The name cryptocurrency (digital money) no longer holds a nameless identity today.
It is a well-understood term among seasoned investors, traders, and technocrats. Its viability amounts to safety for those experts believing in a system of digital currency circulated in a manner inviting a zero possibility of forgery or misappropriation via cybersecurity threats.
However, there are still people being clueless as to what cryptocurrency stands for, what is its use, its benefits, and how it would be a safe alternative to bank currency in near future.
Perhaps the reason behind cryptocurrency being a foreign term to many people is that it is still a complicated and esoteric subject, thanks to its several vague explanations endorsed by some know-all geniuses.
What is a cryptocurrency?
Just as we have banknotes or bank currencies in legal tender to buy a product or service to cater to our daily purpose, cryptocurrency somewhat holds a similar connotation, albeit in a way that is technically more nuanced than the physical money.
Cryptocurrency is a digital currency that allows its holder to pay for goods or services he/she has purchased as a mode of virtual payment. Or you can also trade your cryptos for profitable gains. An online ledger associated with crypto transactions is protected by fail-safe cryptography. Cryptos are usually referred to as unregulated currencies.
The payment system carried out by cryptocurrency is said to be far quicker, easier, and safer due to the fact that it allows a systematic payment approach based on blockchain technology (a distributed database of time-stamped blocks linking to each previous other).
Now, what needs to be understood here is how this digital currency/money is different from the conventional bank currency.
Cryptocurrency Vs. Bank Currency
The main difference between crypto money and bank currency is that the former one is decentralized, global digital money.
To put it simply, unlike bank currency that is governed by a central government of a country, crypto money is not fettered under governmental control and interference. Meaning, cryptocurrency is not controlled/regulated by banks or supported by a central government in a country.
Therefore, crypto can’t be loaned at banks, be printed, or issued.
As clear as it seems from the aforesaid explanation, cryptocurrency rules out the possibility of an intermediary required to process a monetary transaction from a sender to the recipient.
Popular Cryptos Currently in Trends:
- USD Coin
- Binance Coin
History Of Cryptocurrency – Genesis Of Digital Money
In contrast to the popular belief that Bitcoin was the first cryptocurrency that was brought to existence by Satoshi Nakamoto in early 2009, the history of digital currency belies this notion. In fact, it takes back to the era which didn’t register the presence of Bitcoin at all.
Moreover, the idea of what cryptocurrency actually was remained an unanswered puzzle until cryptographers exercised several relentless efforts when a cryptocurrency named Bit Gold was introduced to the world by a computer scientist by the name of Nick Szabo, in 1998.
One may argue that the genesis of Bit Gold didn’t have its full-fledged circulation and popularity, but it goes without saying that it, in fact, spelled a way forward for the launch of Bitcoin.
When was Bitcoin brought to existence?
Bitcoin was created by Satoshi Nakamoto in 2009 followed by his release of a white paper stating a newly-devised cryptocurrency called Bitcoin. Don’t think that Bitcoin tasted its pervasive popularity like today. As a matter of fact, it took many years of time for the crypto to finally get accepted by merchants as a monetary form of payment.
The Significance Of Bitcoin Cryptocurrency
Today the popularity of Bitcoin can be imagined with the fact that it enjoys a market capitalization of $735.3 billion as tracked by CoinMarketCap. This means, Bitcoin is the largest digital currency based on its market capitalization, which also explains its paucity and exorbitance (high price).
The mining of Bitcoin so far has been more than 18 million. The main thing about this first decentralized cryptocurrency is that it doesn’t require intermediaries (banks or governments/agents) during peer-to-peer transfers. It uses blockchain technology with which a person from any geographic location can transact bitcoins to an intended recipient.
What Is A Blockchain Technology?
A public distributed ledger, blockchain is an inherent technology or a specific type of database of bitcoin that store data and then chain them together in chronological order. The entry of new data is made into a fresh block (a small unit of blockchain) until it is filled.
Thereafter, the sequence-wise chaining of the data-loaded block is done onto the former block. It should be noted that blockchain technology allows the storage of information of varying natures/types. However, the widespread use of this technology is as a ledger to transact bitcoins.
The experience of crypto transactions is like keeping a track of your daily expenditures, in which a group of blocks (similar to pages) constitutes blockchain.
What Is Decentralization In Blockchain?
When a cryptocurrency like Bitcoin is used in a decentralized way, it simply means that any possibility of involving an intermediary during a peer-to-peer transfer of the crypto is ruled out. In other words, no person or group, except the collective users, controls Bitcoin transactions.
A decentralized blockchain also means that data, once entered, can’t be reversed. Irreversibility of entered data is the main feature of decentralized blockchain technology.
So, bitcoin transfers used in a decentralized way simply means that the transactions are recorded for good and are publicly viewable. It also means that the recorded transactions can’t be hacked.
What are the Benefits of Cryptocurrency?
The cryptocurrencies have their efficacy pertaining to their seamless application in both personal and commercial use, even though such usage is not fully widespread globally, as yet.
One may argue what qualifies digital money to become relevant in its respective application for both personal and commercial use, given it is not broadly accepted in a legal tender in many countries?
I think that the sooner the use of cryptocurrency comes enforced in almost all the countries in the world, the doubt surrounding its relevancy and impacts on the economy of a country would be cleared.
Jotted down below are some of the top benefits offered by cryptocurrency.
Unlike fiat currencies that mandate a user to wade through several procedures enforced by the centralized governing body before making transactions, transacting cryptocurrency, on other hand, involves no intermediary.
You can transfer your crypto to the recipient account without having to depend on an intermediary like agents, brokers, etc.
Moreover, you don’t have to pay additional fees or commissions during crypto transfer. The omission of such hassles makes crypto transfer quite an easy and simplified procedure for users. In other words, the users hold the transfer autonomy.
Understand that transacting crypto to a recipient account follows a decentralized networking system heavily encrypted. This explains why cryptocurrency transfer is secure due to encryption as well as peer-to-peer networking structure that circumvents the possibility of involving a middleman.
More often than not, such transactions are quite anonymous which means, hackers are prevented from spying on your crypto activity. They can’t access your confidential details related to crypto account history. None but you are authorized to view the transactions done recently.
Unlike banks that document each and every transaction history of your money for future reference, a crypto transfer does not lay out such a regulatory obligation for users.
Bankable for the Unbanked
A report suggests that there are around 7 billion unbanked adults holding no account at any financial institution. One of the reasons behind this points out to some herculean procedures maintained by financial institutions which lay down several mind-numbing terms for applicants to comply.
No doubt, such procedures pose a headache for most depositors, who then turn their eyes to an efficient alternative ruling out any mandatory fulfillment of official obligations as found in the banks.
Since cryptocurrency offers that kind of freedom, people, understandably, make a beeline for it.
Purely Peer-to-Peer System
One of the greatest benefits of cryptocurrency is that it involves a peer-to-peer payment system. The meaning of this system is that a user doesn’t have to rely upon a third party or intermediary. Crypto to be transacted to or from anyone on the network excludes the requirement of an authority’s approval.
An Investment Viability
Since the advent of Bitcoin, there has been in circulation of more than 5,000 altcoins serving over 2000 markets. Moreover, the prediction about crypto’s investment viability is also gaining momentum, given its continuous growth in circulation worldwide today.
Cryptocurrency is no longer an anonymous name in the world of digital currency, given its gradual circulation all around the world.
Some concerns regarding the safe trading of cryptos still hold the dissent of many investors toward the viability of digital assets in the future. This explains why people require conducting deep research to get the hang of how a system of decentralized digital money works.
However, the fate of cryptocurrency to dominance the world’s economic space in the future remains unquestionable regardless.
With illustrious personalities like Elon Musk being the ardent supporter of cryptos, we can say for sure that we are very much inching forward to a future wherein the pervasive circulation of digital money in a legal tender would be reality.