WHAT IS CRYPTOCURRENCY?
These days we often hear about cryptocurrencies such as Bitcoin but very few people understand what it actually means. In simple words, Cryptocurrency means virtual currency. So basically a user can buy goods and services online using Cryptocurrency. Cryptography protects this form of digital or virtual currency. The central authority does not issue it and is based on decentralized control. Many cryptocurrencies are decentralized networks based on blockchain technology— disparate network of computers enforce a distributed ledger.
Basically, the derivation of the word “Cryptocurrency” came from the encryption techniques that are used for securing networks. One of the important elements of cryptocurrency is blockchain, which is a method used to ensure the integrity of transactional data of organizations.
TYPES OF CRYPTOCURRENCIES
A group known as “Santoshi Nakamoto” launched the first blockchain-based cryptocurrency in 2009 called Bitcoin. It is the most popular form of cryptocurrency to date. In fact, over 18.6 million bitcoins have been circulated as of 2021. Although after its success, other competing cryptocurrencies are Litecoin, EOS, Ethereum, and Namecoin. Today, the aggregate value of all the cryptocurrencies in existence is around $1.5 trillion—Bitcoin currently represents more than 60% of the total value.
ADVANTAGES OF CRYPTOCURRENCY
Cryptocurrencies very well make online payments secure . These are like virtual “tokens” that adhere to ledger entries internal to the system. The major attractive nature of cryptocurrencies is that instead of depending on third parties like banks for transferring funds, they help in doing so directly. Private and public keys secure the entire transfer process. Only the owner can use the private key. A user’s “wallet” in modern Cryptocurrency uses the public key.
Another key feature is that transferring funds cost only minimal processing fees. This enables users to get rid of the high fees that banks and financial institutions usually charge. Not only this but transaction through cryptocurrency is also safe. If done through banks there are chances that they have a complete record of the transaction history. But Cryptocurrency ensures total privacy of the user’s financial transactions.
The integration of new technologies into the banking systems may drive the prices of cryptocurrency to new heights. Some countries are already working on the implementation of cryptocurrency as their alternative currency. Many countries are testing the mechanism to control and provide the legal authority for such digital currency. Although there are a bit fluctuations in the Cryptocurrency market, if used properly then this can really improve the financing sector.