What is cryptocurrency?

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andre francois mckenzie JrjhtBJ pGU unsplash

What is cryptocurrency ?

The simplest answer to this question is cryptocurrency is a method of storing and exchanging digital assets that are designed to work independently of any central authority. That means that it operates outside of state control.

 Cryptocurrency could be used in order to transfer money securely over the internet without the use of a third party, such as a bank or credit card company.

 It has many uses, including but not limited to; peer-to-peer transactions, information storage in “digital wallets”, and decentralized applications (DApps).

Bitcoin is often called the first cryptocurrency. It “solves” one of the problems inherent in fiat currencies (such as US dollars) by enabling individuals to securely send and receive payments without involving any banks or other third parties.

Put simply, it is a consensus network that uses an open ledger to record transactions between two parties efficiently and in a verifiable manner.

 The ledger itself can be programmed so that it validates transactions with minimal trust required – this is sometimes referred to as ‘proof of work’. 

The general public now has many ways to buy, sell, trade, earn, learn about digital currency via websites like coinmarketcap.com or bitcoinfees.com

The key characteristics of cryptocurrencies are related to security and its underlying blockchain technology.This Crypto Circle X describes all about cryptocurrency.

 Transactions are recorded on the blockchain, the digital ledger which is distributed among all participants in the system. Users can control their transactions through encrypted keys (private keys) which are used to sign off any transaction. 

This process prevents anyone else participating in the network from using your funds (unless you allow them or they steal it). 

Through this, cryptocurrencies use cryptography to secure all transactions. This also makes it impossible for third-party agencies to interfere or halt transactions like with traditional currency exchanges.

Bullion: 

Aka: Physical Gold is a term used for bars of gold, silver, platinum etc which are held in vaults by banks and traded on the open market just like with cryptocurrencies.

 The London Bullion Market Association is an international association of precious metals markets. Bars are often purified, created by specialist refineries and stamped with an official guarantee of weight and purity .

GoldCoin: 

GoldCoin (GLD) is a peer-to-peer cryptocurrency which operates on the proof-of-work algorithm.

 It was created to be used in digital transactions just like Bitcoin but because it was created before Bitcoin it has some major differences including the security aspect.

 Instead of using SHA-256 like Bitcoin to secure transactions, Goldcoin uses Scrypt meaning that you can mine Gold Coins from your PC or laptop instead of buying expensive mining hardware for large scale mining operations.

 That means that many can mine and enjoy the benefits of ownership. It also means that the difficulty of mining decreases as more people start to use Goldcoin and its network. 

Goldcoin was created on May 21, 2013 and since then it has become an established coin with a global following .

Gold Pressed Latinum:

 Gold Pressed Latinum (GPL) is a fictional currency from the Star Trek franchise.

 It is used as a plot device in various spin-off series including Star Trek: The Next Generation, Star Trek: Deep Space Nine, Star Trek: Voyager and Star Trek: Enterprise.

 The currency has no stated value in the story and has varying exchange rates depending on where it is traded .

Facts about cryptocurrency :

1. Cryptocurrencies are decentralized digital currencies .

That is not issued by any central financial institution, government, or other regulatory authority.

 The use of cryptography for securing transactions means that cryptocurrencies are secure .

 They are also anonymous meaning there is no inflationary risk because no central bank can print money.

2. Cryptocurrencies can be exchanged between different users.

Without the need to involve a third party like a bank or clearing house. Thus, the process of exchanging cryptocurrency is very fast and inexpensive because it does not require centralized exchange .

However , this could be vulnerable if the exchange platform becomes hacked, loses its customers’ data or is forced to close down because of regulatory pressures unlike with traditional currency exchanges.

3. The time it takes to process a transaction is now minutes not days.

Usually because there are fewer middlemen involved in the transaction and they don’t charge for this service.

4. Hacks are less common because of this .

Mutual P2P (Peer-to-Peer) Cryptocurrencies distribute the risk of having to make all transactions public by collecting all transactions within the system in one place (the blockchain) and making them publicly verifiable .

 If one person loses their data , it won’t affect everyone else.

5. No or minimal government control .

Cryptocurrencies are not controlled by any government, corporation, organization or individual. This means that you can transfer money without needing to pay high fees and wait days for the transaction to go through .

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