101: What is Cryptocurrency?
What is Cryptocurrency?
Digital Cash? Online Money? No Bank?
A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. The tokens are encrypted over a blockchain. Their decentralized nature enables them to be operated out of the government’s control. In the last few decades, people are slowly shifting towards cryptocurrency.
Where did it come from?
Cryptocurrency’s technical foundations date back to the early 1980s when an American cryptographer named David Chaum invented a “blinding” algorithm that remains central to modern web-based encryption. The algorithm allowed for secure, unalterable information exchanges between parties, laying the groundwork for future electronic currency transfers. This was known as “blinded money.” The rest is history!!
Types of Cryptocurrency
Bitcoin, the currency founded by Satoshi Nakamoto remains the most famous and high-valued cryptocurrency. There are many tokens that emerged after Bitcoin’s success called “AltCoins” claiming to be an alternative to Bitcoin.
Satoshi Nakamoto is a pseudonym who launched bitcoin in 2009, making it the first blockchain-based cryptocurrency. The group or individual remains anonymous till the day and assumptions are they did this to maintain the privacy and anonymity that Bitcoin offers.
Some of the competing cryptocurrencies spawned by Bitcoin’s success, known as “altcoins,” include Litecoin, Peercoin, and Namecoin, as well as Ethereum, Cardano, and EOS. 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.
The Ultimate Investment??
The cryptocurrency did prove to be an excellent ledger against inflation and the profits were off the charts. This adds brownie points to crypto being the best investment option. On the other hand, the technology is in no more than two decades old and the uncertainty is its closest friend, such pointers may arise doubt about whether crypto is the ultimate investment or not. The debate can be pretty elaborative.
The surge and dips in any cryptocurrency are rapid and sharp, making your investment journey more like a roller-coaster ride. Your investments would flourish depending on how well do you read about the token and the technology. Unlike stock exchanges, crypto exchanges are open all the time making your investment prone to more volatility. It’s not all bad and the results are worth the risk. While short-term profits can be achieved by trading, the long terms profits can be achieved by staking and lending. Crypto is for everyone.
Advantages of CryptoCurrency
The decentralized nature of crypto allows transactions at a much faster pace as compared to traditional banking services. Due to the P2P transactions, there are no extra layers and transactions are faster. Since all the transactions are recorded on a blockchain, the transactions are secure and transparent.
Unlike credit cards charging extra fees for convenient transactions, crypto transactions require a wallet and no overhead fee is charged. Crypto cards like Crypto.com VISA Card allow the user to pay bills with one cryptocurrency with additional rewards. In the future, we might see more and more people using cryptocurrency instead of fiat currency.
Disadvantages of CryptoCurrency
With each coin with two sides, cryptocurrency too has some drawbacks. The anonymous nature of the transactions poses a threat to some extent. Since all the transactions are identified by a hash or a public key, this may work as a loophole for money laundry or terror funding. Even though the community keeps a close eye for any suspicious activity, not all transactions can be watched. With anonymity being a super-power in this era, it must be used with responsibility.
Join Us in a Social Crypto Journey: