digital currency designed to enhance certain Bitcoin features. Bitcoin Cash increases the block size, enabling faster processing.
FEW THINGS TO NOTE AND KNOW ABOUT CRYPTOCURRENCY
1, A cryptocurrency’s value changes constantly.
A cryptocurrency’s value can change by the hour. An investment that may be worth thousands of U.S. dollars today might be worth only hundreds tomorrow. If the value goes down, there’s no guarantee that it will go up again.
2, Investing in Cryptocurrency
As with any investment, before you invest in cryptocurrency, know the risks and how to spot a scam. Here are some things to watch out for as you consider your options.
3, Cryptocurrencies aren’t backed by a government.
Cryptocurrencies are not insured by the government like U.S. bank deposits are. This means that cryptocurrency stored online does not have the same protections as money in a bank account. If you store your cryptocurrency in a digital wallet provided by a company, and the company goes out of business or is hacked, the government may not be able to step and help get your money back as it would with money stored in banks or credit unions.
4, No one can guarantee you’ll make money.
Anyone who promises you a guaranteed return or profit is likely a scammer. Just because an investment is well known or has celebrity endorsements does not mean it is good or safe. That holds true for cryptocurrency, just as it does for more traditional investments. Don’t invest money you can’t afford to lose.
5, Not all cryptocurrencies — or companies promoting cryptocurrency — are the same.
Look into the claims that companies promoting cryptocurrency are making. Search online for the name of the company, the cryptocurrency name, plus words like “review,” “scam,” or “complaint.”
6, Paying with Cryptocurrency
If you are thinking about using cryptocurrency to make a payment, know the important differences between paying with cryptocurrency and paying by traditional methods.
7, You don’t have the same legal protections when you pay with cryptocurrency.
Credit cards and debit cards have legal protections if something goes wrong. For example, if you need to dispute a purchase, your credit card company has a process to help you get your money back. Cryptocurrency payments typically are not reversible. Once you pay with cryptocurrency, you only can get your money back if the seller sends it back.
Before you buy something with cryptocurrency, know a seller’s reputation, where the seller is located, and how to contact someone if there is a problem.
8, Refunds might not be in cryptocurrency.
If refunds are offered, find out whether they will be in cryptocurrency, U.S. dollars, or something else. And how much will your refund be? The value of a cryptocurrency changes constantly. Before you buy something with cryptocurrency, learn how the seller calculates refunds.
9, Some information will likely be public.
Although cryptocurrency transactions are anonymous, the transactions may be posted to a public ledger, like Bitcoin’s blockchain. A blockchain is a public list of records that shows when someone transacts with cryptocurrency. Depending on the cryptocurrency, the information added to the blockchain can include information like the transaction amount. The information also can include the sender’s and recipient’s wallet addresses — a long string of numbers and letters linked to a digital wallet that stores cryptocurrency. Both the transaction amount and wallet addresses could be used to identify who the actual people using it are.
10, Hacking: Hacking into your cryptocurrency account is as simple as discovering your login credentials. Being fooled by a single email phishing attack can be like handing over your digital wallet to a thief. Once the hackers have phished your login credentials, they can transfer all your cryptocurrency to another account and you’ll never be able to recoup it. In addition to knowing a phishing attack when you see one, you’ll have to know how to spot fake websites, which simulate the official exchange websites so well they can trick you into providing your login information.
11, Losing your wallet: If you lose your wallet, you can lose your entire investment if you don’t have a wallet backup. Human error can be the most fatal risk associated with cryptocurrency, so be careful not to lock yourself out of your account, forget your password or forget to back up your wallet.
12, Frauds: Once done, transactions can’t be reversed and frauds happened
CRYPTOCURRENCY IMPORTANT TIPS
Here are a few tips before you venture into the realm of crypto currencies.
1, Educate yourself, guy. Learn about the technologies behind these crypto currencies. Understand the phenomenon and don’t be a victim of the “greater fool’s theory.”
2, Safe the wallet. We can put no more focus on this. The higher the demand, the greater the chance of this internet exchanges being hacked or overburdened.
3, Keep on for a long time. Lock some gains to your satisfaction by trading day, but it will be a great deal to reap the rewards after a couple of years. I made my first purchase at a certain price of x. It soared to 10X.
USES OF CRYPTOCURRENCY
They can be used for various purposes like:
> Buying goods - Various companies have started accepting cryptocurrencies as a mode of payment and you can buy goods in exchange for cryptocurrencies.
>Trade, or even HODL - There are a lot of crypto enthusiasts who are ready to sell off or buy cryptocurrencies in the market. Since their prices vary (and indeed, appreciate over time), they can be considered as an asset. Some enthusiasts even choose to buy and keep them for extended periods - a term now called ‘hodl’.
ADVANTAGE OF CRYPTOCURRENCY
Various advantages of Cryptocurrencies are-
> It makes of transfer of funds easy between two parties.
> It doesn’t have any banking fees.For international payments, it has low transactional fees.
> These payments are secure
DISADVANTAGES OF CRYPTOCURRENCY
> It can lead to black market activity.
> There is a risk of loss in case any virus erupts in records.
>The prices are uncertain. It can fall and rise anytime.
>Cyber Hacking is one of its biggest disadvantages.
FUTURE OF CRYPTOCURRENCY .
No one knows what will become of crypto-currency. It is mostly unregulated, but some countries like Japan, China and Australia have begun weighing regulations. Governments are concerned about taxation and their lack of control over the currency.
More than 90 % altcoin exchanger are scam. So be very careful. The price of crypto-currency is increasing that does not mean it is a good thing for long term investment. I left these for your decision. Learn, understand then invest in it. No-one knows the future, use your wise sense of judgement.
Conclusion
Cryptocurrencies and blockchain technology are still in their nascent stage in financial terms, and we can only expect more developments and innovations to emerge. Blockchain is likely to change more industries, considering how many industries are taking advantage of its security and traceability features. While some companies are already seeing cryptocurrency as a payment method, others are still skeptical about its viability.
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