Cryptocurrency: Beginners Guide
everything you need to know about this digital currency
What is CryptoCurrency?
Cryptocurrency is just like regular currency, except they are entirely digital. Each Cryptocurrency is just an entire collection of numbers and data. It is a decentralized digital currency that can be transacted to buy goods or services. It can be a replacement for physical money shortly, which is currently used for trading for all goods & services across the globe.
How is it Operated & Where is it stored?
These Cryptocurrencies are a collection of binary data that operates using an online ledger with strong cryptography for secure online payments. Almost every physical money in the world has a unique serial number. This serial number provides information about when and where the physical money is printed & distributed. The central Bank generally keeps these records. In India, it can be referred to as RBI.
Each Individual cryptocurrency coin is like a serial number; you see on the physical money without any physical presence.
A cryptocurrency wallet address is like a bank account number. There is no need to provide any personal information to create a Cryptocurrency wallet. Hence your identity is not attached to the Crypto wallet. Any cryptocurrency held in your crypto-wallet is kept directly by you, and there is no intermediary as Bank for storing your money in your account.
Hence it means no one has the right to block your transaction or shut down your cryptocurrency wallet because only you have total control over the cryptocurrency wallet. The main risk involved here is that if you forget your password or lose access to your crypto wallet, you might lose your Cryptocurrency as there will be no intermediary who will help you recover your Crypto wallet.
How secure is Cryptocurrency?
In today’s world, Banks & Govt are responsible for tracking everyone’s account transactions & balances kept thereon in the case of physical money. Still, In Cryptocurrency, all the transaction-related records are kept and stored in all the computers connected to a cryptocurrency network. These transactions and records are public and can be viewed by anyone using a blockchain explorer.
Computers can earn Cryptocurrency for processing the crypto transaction on a Cryptocurrency network. This process encourages more computers to join the network and earn Cryptocurrency. This process is referred to as crypto mining.
Hence the above-decentralized process makes Cryptocurrency more safe and secure.
History of Cryptocurrency?
During the 1980’s an American discovered a “blinding” algorithm that remains common to modern web-based cryptographs. This Algorithm allowed users to transfer information between parties safely. Hence this became a safe mode to transfer digital currency in the future.
After 15 Years, a software engineer published a Digital Currency architect, which includes many essential components of modern Cryptocurrency.
During the 1990’s emergence of Digital Finance intermediaries like Pay pal paved the way for the rise in digital transactions. This helped users do financial transactions anywhere across the world and saved a lot of time.
In 2008, Nakamoto released the first Cryptocurrency named Bitcoin to the public. From there the Cryptocurrency started to boom.
Source: Money Crasher
Types of Cryptocurrency.
Currently, there are thousands of Cryptocurrency in the market, and not all of them are designed as a currency that is exchanged to buy goods/services.
Broadly there are 2 Types of Cryptocurrency.
- Coins: Coins are just means of payment that can be used to purchase goods and services from Amazon, Microsoft & Tesla etc. Coins operate on their Blockchain. Eg: Bitcoin, Litecoin, Ethereum,etc.
- Tokens: Tokens are created on existing Blockchain using smart contracts. They dont have their own Blockchain. They can give access to products/services and also perform many other functions. E.g.: Dogecoin, Ripple, Tether, etc.
Why is it So popular?
Cryptocurrencies are so popular because they are not associated with any government. Hence they can stay stable even if there is a disturbance within the specified country. The potential of profits is enormous in Cryptocurrency. The usage of crypto wallets and transactions related to Cryptocurrency is becoming easier day by day as many companies are adopting it & More companies are accepting it as a payment option. Using Cryptocurrency for online payment is way safer than traditional digital currency. As it uses blockchain concepts, it is tough to hack Cryptocurrency.
Finally, Cryptocurrency is to be seen as the future of money.
How secure is Cryptocurrency?
It is complicated to pamper online crypto transactions by hackers as Cryptocurrency transaction uses the blockchain concept it is a safe mode of online transaction. But we should not forget that it is a Digital currency stored in the digital form of cash in wallets. Hackers can penetrate wallets stored in clouds and can steal your Cryptocurrency. Even if you choose to keep it on your hard drive, they are not entirely safe.
Some of the best CryptoCurrency by Market Capitalization?
As per Wikipedia, some of the top Cryptocurrency by Market Capitalization are as follows
How is it Regulated In countries?
In India, Cryptocurrency is not legal and remains uncertain for investment and trading activities. RBI has banned cryptocurrency transactions for financial institutions and cannot perform them. However, in March 2020 supreme court had made crypto transactions legal in India, but in early 2021 Government banned the issue hold and trade of Cryptocurrency.
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