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  • Pranav Nandurkar

Do you know: What is Cryptocurrency?

A cryptocurrency or crypto is a digital or virtual currency secured with strong cryptography used as a medium of exchange wherein each coin ownership records are stored in a ledger in a form of a computer database. Many Cryptocurrencies typically use decentralized networks, but it does not exist in any physical form(like paper money) neither is it issued by any central authority. Each cryptocurrency works through distributed ledger technology, typically a blockchain, that accommodates as a public financial transaction database.


MAIN TYPES ARE -

Bitcoin

Altcoin

Tokens



Out of which talking about Bitcoin -

The first decentralized cryptocurrency, bitcoin, was created in 2009 by the pseudonymous developer Satoshi Nakamoto. Bitcoin is a cryptocurrency, a digital asset designed to work as a medium of exchange that uses cryptography to control its creation and management, rather than relying on central authorities. It used SHA-256, a cryptographic hash function. Currently, the market value of bitcoin has reached more than $1 trillion.



Some facts about Bitcoins are

- There are about 18.5 million bitcoins in existence and this number changes every 10 mins when new blocks are mined.

- Of all the bitcoins 88.7% are already issued.

- There are only 21 million bitcoins that can be mined.


Next comes the Altcoin majority of which are just alternate versions of Bitcoin with minor changes and that’s how they got the name ‘altcoins’. Not all of them are the same, some of them are very different from Bitcoin. Some altcoins use different algorithms from Bitcoin. For example, Factom is an altcoin that uses PoS (Proof of Stake). In PoS, there are no miners. Instead, there are stakers.


Last comes Tokens, they are unique in the fact that they do not have their own blockchain. They are used on dApps (decentralized applications) the apps that can be built on blockchains like Ethereum and NEO.


As we know everything comes with some Advantages and Drawbacks, some of them on the use of cryptocurrencies are-


- On one side it holds the promise of making it easier to transfer funds directly between two parties, without the need for a trusted third party like a bank or credit card company. Likewise on the other hand it makes them well-suited for a host of illegal activities, such as money laundering and tax evasion. Whereas Bitcoin is a relatively poor choice for conducting illegal business online since the forensic analysis of the Bitcoin blockchain has helped authorities to arrest and prosecute criminals.


- Transaction through cryptocurrency is very fast and easy. Whereas, once you lose your wallet, there is no way to recover it back and even the payment is not reversible.


- The cryptocurrencies are known for its feature of being decentralized. But, the flow and amount of some currencies in the market are still controlled by their creators and some organizations. These holders can manipulate the coin for large swings in its price.



Some key points about the Criticism of Cryptocurrency -


- Bitcoin has always experienced some rapid surges in it. In Dec. of 2017 price per Bitcoin dropped up to $7,000 but recently it has been increasing greatly.


- Malware or data loss can cause the loss of your cryptocurrency. And once Cryptocurrencies are lost then it’s gone forever.


- Cryptocurrency blockchains are highly secure, but other aspects of a cryptocurrency ecosystem, including exchanges and wallets, are not immune to the threat of hacking.


- Being decentralized has always been criticism for some because there is no control, lack of centralization and it could influence financial security.