Cryptocurrency, sometimes also known as crypto, is a form of currency that is found and used digitally. This type of currency uses cryptographic techniques to secure transactions. Unlike our traditional currency, cryptocurrencies do not have any central issuing or regulatory authority and it uses a decentralized system to hold, store or record transactions and issue new units.
Table of Contents
In simpler words, cryptocurrency is a virtual payment network that does not depend on any banks or other financial institutions to authenticate transactions. This system is a peer-to-peer network that allows people all around the world to send and receive payments. Instead of being physical money that needs to be carried around, cryptocurrency transactions and payments are entirely digital and done through an online trading website. When a person transfers crypto funds, the transactions are stressed and recorded in a distributed public ledger. Just as fiat currency is stored in physical wallets, cryptocurrency is stored in digital wallets.
How did it get its name? This currency is made from codes, it got its name because it uses encrypted codes to authenticate transactions. Now we know that cryptocurrency is created from advanced-level coding. The key purpose behind advanced encrypted codes is high-level safety and security.
The first ever cryptocurrency to develop was Bitcoin. It was founded in the year 2009 and to date it is known as the leading cryptocurrency in the marketplace.
Working of Cryptocurrency
Cryptocurrency operates on a distributed public ledger known as a blockchain that keeps the record of all transactions.
Each unit of cryptocurrency is developed by a process known as mining. This procedure involves the usage of computer power to resolve complex mathematical problems (cryptographic puzzles) that create coins. Users of cryptocurrency are also allowed to purchase currencies from various brokers or exchange platforms like Gemini, Bitcoin Trading Software, and others. Moreover, these purchased cryptocurrencies can easily be used to purchase services or goods.
Owning a cryptocurrency is owning nothing tangible as it is completely virtual. You only have a key that enables you to move a record or a unit of measure from one user to another without involving any third party or intermediary.
Bitcoin has been around since 2009. The use and applications discovered in 2009 are now changing and developing. Cryptocurrency is expected to be the future of finance. Furthermore, it is also expected bonds, stocks, and other financial assets will be traded using this technology.
Today, there are around 19,000 cryptocurrencies out there in the world. Below are some of the best-known cryptocurrencies.
This currency was launched in 2009 and is known as the first-ever cryptocurrency. Since its launch, it is still the most traded cryptocurrency in the market. It was created by an anonymous developer, later known as Satoshi Nakamoto. His identity is still not confirmed.
It was developed in 2015, today known as the second biggest cryptocurrency in the crypto market. It has its blockchain platform with its cryptocurrency Ether (ETH) or Ethereum. Moreover, This cryptocurrency is the most popular one after Bitcoin.
Launched in 2011, it is very similar to Bitcoin and that is the reason behind its name. People also used to call Litecoin Bitcoin Lite. This cryptocurrency brought in innovations and provided speedier payments and transactions. It also allows for processing more transactions per second.
Ripple is also a cryptocurrency or you can call it a distributed ledger system that was established in 2012. Ripple can be easily used to track various types of transactions and not just related to crypto. The company behind Ripple has worked with multiple banks and financial establishments.
All cryptocurrencies that were launched after Bitcoin are now called altcoins or alternative coins to distinguish them easily from original ones.
When we talk about cryptocurrency, there is a clear division in the world. There are two types of people, those who support cryptocurrency and those who do not. Big names like Bill Gates and Al Gore support cryptocurrencies and prefer them over regular currencies because they are safer and easier to use. On the other hand, people like Warren Buffet and Robert Shiller are against it and call it a criminal activity.
Cryptocurrencies are expected to occupy over 25 percent of national currencies in the future.