Crypto Currency

What Is Cryptocurrency?

A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers. A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation.

How Does Cryptocurrency Work?

Cryptocurrency works a lot like PayPal or a credit card, except you exchange digital assets for goods and services instead of US dollars. To make a transaction with cryptocurrency, you must exchange currency with a peer using a digital wallet known as a cryptocurrency wallet. A cryptocurrency wallet is software that allows you to transfer funds from one account to another. To complete a transaction, you need access to a password, known as a private key. The private key is much like a bank account. You can own multiple keys and own all the funds sent to those keys. Transactions are recorded on a public ledger, which shows the transaction totals without revealing the identities of the parties involved.

Cryptocurrency mining is the process required to verify transactions. It involves a massive amount of computing power and complicated algorithms, but those who are successful at solving problems through mining can earn reward coins, tokens, or transaction fees.

Advantages of Cryptocurrency

• Funds transfer between two parties will be easy without the need of third party like credit/debit cards or banks

• It is a cheaper alternative compared to other online transactions

• Payments are safe and secured and offer an unprecedented level of anonymity

• Modern cryptocurrency systems come with a user “wallet” or account address which is accessible only by a public key and pirate key. The private key is only know to the owner of the wallet

• Funds transfer are completed with minimal processing fees.

Disadvantages of Cryptocurrency

• The almost hidden nature of cryptocurrency transactions makes them easy to be the focus of illegal activities such as money laundering, tax-evasion and possibly even terror-financing

• Payments are not irreversible

• Cryptocurrencies are not accepted everywhere and have limited value elsewhere

• There is concern that cryptocurrencies like Bitcoin are not rooted in any material goods. Some research, however, has identified that the cost of producing a Bitcoin, which requires an increasingly large amount of energy, is directly related to its market price.

5 popular cryptocurrencies

1) Bitcoin

Bitcoin is the oldest and most popular cryptocurrency in the world. It was created in 2009. It is the first decentralised cryptocurrency that facilitated transactions using its own blockchain technology. At the time of writing, Bitcoin was priced at roughly ₹ 37.34 lakhs.

2) Ethereum

Ethereum is a cryptocurrency network that uses blockchain technology to facilitate smart contracts. It is a decentralised software that allows smart contracts to be built on its network and run on it without any control or fear of fraud by a third party. Ether is the token used to enable transactions on the Ethereum network. Ethereum is currently priced at roughly ₹ 2.46 lakhs.

3) Dogecoin

This cryptocurrency was created using a popular meme that features a Shiba Inu dog as its icon. The meme was immensely popular as is the cryptocurrency whose price skyrocketed after receiving backing from Tesla CEO Elon Musk. Musk managed to shake up the already volatile crypto market by backing the meme coin. Dogecoin, unlike Bitcoin, has no limit on the number of coins that can be mined. It's is currently priced at ₹ 22.49.

4) Cardano

Cardano was created through a research-based approach by a team of mathematicians, engineers, and cryptographers. In the ecosystem of cryptocurrencies, Cardano claims to be a more sustainable and balanced coin when compared to the other cryptocurrencies. It is currently priced at ₹ 210.78.

5) Litecoin (LTC)

It was created in 2011 by Charlie Lee, a graduate from MIT and an engineer at Google. It was one of the first few cryptocurrencies that followed the same technology as Bitcoin. Despite being modeled on Bitcoin, Litecoin generates blocks at a faster rate, and, hence, offers a faster transaction time. It is currently priced at ₹ 13,631.