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What are cryptocurrencies really?

What are cryptocurrencies really?

Money is a crucial element in human being life. Money has had many forms from bartering, minted currency, paper money, fiat money too cryptocurrency. In a bartering system, people would directly trade one good for another like a trading horse for goat. This kind of trade found ineffective as one element had high value compared to another element, still, trade was taking place. Whereas, the minted currency was prepared from a blend of silver and gold which were printed with a picture to symbolize the face value of the coin. Later Chinese invented paper money, ultimately during that period bank was making bank notes for people to carry around instead of coins. Even now people are habituated with paper money. In today’s world, the main source of money is fiat money. Fiat money is the legal tender whose value is not backed by gold, silver or something other thing but backed by the government that issued it.

The modern revolutionary new form of currency that introduced to buy products and services are Cryptocurrency. It is one of the most controversial new modernism of money. It stands for digital currency that uses cryptography for security. Cryptography includes creating written and generated codes that allow information to be kept secret.  This form of digital money is not supported by the banks and government entity. In order to learn more about it, this money is tax-free and does not have any transaction fee.  The transaction is anonymous and protected in nature. This kind of digital currency uses peer to peer network and software with freely available sources code to reallocate and adopt the currency as users see fit. 

The first cryptocurrency is Bitcoin. It was created by an unknown person under the name Satoshi Nakamoto. It is the first decentralized digital currency. Under these, the transaction is verified by network nodes with the help of cryptography. This verified transaction is saved in public distributed ledger which is also known as blockchain. As Bitcoin is not tied with any specific country, so international payments are easy to make. It is also a form of investment, where people can save money for future uncertainty. People can send Bitcoins through mobile app or computer to transfer Bitcoins, it is more likely sending cash digitally. Every Bitcoin created has an association to specific key or address which makes each Bitcoin unique. The supply of Bitcoins are depended upon ‘Mining’. The user can purchase the Bitcoin from “digital wallet” which showcased on the cloud or on user’s computer. 

List of Cryptocurrencies:

  • Bitcoin
  • Ripple
  • Litecoin
  • Auroracoin
  • Peercoin
  • Dogecoin
  • Namecoin
  • Mastercoin
  • Primecoin

Benefits of Cryptocurrency:

  1. Easy access: 

Cryptocurrency is generously accessible to the general public. It is decentralized operation and investors from all over the world have easy access to them. Many projects which raise funds through cryptocurrency will helpful to the user. Anyone who makes online fund transfer can become part of such project.

  1. Quick and easy payment:

Making payment using cryptocurrency without credit card or sign any document is very much easy. The payment need only address of wallet of the person or enterprise to whom make the payment. Payment transfer processing is very fast and can effect in a matter of seconds.

  1. Lower fees:

The cost is nil and negligible hence cryptocurrency does not charge huge fees to conduct payment and fund transfer.  In cryptocurrency, the buyer is paying the small fee. 

  1. Highly secured:

All transaction of cryptocurrency is secured due to use of NSA created cryptography. No person except the owner of a wallet can make transfer or payments from a wallet.

  1. No third party:

There is no third party involved like a bank on whom need to trust. People can keep their wallet and use it as per their wishes. Because they are only the master of their own money.

Drawbacks of Cryptocurrency:

  1. Difficult to understand: 

As cryptocurrency new investment opportunity, but it is very difficult to understand. People end up investing without proper knowledge and lose money to something they did not learn about. People are not aware of how to use cryptocurrency and hence open themselves to the hacker. 

  1. Irreversible payment:

If any mistake happens in payment by using cryptocurrency, then there is no way to get a refund of the amount paid. There is only one way to refund money is to ask the person foe a refund payment and if he refused then forget about it.

  1. Losing wallet:

Cryptocurrencies are stored in wallet which is in computer system or mobile, if this tools lose then there is no way to get money back. It is like burring your own money. One should take care of his tools and remember the passwords of this gadgets.