Cryptocurrency is the new buzzword in digital world. Though it is still at a nascent stage, many people have started transacting in Cryptocurrency of late. However, if we compare it with the traditional methods of transactions like banking and credit card, Cryptocurrency lags behind many light years in terms of popularity and acceptance. There should be hardly 3-5% people transacting through cryptocurrency. Many questions spring up in the mind when we talk about cryptocurrency. What is Cryptocurrency? When did it start? What are its pros and cons? Why are people still hesitant to use cryptocurrency even for online transactions? This article is aimed at answering such questions.
What is Cryptocurrency?
To know the definition Cryptocurrency we first need to break the term. Cryptocurrency is a digital currency where cryptography is used. Cryptography actually means, in this context, the conversion of easily readable information into an undecipherable code that is used to keep the track of various transactions done online like transfers, sales, purchases etc. Hence a simplified definition of Cryptocurrency is digital currencies wisely devised to match very high standards of security and supports/promotes secrecy of transactions. The accuracy of computer and inscrutable formulas of mathematics are intertwined to design complicated mesh for protecting currency and its transactions.
How many types of Cryptocurrencies are available in the world?
When we hear the word Cryptocurrency the first name that comes to the mind is Bitcoin. Yes that was the first ever cryptocurrency that came into being in 2009. However, it might be a revelation that there are not 5 or 10 but as many as 900 (approx.) different Cryptocurrencies fuelling online transactions globally.
How are Cryptocurrency units manufactured?
A special process is required for generating the cryptocurrency units that require solving of highly complicated and convoluted mathematical problems utilizing computer intelligence. This process is known as mining. Another way to gain Cryptocurrency units is to purchase from the brokers. Users store these currencies in cryptographic wallets and spend as and when required.
What are some popular Cryptocurrencies?
Bitcoin: Developed in 2009 by Satoshi Nakamoto, Bitcoin is the first and stilt eh foremost Cryptocurrency used in digital world for transactions. Satoshi Nakamoto who also developed the Block chain of Bitcoin is still a “Hazy figure” whose real identity is not known yet. As per the calculations of July 2017, the total market capitalization of Bitcoin is $45 billion.
Etherum: The etherum came after being in 2015 and ranks next only to Bitcoin. However, its journey so far has seen several jerks and tugs. In 2016 it witnessed a major hacking incidence that resulted in its splitting into two currencies. Besides its experienced roller-coaster ride skyrocketing to of $400 and reaching the rock bottom at 10 cents. As per the calculations of 2017 its market capitalisation is $18 bn.
Ripple: Ripple originated in 2012 and is more than just a cryptocurrency. It is a distributed ledger system that doesn’t only track cryptocurrency but is also utilized by the reputed banks including the brands like Santander and UBS. Its market capitalization is $6.3 billion.
Litecoin: Its general form is not much different from Bitcoin but it ha introduced some enhancements that offer it a unique identity. It uses the latest technology for allowing multiple transactions with the help of quicker payments and processes. Its total value touched $2.1 billion.
Pros of Cryptocurrency
Transparency: Block chain an open ledger is used to record and monitor various transactions in cryptocurrency. Hence it is practically impossible to change any completed transaction that is recorded on the ledger. It cannot be manipulated and one can verify it anytime. Lack of exclusivity promotes transparency.
Lack of inflation: A number of factors influence inflation like shifting economies and printing of notes. This situation is almost perennial/ however, the Cryptocurrency can offer a better control in this context. For example Bitcoin has already been programmed to have only 21 million bitcoins so once this quantity is reached, no more bit coin will be introduced in the market.
Portability: One of the major limitation with physical currency is transportation, you feel you heart sinking when you carry say $100,000 in hard cash while walking rough a street market after, say a day’s collection. But with Cryptocurrency like Bitcoin you can carry $10,000,000 stored in a small memory drive that can slide into your pocket.
Cons of Cryptocurrency
Volatility: The cryptocurrency being a new type of cash offers great volatility. Another worse a meagre investment in cryptocurrency during morning can shoot up to great amounts by overnight. However, the same volatility is applicable in case of lowering of value to
Anonymity: The anonymity that it promises makes Cryptocurrency a preferred choice for illegal entities and is distributed r accepted largely on the dark web. Hence it is recommendable that the users be mindful while buying Cryptocurrencies.
Lack of trust: People find it difficult to trust anything that they cannot understand. We cannot deny that most of the globe population is still unaware of Cryptocurrency and a huge portion of those who know about it wouldn’t like to use cryptocurrency in their financial transaction. Hence there are very VERY less people and institutions in the world that would accept Cryptocurrency as a form of payment.