What is Cryptocurrency?
I was confused when I first heard the word Cryptocurrency. Then, I was constantly looking into news and articles about it. After long research, I get to know that it is a global phenomenon. Many entrepreneurs have made fortune by investing in cryptocurrency. Usually, many of us know the term cryptocurrency but understood by a few people. So, we need to do a lot of research to get comfortable with this technology.
You can go through my articles in the Desiairdrops blog. Here, I have tried my best to give all the information with full clarity as much as possible.
What do you need to know about cryptocurrency?
Cryptocurrency is a digital currency that uses encryption techniques. It conducts a financial transaction through the internet-based medium. It uses a decentralized control system. Hence, it is not controlled by a handful of centralized digital currency and central bank systems.
Basically, cryptocurrencies are entries about token in decentralized consensus-databases. But, what is decentralization means? It is a process of planning, decision making delegated away from central authority or group. But still, a question in your mind why Cryptocurrency? Yes, here I am to answer your question.
Where did the cryptocurrency originate?
Few people know, but cryptocurrency rose as a byproduct of another invention. The First cryptocurrency is Bitcoin. Satoshi Nakamoto (a person or group of people that used this pseudonym) invented it in 2009.
Satoshi Nakamoto had no specific intention to create a currency. He wanted to build a decentralized digital cash system. In the nineties, many people had tried to create a centralized digital cash system but failed to do that. After seeing all centralized attempts had failed, Satoshi tried to build a Peer-Peer digital cash system without a central entity. And great to say, he succeeded.
This decision gives the birth of cryptocurrency. Now, if you want to know more about it, you have to get into crypto deeply.
What is the difference between a Centralized and a decentralized system?
To get digital cash you need a payment network with accounts, balance, and transaction. This is easy to get. But the main problem is that every payment network has to prevent one entity from spending the same currency twice. Usually, the central server keeps records about balances.
In a decentralized network does not have this server. So, every peer in the network has to track all transaction records to check the validity of future transactions. Also, if the currency is double-spent or not. If the peers in the network disagree by a small percentage, then everything will be broken.
Thus, every peer needs to give their absolute consensus to validate a transaction. But how can these entities reach a consensus about these records?
This attempt was totally opposite to the Centralized System. In the Centralized System, a central authority declares the correct state of balances. Now, it is challenging to implement consensus without a central authority.
Nobody believed that it was even possible to achieve consensus without a central authority.
Satoshi proved it was. It was his major innovation by inventing the bitcoin, the first and most important cryptocurrency.
The consensus-keeping process is secure. Because, it has a strong cryptographical function. The word Crypto itself indicating that it Conceal or Hiding your currency from all unfavorable actions. Hence, it is totally secured by math.
Properties: Need to know Properties of Cryptocurrency
Cryptocurrencies have two separate properties, transactional and monetary property.
Let’s talk about Transactional Property
Irreversible: Once a transaction is placed, it can not be reversed by anyone. No one could help you if you send money to a scammer. Or, a hacker steals all of them from your computer. There is no safety net.
Pseudonymous: Neither transaction nor accounts are connected to real-world identities. You receive bitcoins in the so-called address. These are randomly seeming chains of around 30 characters. It is not necessarily possible to connect the real-world identity of users with those addresses.
Fast and Global: Transactions and Confirmation both are very fast in the network. Transactions can manage instantly in the network and confirm within a minute. The total system is quite different from your physical location as they happen in a global network. There are no geographical constraints to send Bitcoin. It can be a neighbor or someone on the other side of the world.
Secure: Security is very important for any kind of transaction. In the case of cryptocurrency we can say with assurance that yes, it is secure. In cryptographic terminology, every security system requires a public key for local access and the private key for private access. For crypto wallets, the public key is your address through which other users send tokens in your wallet. A private key allows the user to access his or her own cryptocurrency.
Permissionless: No one can stop you to use cryptocurrency. But, at first you have to install and do registration in any crypto wallet. There are many crypto wallets available for free downloading. After completing the process, you can send and receive Bitcoins and other cryptocurrencies.
Controlled Supply: Unlimited supply doesn’t suit in cryptocurrency. It limits the supply of the total number of tokens. In bitcoin, the supply is decreasing and will reach its final number most probably in 2140. The supply of crypto tokens is controlled by a schedule, written in the code. The code monitors the future monetary supply of a cryptocurrency.
No debt but bearer: The Fiat-money we save in our account in nothing but debt. It’s a system of IOU, that we can not change. But, cryptocurrency doesn’t represent debt, they represent themselves only.
Major of Bank, Account forum, Software company or Government don’t do any research on Cryptocurrency. Cryptocurrencies such as Bitcoin is a permissionless, irreversible, and pseudonyms. Hence, its monetary transaction is protected from the control of banks and the government. So, you can not hinder someone to use Bitcoin. Or, can not prohibit someone to accept a payment, and can not undo a transaction.
Cryptocurrency transactions are not changeable by a government, bank and any other central institution. It attack the scope of the monetary policy by taking away the control of central banks on inflation and deflation.
Here, we represent the top 10 popular cryptocurrencies according to CoinMarketCap. Though Bitcoin is a famous one, investors and the users should keep on eye on several other cryptocurrencies.
Conclusion: What is Cryptocurrency
After long research, one thing we have to admit that the market of cryptocurrency is fast and wild. One day the whole world will turn towards Bitcoin. It will reduce fiat trouble and provide an escape against capital control. Everyday new cryptocurrency arises with new promises. Old ones die. Early adopters become wealthy and some investors lose money. Few survive in the first few months and rest dumped by speculators or investors. After that, one has to wait for their return of what they have invested without losing their hope. So, it is a very common scenario in Crypto World. Anyone wants to be an Investor or a common User may face this type of situation.
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Writer, researcher, and analyst on cryptocurrency and blockchain technology at L&P Digitech Pvt. Ltd. Also managing the content with SEO at this current company. Keen interest to know more about new technologies related to the crypto world and blockchain technology. Completed Masters in Computer Application (MCA) and holds Post Graduate Diploma in Instructional Designing with sound knowledge in Articulate3. Out of all, love to travel, listen to music, and to eat also.