The Economic Times states that over 300 million people worldwide hold Cryptocurrency at present. The increasing popularity of Cryptocurrency can be attributed to the fact that various cryptocurrencies in the market, such as Bitcoin and Ethereum, have shown tremendous value, encouraging investors to explore this field.
Definition of Cryptocurrency
By definition, Cryptocurrency is a currency that is digital or virtual. It is a tradeable digital asset. It uses cryptography for transactions on a publicly distributed ledger, also known as the blockchain. Blockchain technology is only available online. There is usually no need to rely on central banks and trusted third parties for transaction verifications in Cryptocurrency. This puts individuals in complete control of their assets.
History of Cryptocurrency and How It Works
The cryptocurrency was first invented in 2008 when Satoshi Nakamoto posted a paper called bitcoin. His real identity is still a mystery. Later in 2009, the Bitcoin software was made available to the public for the first time, and mining began.
Mining is a process wherein complicated mathematical problems are solved using computers that generate coins. Users can also buy the currencies from brokers and then store and spend them using cryptographic wallets. Moreover, mining updates and secures the network by constantly verifying the public blockchain ledger and adding new transactions. This is how Cryptocurrency typically works.
Main Types of Cryptocurrency
Bitcoin is the first decentralised Cryptocurrency that uses blockchain technology to facilitate payments and digital transactions.
Ether is the token used to facilitate transactions on the Ethereum network. Ethereum is a platform that uses blockchain technology to enable the creation of smart contracts and other decentralised applications.
Tether is a stable coin or a currency tied to the U.S. dollar. The idea behind Tether is to combine the benefits of Cryptocurrency (such as no need for financial intermediaries) with the stability of a currency issued by a sovereign government.
Binance Coin is available on the Binance Cryptocurrency exchange platform, along with other digital coins available for trading.
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Advantages of Cryptocurrency
One of the primary advantages of Cryptocurrency is that, unlike traditional finance, investors are usually not required to have a valid ID or go into a bank to use Cryptocurrency. Transactions can be made easily, at a low cost, and privately through a simple smartphone app.
Cryptocurrency is built on blockchain technology, known for its security and privacy. It involves navigating through web transactions, making them nearly impossible to trace.
- Smooth Currency Exchanges
Cryptocurrency can be bought using many currencies, like the US dollar, European euro, the Indian rupee, or Japanese yen, across different wallets and by paying minimal transaction fees.
Disadvantages of Cryptocurrency
Despite its huge acceptance, the fact is that many cryptocurrencies can be extremely volatile. Therefore, investors need to understand its methodologies fully before they invest.
Cryptocurrency exchanges can be vulnerable to cyber attacks, leading to a substantial loss of investors' money. It can also be vulnerable to scammers too. Therefore in case, the investors suspect they've been targeted, it is important to report about it.
The Financial Conduct Authority does not regulate the Cryptocurrency market, so there are usually no rules to protect your business. Therefore, Cryptocurrency can be a risky investment.
FAQs on Cryptocurrency
Q.1. Why is Cryptocurrency popular?
Because of its ease of transfer and no third-party involvement, Cryptocurrency is generally considered hassle-free, making it a popular investment choice.
Q.2. How many owners of Cryptocurrency are there in India?
Currently, India has over 100 million Cryptocurrency owners.
Q.3. What are the various cryptocurrencies currently in the market?
There are a lot of cryptocurrencies in the market, such as Bitcoin, Ethereum, Dogecoin, Ripple, Matic and Binance Coin.
Q.4. Why was Cryptocurrency developed?
Banks and governments typically control our modern currencies. However, intermediaries may cause certain problems, including their systems being cyber attacked, leading to data being controlled and tampered with. To avoid these risks, Cryptocurrency was developed.
Q.5. How does Cryptocurrency work?
Cryptocurrencies run on a distributed public ledger called blockchain, a record of all transactions updated and held by currency holders.