What is cryptocurrency and why its popular?
- Cryptocurrency is a digital trading currency that allows you to buy goods and services, or to trade your goods with profit. You can also say cryptocurrency is a digital asset that is mainly designed for exchanging coin ownership and is also an online ledger. Their records are stored in databases by powerful cryptography for securing or protecting the transaction, also to have a record of the creation of extra coins, and also to verify the transferring. They are mainly used for making profits in their trade.
- Cryptocurrency doesn’t exist in real form like paper money. It isn’t controlled by any central authority. These are mainly decentralized as compared with centralized digital currencies. When cryptocurrency is issued by a single issuer is it centralized. But when issued by a decentralized authority, it works as a distributed ledger backed by blockchain (which serves public databases).
- Popular cryptocurrencies backed by blockchain are Bitcoin, which was first released in 2009 (the 1st decentralized network).
- Rather than bitcoins many altcoins and crypto tokens are there to trade. This term refers to those which were manufactured after bitcoins. Altcoins are other types of digital currency. Some examples of altcoins are litecoin, ethereum, and ripple. Crypto token provides you with many functions other than making the payment. Tokens are issued to users for a contract of smart running on high of blockchain.
According to research cryptocurrency has to meet almost six conditions:
1) There is no central authority, it’s maintained by the state through distributed consensus.
2)The system usually keeps a watch on how many new cryptocurrencies are manufactured. If new currencies are possible, they have ownership of the new units.
3)Ownership can be displayed through cryptography.
4)If there are two conditions for changing the ownership they are simultaneously done by their well-managed algorithm.
5)Ownership can be proved by cryptography.
6)The transaction can only be done when they are issued by their current owner.
Why is cryptocurrency so popular?
- Most people see cryptocurrency as the currency of the future as there is a race going on for buying currencies such as Bitcoin and altcoins because their values are rising day by day.
- People often like cryptocurrencies because they are decentralized and their transactions are quite secured than traditional payments systems.
- Cryptocurrencies values are going up and they avoid long-term acceptance.
- Cryptocurrency doesn’t allow central authority or banks for managing the supply of money, as banks reduce the value of money through inflation.
- They are backed by blockchain technology which keeps your data secure.
It’s digital money that doesn’t involve any bills or physical coins. It’s all digital. You can transfer the currency without going through all the bank processes. Bitcoin and ethereum are known worldwide for trading in cryptocurrency. But as you have heard, the old one has to be replaced by a new one. So, new coins are always being created. One should learn about cryptocurrency trading in Indian exchanges.