What is Cryptocurrency?

What is Cryptocurrency?

 

Cryptocurrencies are taking the world by storm, particularly with the rise of Bitcoin and other such digital/virtual currencies. Cryptocurrency is a digital currency that is stored and created electronically in blockchains. There are specialized cryptocurrency exchanges for trading and storing these currencies as well. There are encryption techniques used for streamlining the monetary unit creation and also for fund transfer verification. This heightens the security quotient. These do not have any physical format at all and cannot be redeemed for another market commodity such as gold.

When it comes to cryptocurrency market capitalization and availability, their supply is not influenced by any central authority or bank. Additionally, the whole network remains totally decentralized. Some of the popular options include Bitcoin, the one that started this global craze, PPcoin, Litecoin and Namecoin among others.

Bitcoin and the nature of cryptocurrency

What is cryptocurrency then? This is a type of digital money that has been encrypted to remain absolutely safe and in many situations, absolutely anonymous. This currency is linked with cryptography where legible information is transformed into codes which are virtually indecipherable, for the tracking of transfers and purchases. Bitcoin Cryptocurrency was the first one to arrive in the year 2009 and is also the most popular one globally at present. Several other cryptocurrencies have sprouted up over the last 8-9 years or so.

Several people have gone into cryptocurrency mining with mixed results. In fact, there are now multiple exchanges for trading in bitcoin and other virtual currencies. At these exchanges, the cryptocurrency prices keep changing based on demand and other aspects. Bitcoin was invented by Satoshi Nakamoto who wished to come up with a unique peer-to-peer electronic cash mechanism. This system of digital money was totally decentralized which was something radical at that point.

How Cryptocurrency came into being

Satoshi could find a way to actually realize digital cash with a highly technical process. This led to the actual inception of cryptocurrency as we know it. Payment networks, as many people know, are vital for realizing digital cash. These networks should encompass balances, accounts and other transactions. However, every network has to keep a tab on any double transactions, i.e. preventing the spending of exact amounts two times by a single entity. This is taken care of in most cases through central servers which also specialize in balance record keeping.

However, this server is not available in any payment network which is fully decentralized. As a result, each network entity has to cover this function. Each peer should have a transaction list in order to verify the validity of future transactions. In case of network peers do not agree about a transaction, the whole chain is broken. Total consensus is needed. Satoshi made sure that this consensus came about minus having any central authority. This helped in making cryptocurrencies such innovative and attractive innovations with a sizable global impact of their own.

What is cryptocurrency wallet?

A cryptocurrency wallet is digital that is created by a user to store cryptocurrency. The wallet is then used create unique public addresses for cryptocurrency exchange.

What is cryptocurrency address?

A public address used to receive cryptocurrency is a unique line of characters. Each and every public address has a matching private address to it that is a key to prove ownership of that particular public address. The address is called a Bitcoin address which is like a unique email ID that enables you to can send money to as opposed to emails.

The two most famous cryptocurrencies are Bitcoin and Ethereum.

Bitcoin is the top cryptocurrency that functions like a gold standard digitally among other cryptocurrency rates. This operates as a payment method worldwide. Within seven years since its origin, Bitcoin‘s price has climbed to more than $650 which is higher than any other cryptocurrency prices and its transaction rate touched in excess of about 200.000 of daily transactions.

Ethereum is the idea of young maverick VitalikButerin. It has secured the second place after bitcoin globally. Unlike Bitcoin, its blockchain validates balances and accounts sets. This indicates that Ethereum is able to undertake transaction processing through complex programs and contracts.

This unique feature makes Ethereum the most effective blockchain application instrument. However, Ethereum comes for a price. After the Dao was hacked which was a smart contract based on Ethereum, the developers made up their mind as to a hard fork. This was done without any consensus and this lead to Ethereum Classic coming into being. Besides, there are other Ethereum clones as well. Ethereum is comprised of different Tokens like the DigixDAO and Augur. Thus this makes the Ethereum a cryptocurrency family as opposed to one currency.

The future of cryptocurrencies seems to be far fetching with its popularity raging like wildfire every passing day. Every new cryptocurrency seems to emerge and the old ones fade away. While the early adopters become rich the investors lose money. People are indulging to investing in cryptocurrencies more these days because they fear of their national currency to face a severe devaluation. In Asia, as bitcoins are flourishing, the darknets of cybercriminals are increasing too. More companies are adapting to smart contracts and token on Ethereum which is the first application of blockchain technology in the real world. Cryptocurrency is sure to bring a revolutionary change in the world economy in the next few years. It will severely affect the control of the bank and government on people’s money.