What is a Cryptocurrency?
Cryptocurrency or crypto is as a digital currency which is used for trading goods and services and which is secured with an online ledger with strong cryptography to secure transactions.
Several cryptocurrencies utilize blockchain technology, a decentralized technology that is spread across many computers which manages and record transactions.
Although currently governments are trying to bring oversight to cryptocurrencies, typically they are not issued by a central authority, enabling them immunity to government oversight.
Cryptocurrency is issued by independent organizations or groups through a process called Initial Coin Offering. Some cryptocurrencies have a limited supply of currencies that would be issued while some other have no limitations.
What is a Blockchain ?
Blockchain is a digital ledger of transactions and contracts that are recorded independently. A key feature of blockchain is that the digital ledger is distributed across several distributed computers.
Blockchain technology generates structured data with inherent security features. The underlying security is based on the principles of cryptography, decentralization and consensus.
These mechanisms ensure the trust in transactions. In majority of the blockchains or distributed ledger technologies (DLT), the underlying data is structured into different blocks and each block contains a transaction or block of transactions.
New blocks that are generated connects to all the other blocks before it in a cryptographic chain in a way that it is nearly impossible to tamper with. Each transaction within these blocks are verified, validated and agreed upon by a consensus mechanism, ensuring that all transactions are true and correct
How is Cryptocurrency created ?
Most of the cryptocurrencies are created using a process called Mining. Cryptocurrency mining is often performed by high end computers that can perform complex computational calculations.
The process of creating new cryptos by solving a computational calculation is called as mining and crypto mining is necessary to maintain the ledger of transactions upon which cryptocurrency is based.
Which are the top Cryptocurrencies ?
The list of top cryptocurrencies in 2021 includes the following.
- Bitcoin cash
Bitcoin, Ethereum, Binance Coin, XRP, Tether, Cardano, Polkadot, Uniswap, Litecoin and Stellar are the largest trading cryptocurrencies by market capitalization.
How can you buy Cryptocurrency?
Cryptocurrencies can be bought through exchanges, P2P exchanges, Cryptocurrency ATMs and wallets.
Cryptocurrency exchanges allows an individual to buy, sell and hold cryptocurrency online using a computer or a mobile phone. Most popular crypto exchanges in the US include Coinbase, Craken, Binance US and Gemini.
Coinbase is a known platform that makes buying, selling and storing cryptocurrency easy and provide vault protection and mobile apps.
Cryptocurrency ATM’s offers the option to buy crypto’s from a retail store or location using Cash as the payment method.
The cyrpto’s that are brought through the exchanges or through from a cryptocurrency ATM can be stored in a wallet, an online app that can hold currency, in order to buy cryptocurrency.
How can you sell or transfer Cryptocurrency?
Cryptocurrency can be sold through Cryptocurrency exchanges like Coinbase, Binance US etc. Also they can transferred in a fraction of second using the digital wallet.
What are Altcoins ?
Cryptocurrencies other than Bitcoin are termed as Altcoins and they share similarities with Bitcoin. Altcoins are entirely different from Bitcoins and some Altcoins make use of different consensus mechanism to produce blocks. The major difference between Altcoin and Bitcoin lies in Altcoin’s ability to provide additional capabilities including smart contracts and low price volatility.
Popularity of Crypto’s
Cryptocurrencies are immensely popular because supporters view cryptocurrencies such as Bitcoin as the currency of the future. Some supporters of cryptocurrency feel that cryptocurrencies remove central banks from managing the money supply and these banks reduce the value of money through inflation.
Others like the technology behind cryptocurrencies, the blockchain, since it is a decentralized processing and recording system and believe that blockchain technology is more secure than other payment systems.
There are also some speculators who like cryptocurrency because they are skyrocketing in value. These speculators have little interest in the long term acceptance of currencies as a way to transact payments. This creates the volatility in the crypto currency prices
Is Cryptocurrency legal ?
Cryptocurrency is legal in most of the countries and cryptocurrencies although they are not officially recognized as legal tender. Bitcoin, the most popular cryptocurrency is legal in the USA.
El Salvador became the first country to legally recognize Bitcoin as a legal tender. It may be due to the fact that most of people in El Salvador do not hold a bank account and they can hold Bitcoin in a digital wallet.
Several countries have started to bring oversight and legislations to control the cryptocurrencies. Some countries have also have started thinking about creating digital currencies like US Federal Reserve is exploring the possibility of creating a Digital Dollar.
It is apparent that cryptocurrency or digital currency in the future of payments and will impact business operations. Although there is scepticism around the price volatility, the future of cryptocurrency looks promising and upcoming years will see more growth and adoption of cryptocurrencies. Apart from cryptocurrency, the underlying technology, blockchain has generated interest in other industries. Proponents of cryptocurrency firmly believe that it has immense potential and a very big change in crypto is forthcoming as finance institutions makes its entry into the market.