cryptocurrency

 

Crypto – A Global Currency

What is cryptocurrency

A cryptocurrency is a digital currency, that works on blockchain technology and is designed as a medium of exchange online to buy goods and services and make payments and was introduced in 2009 by Satoshi Nakamoto.

Cryptocurrency don’t have a central issuing or regulating authority, instead using decentralized system to record transactions and issues new units. That’s why cryptocurrency transaction never fails, which makes it very unique.

Cryptocurrency is not considered as currency in the traditional sense. It can be classified as commodity, security as well as currency. Cryptocurrency can be seen as an asset. Unlike paper money, cryptocurrency does not exist in physical form.

The first modern and world’s best-known cryptocurrency is Bitcoin, which was launched as an open-source software in 2009. According to the report, till march 2022, there were more than 9000 other cryptocurrencies in the market.

If we talk about Bitcoin, it is a fact that the total amount of Bitcoin is limited. Cryptocurrency is a limited resource, like oil and gold. That’s why currency like bitcoin continue to increase in value as the supply goes down.

How it works?

In traditional financial deals, where two parties are using money, a third-party organization usually a central bank assures that the money is genuine and transaction is recorded. With cryptocurrencies, a chain of private computers or a network is constantly working towards authenticating the transactions by solving complex cryptographic puzzles. For solving the puzzles, these systems are rewarded with cryptocurrencies. And this process is called mining. Behind all these processes, there is a technology called Blockchain.

In the year around 2008, Satoshi Nakamoto has given an idea where the transactions and the value of money would be recorded digitally on an open ledger that contains all transactions ever made, in an anonymous and encrypted form. And this ledger is called Blockchain.

Some most popular cryptocurrencies

1.    Bitcoin

Price - $21,558.

Market Cap - $413 billion.

2.    Ethereum

Price - $1697.

Market Cap - $208 billion.

3.    Tether (USDT)

Price - $1.00.

Market Cap – $67 billion.

4.    USD Coin (USDC)

Price - $1.00.

Market Cap – $52 billion.

5.    Binance Coin (BNB)

Price - $300.50.

Market Cap - $49 billion.

 

How to Invest in cryptocurrency

There are two ways:

The first is to buy it from someone and the second is to mine new crypto coins. Buy it from someone usually happens in two ways that is by an exchange facilitated transaction or peer-to-peer transaction. For Indians, the simplest way to invest or trade in cryptocurrencies has been through the platforms operating in India such as WazirX, CoinDCX, CoinSwitch Kuber, etc.

To trade or invest in cryptocurrencies using INR, user need to rejister one of the exchange platforms by completing a KYC process. Then, a user buying crypto for first time will need to load INR money in the wallet of their cryptocurrency exchange. The cryptocurrency wallet is identified by a unique address represented by a randomly generated combinations of numbers and letters. There are two ways to load money into cryptocurrency wallet through net banking or an e-wallet.

Some Pros and Cons of Cryptocurrency

Pros are ,

·       Secure and private – Privacy and security have always been concerns for cryptocurrencies. The blockchain ledger relies on various mathematical puzzles, which are hard to decode. It makes cryptocurrency much more safe and secure than electronic transaction.

·       Decentralization – The decentralization helps in keeping the currency monopoly free and in restraint, so that nobody can determine the flow and the worth of the coin, which will keep it stable and secure, unlike the currencies which are centralized.

·       Self-governed - Governance and maintenance of any currency is very important factor for its development. The cryptocurrency transactions are stored by developers/miners, they keep transaction records up to date, safe and secured, keeping the integrity of cryptocurrency.

·       Cost effective mode of transaction – One of the most uses of cryptocurrencies are to send money across borders. With the help of cryptocurrency, the transaction fee paid by user are reduced to negligible or zero amount.

·       Trading is smooth – Varied cryptocurrency wallets and exchanges helps to convert one currency into another by trading in cryptocurrency, across different formats and by paying minimal transaction fees.

To every pro there’s are cons as well

·       No refund or cancellation – If there is any dispute between the concerned parties, or if someone mistakenly send funds to a wrong wallet address, the coin cannot be retrieved by the sender.

·       High consumption of energy – Mining cryptocurrencies require plenty of computational power and electricity input. In case of Bitcoin, mining Bitcoin requires advanced computers and plenty of energy. Major Bitcoin miner country is China.

·       Illegal transactions – Since the privacy and security of cryptocurrency transactions are high, its hard for the government to trace down any user by their wallet address. Sometimes Bitcoin is used as a mode of payment during many illegal deals in the past, like buying drugs on dark web.

In India, cryptocurrency in not legally active, but there might be an international collaboration to make crypto prohibition law effective in the country. The cryptocurrency or digital rupee might become legally active in coming year 2023, the government will levy a 30% tax on profit earned by crypto assets.

Cryptocurrency and Blockchain technology can really help to change the scientific breakers we face by providing everyone access to real time data and eliminating the major institutions, and corporation sitting on important information. According to the analysis, the global market has seen a significant growth of 10% in year 2020 as compared to previous years 2017-19 and Bitcoin price has reached all time high in 2021, as values exceeded over 65,000 USD in November 2021. I think crypto will be going to have a great future all around the world.

As “Elon Musk” says “Cryptocurrency is promising, but please invest with caution!”.