At the dawn of humanity, the barter system was in practice where the people used to exchange goods and products. The known currency which we know till date was introduced by King Alyattes in Lydia (presently a part of Turkey) which featured the roaring lion in its coin around 600 BC.
As time progressed the notes were also introduced in the system. Presently United Nations recognizes 180 currencies used in 195 countries across the world. But now the system is changing and cryptocurrencies are coming into existence and countries like Senegal, Tunisia, Marshall Islands, etc. have already adopted this digital currency and more of the countries are in the process of adopting this digital currency.
All About Cryptocurrency – Beginners Guide
So, guys, we are going to know the most futuristic element which you must be aware so that it may not be new to you when it will be adopted in your country. You will have a hard time finding that most of the banks and other financial institutions have published a paper or are in the process of it or they may be starting a blockchain project. (You could know about Blockchain in our other article)
You could be the master of it and also educate others so as this information spreads as far as it can. After reading you will know more than other humans, so let’s have a sneak peek into the future.
What is Cryptocurrency?
Cryptocurrency is an alternative to the traditional currency which has its own sets of benefits and disadvantages. Originally, Bitcoin was introduced by an unknown inventor Satoshi Nakamoto and as the time passed other cryptocurrencies started to emerge out of the Blockchain.
Cryptocurrency is just a small application of Blockchain. In late 2008, Nakamoto developed a peer-to-peer electronic cash system with a goal in mind to create something helpful and unique which other people failed to invent.
Cryptocurrency is a digital asset which serves as a medium to exchange currencies which one can easily do the financial transactions. It makes use of strong cryptographic ledgers which are safe and secure and they also control the creation of additional units. Know More about Crypto – Wiki.
How did Cryptocurrency Originate?
Satoshi never had the vision to build Bitcoin but it emerged as a side product that builds this currency to eliminate the intermediaries involved in the financial transactions which included Peer-to-Peer network for sharing the files. A digital cash system was introduced and with this method, cryptocurrency also emerged.
Before this invention, one major problem occurred and that was double spending (the method to prevent that one entity will not be able to spend the same amount more than once). This is usually done by a centralized authority.
In the decentralized network, there is no central server. Every node has the same amount of information as the other nodes and there are several nodes in a network.
Basic Mechanism Behind the Creation of Crypto Coins
Any cryptocurrency is having a network of peers. Every peer has all the information related to all the transactions in the network. The peer can add information but not edit or delete it.
Let’s understand with an easy example. A gives a certain amount of Bitcoin to B which contains the information locked by A in a private key. It is also called Public Key Cryptography. All the other people will be notified about this transaction. This is only peer to peer network technology. That’s it!
This transaction has to be confirmed by the other recipients. 51% of the network has to accept this transaction. When the transaction is confirmed then it is irreversible and no one has the authority to change it and it becomes a part of blockchain with an immutable record.
Here miners come into action. Miners have the authority to confirm the transaction. Hey! Anyone can become a miner. Their work is to accept the transactions, mark it as a legit transaction and broadcast it to the network. In return, they get some amount of Crypto coins called Tokens.
Every crypto community has its own miners. They contribute the computational power to solve the complicated algorithms so that the transaction done in the network could be confirmed and recorded in the public ledger called Blockchain.
Like trading, mining is an investment. The cost of investment depends upon the type of mining machine you buy and the electricity it consumes to solve that cryptographic puzzle. As more miners join the chain, the tough the process becomes. A few years back you could do the mining from your normal computer and laptop but, now it has become more difficult as you have to buy the industrial hardware. If you are a beginner then Litecoins and Dogecoins are the best options to go for.
Things you can do with Cryptocurrency
Buying of Goods and Services – Simply Trade!
When the currency was launched it was hard to find merchants who accept the payment as a form of cryptocurrency but now the scenario has changed and you could find many merchants across the world where the transactions are done using cryptocurrency.
You could buy a flight ticket, shop in a jewelers store, buy the apps online and there are many offline merchants who accept the payments. Bitfy and Openbazaar are some of the examples that transact in cryptocurrency.
Though cryptocurrency has become a hotspot for investment for many people, it also involves huge risk. You can quote from the news that there are many of the people who have become a millionaire by investing in Bitcoin. We have also seen the value of Bitcoin going up to $7000 for just one Bitcoin.
The market value of Bitcoin fluctuates very high through the course. If you had invested $1 in the year 2012 when the price was very low and taken out the same amount it would be like seven thousand times more value than before.
You could also accept the payment as you would accept cash for the transaction. The interest is going to increase in the coming days and it has been forecast that the value will only increase.
Top 10 valid Cryptocurrencies other than Bitcoin
There are many currencies which have evolved after Bitcoin and prove to be more valuable than Bitcoin and offers more services and security than Bitcoin. As of August 2018, the number of cryptocurrencies is 1600 and is still growing. Let’s have a look at the top 10 cryptocurrencies.
- Ethereum (ETH)
- Zcash (ZEC)
- Litecoin (LTC)
- Dash (DASH)
- Ripple (XRP)
- Monero (XMR)
- Bitcoin Cash (BCH)
- Cardano (ADA)
Advantages and Disadvantages of Cryptocurrency
Cryptocurrency is a small application of Blockchain and is related to Blockchain technology which solves the double spending problem without the need for a central authority.
Learn about the pros and cons of Cryptocurrency here and judge according to your mind whether you should adopt this technology or not.
Cryptocurrency is a Blockchain based ledger where the transactions are recorded in a ledger called smart contracts. These transactions are immutable i.e. cannot be altered once recorded. All records are available online and can be viewed by everyone. So this makes it a transparent and could be used by government agencies to make their nation a good and transparent one.
Inflation is Unaffected
If we talk about the traditional currencies then, the currency notes have to be printed and as the economies make a dip or rise. In the case of cryptocurrencies, the scenario is different as the Bitcoin was programmed to be in a finite number. So inflation is not affected.
A large amount of money can be transferred without any problem and that too nobody can detect. Millions of dollars of Bitcoins can be transported on a single pen drive.
Low-cost money transfers
The most understood advantage of cryptographic forms of money is their capacity to send and get installments requiring from little to no effort and at a high speed. For illustration, an ongoing $99 million Litecoin (LTC) exchange took just more than two minutes to process and cost the sender just $0.40 in exchange expenses.
Make private transactions
Security driven advanced currencies, for example, Monero (XMR), Zcash (ZEC), and (PIVX) empowers clients to make unknown monetary exchanges.
Not Very Trustworthy
Today also there are millions of people who do not know about the Blockchain technology and above all, it is human nature that in any new technological advancement, people fear in adopting the new technology. Same is with the cryptocurrency, there are many news about Bitcoin theft from an online account. So people are hesitant to adopt this as a medium of transaction.
Once Lost, it Cannot be Recovered
Whoever has the code the currency is in their control. The currency can be stored offline and the main owner name is not displayed online. So it is hard to trace the lost coins.
Once the central authority is finished then the question arises that who will take the responsibility in case of any theft happens in the account.
- How cryptocurrency works
- Cryptocurrency mining
- Cryptocurrency list
- Cryptocurrency for dummies
- Cryptocurrency exchange
- Cryptocurrency news
- Cryptocurrency reddit
- Cryptocurrency Wikipedia
The list is constantly increasing of the organizations who are doing the transactions in crypto. Make sure that you take all the precautions and read all the documents before making any transaction in cryptocurrency. Rest the future lies with the Blockchain. There will emerge someone who will diminish all the cons of Blockchain and Cryptocurrency. Move cautiously, or not at all, and never invest money that you can’t afford to lose.
We have mentioned about Blockchain several times in the article as Cryptocurrency is related to Blockchain or we can say that Cryptocurrency is a part of Blockchain. So never miss to read out our Blockchain Blog for more understanding. Mention your comments on what difficulties you face during the transactions in Crypto. We are there to help you out and our experts will answer your queries in the comments section. Your comments are valuable to us.