cryptocurrency is a digital currency which is managed with the help of an
advanced encryption technique. The encryption technique used in cryptocurrency
is known as cryptography and it runs on blockchain technology. These kinds of currencies are not issued by any
central banks and not regulated by any government. Cryptocurrency has not yet
been stabilized, but, it is still used for various purposes like shopping
online and other transactions. Nowadays, there are various websites that allow
us to convert real money to cryptocurrency and vice versa. One of the
first cryptocurrency to come out is Bitcoin.
The unknown inventor of Bitcoin is Satoshi Nakamoto. In late 2008, he said that
he developed a Peer-to-Peer Electronic Cash System. Bitcoin was the first
decentralized, peer to peer payment network. Currently it is the most famous triple entry bookkeeping system in existence.
Bitcoin is like
an app or a program In order to help users send or receive Bitcoins, the user
is provided a personal Bitcoin. In the backend, Bitcoin network works with the
help of blockchain technology. Block chain is like a public ledger, it
helps a user’s computer verify and validate contains every transaction ever
processed. Mining is an important part of Bitcoin.
Mining helps in the process of adding transaction records to the blockchain, it
also helps in keeping the bitcoin network stable, safe and secure. The transactions
are approved by the bitcoin miners before it is added into the bitcoin
blockchain. Due to this, there is no identity theft, no fraud and no
A hash is a product
of a cryptographic function that connects the new block with its predecessor.
This is called Proof-of-Work. Bitcoin is based on the SHA 256 Hash algorithm. Bitcoin network is not owned by anyone just
like no one owns the internet. Bitcoin miners verify all the bitcoin
transactions, which has an entire industry and options for
Bitcoin cloud mining. Users of bitcoin can choose the software and version that
they want to use, hence developers cannot change the bitcoin protocol
immediately. Bitcoin remains as the most famous cryptocurrency and
users should also keep an eye on several other cryptocurrencies. These are some
of the most popular cryptocurrencies of today.
Ethereum – It is
an open source distributed platform and has
a decentralized platform for all applications which run as programmed without
any failure such as fraud or censorship.
– It is a
peer-to-peer digital currency that gives us instant, near-zero cost payments to
anyone in any part of the world.
Ripple – It is a real-time gross settlement
system (RTGS). RippleNet connects
banks, digital exchanges, etc., this helps in providing an effortless means of
sending money globally.
Some of the economic impacts of
cryptocurrency are as follows:
§ Power to the dark web: Dark web is a
place where lots of illegal activities take place and it cannot be accessed by
everyone. One of the disadvantages of cryptocurrency is that people do not have
to give any information about their identity. People take advantage of this
fact and do a lot of illegal transactions. Hence cryptocurrency, like bitcoins
results in the increase of cyber-crimes.
§ Politicization of Money: The
transaction of money was done through central banks. But, due to the evolution
of digital currency there is a new autonomous body which takes care of the
transactions. This means that the power is now with the masses. If digital
currency is adopted on a large scale, it can lean to politicization of money.
§ The Emergence of New Markets:
Cryptocurrencies are not controlled by anyone;
cyberspace is just used to manage this market. Due to the near zero transaction
cost and a few other features cryptocurrencies are growing at a superior pace.
Some of the advantages and disadvantages of
cryptocurrency are as follows:
§ Access to
everyone and decentralized – This means that cryprtocurrency is easily available
to the general public. Cryptocurrency uses blockchain technology and it
operates on a peer-to-peer basis.
§ Quick and
easy payments and lower fees – This means that transaction of cryptocurrency is
very easy as you do not have to enter a lot of details. Transactions are of low
fees, this makes it more desirable.
recognition and better security – Bitcoins is a digital currency that is
universally recognized at a given value. Cryptocurrencies are digital,
encrypted and it is highly secured. It is easier to steal a wallet full of cash
than to steal cryptocurrency.
§ Crypto currency is
difficult to understand and people have a lack of knowledge about it.
§ Can lose your
wallet and there is no way to reverse the payment once it has been made.
§ Cryptocurrency has
flaws because of which it is not accepted widely and is still developing.
Although still developing, block chain can be used by businesses
as it ensures safe and secure business proceedings. It
provides better governance of organizations and eliminates third party. It
could mainly help in supply chain management and banking industry.
Cryptocurrencies are not yet perfect, it is still young, new and people are not
yet completely aware of it. Cryptocurrency can only become a success if its
flaws are corrected and more people get to the benefits of using it. Better improvement
and acceptance could probably happen in the near future and cryptocurrency
would replace the normal currency.