What is Cryptocurrency? | A Brief Explanation To Cryptocurrencies
What is Cryptocurrency?
Question of the year. Surely was question of the previous years too. Maybe for future years as well. Yes, everyone is asking here and there about Cryptocurrencies. Everyone is keen to know about it. But only a handful of people know about it and it’s power to change the present systems of making monetary transactions.It’s like if WhatsAPP is a punch to text messages, Cryptocurrency is a jab to Fiat Currency.
A Cryptocurrency,as the name suggests, is a secret/hidden currency which exists in the records called public ledger, just like the balance in your bank account’s passbook, talktime in your mobile phone, DTH,etc.
It cannot be physically seen or felt, but is used for online transactions, making and receiving payments, just like internet banking.
A cryptocurrency is a digital or virtual currency that uses cryptography for security.
Cryptography or cryptology is the study and practice of techniques to communicate securely in the presence of third parties. Using the code language that only those people know, to whom the codes have been informed, this technique of securing the information to be passed is known as Encryption.
Just like the code languages used in James Bond ,Mission Impossible movies !!!!
More specifically, cryptography is about creating codes for data, that prevent third parties or the public from reading private messages.
Difference between Cryptocurrency and Fiat(traditional) Currency:
A cryptocurrency is usually in a digital form, unlike the fiat currency which is in physical form.
Another difference, which is one of the most defining feature of cryptocurrency is , that it is decentralized. It means no government or bank has control over it. It has its own value and is based upon the demand and supply for it in the market .Just like gold, it has its own value.
Again, different from Fiat Currency in a huge way.
So if no government or bank has control over it, how does it came to existence??? A big question that must be forcing you to scratch your head, right??
The first decentralized cryptocurrency, Bitcoin, was created in 2009 by an individual or group of individuals known as Satoshi Nakamoto. It uses SHA-256, a cryptographic hash function, as its proof-of-work scheme.
Other cryptocurrencies, followed Bitcoin and came into existence more or less in a similar way to it, with some changes, in order to differentiate and compete with each other.
So by now, I am sure you might be clear to the concept of Cryptcurrency to some extent. You may be having some doubts , but still a bird name Cryptocurrency is now known to you . After reading the above information you might be fascinated about this new thing which will drastically change the future of money. Well, you are not alone! Cryptocurrencies is gaining huge popularity and is even accepted as payments by big names, such as Microsoft,Wordprss,Overstock.com,Expedia.com, etc. (Click here to view a list of companies accepting Bitcoin)
As of now, more than 700 crypto currencies are trading in the market, but only few of them are gaining popularity. Bitcoin, is the most popluar cryptocurrency as of now.
For more updates about Cryptocurrencies, visit our Cryptocurrency Section.
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Rohit Kukreja is a Commerce graduate with Financial Markets expertise involving Stocks, Forex, Futures & Options Market and now Bitcoins & Cryptocurrency Markets. Blockchain Enthusiast but not a techie, Rohit is an active member of various Blockchain & Crypto communities all over India.