What is CryptoCurrency? How does it work? What are its advantages and disadvantages?

What is CryptoCurrency? How does it work? What are its advantages and disadvantages?
We know what is currency; which is a physical medium used for transactions between different parties. Currency enables the smooth mutual exchange of goods and services.

The traditional currency exists in a physical form; paper or coins. Normally, it is issued by the government/the Central bank of a country and is accepted as a means of payment at its face value.

Currency replaced the barter system, the old method of exchange that was practiced for centuries.

Compared to this let’s examine what is cryptocurrency.

Cryptocurrency is a new currency, one of the major innovations of the 21st century. It can perform the functions of a traditional currency. What makes it unique and different from the traditional currency is that it doesn’t have a physical form. It is a virtual currency or digital money.


Do You Know where currency was first used?

Ancient Mespotamia-

The Mesopotamian “Shekel”, originated some 5000 years ago is the first known form of currency. 


The absence of a physical form is not the only difference though. It is not a printed material, so you can neither see nor touch it.

What Is CryptoCurrency After All? How Does Cryptocurrency Work

What is CryptoCurrency

Cryptocurrency is a digital currency that is exchanged online for goods and services. It is exchanged using Blockchain technology, also known as distributed ledger technology.

The Blockchain is a public digital ledger of transactions maintained by a network of computers as blocks, in chronological order. These blocks are linked together or chained with the help of Cryptography.

The ledger can be viewed by all cryptocurrency users. And, every transaction is independently verified by peer-to-peer computer networks, time-stamped, and recorded. Once recorded, the data cannot be changed.

The word “crypto” is derived from the encryption technology or Cryptography that is used to make the network safe and to prevent fraud or interference by third parties. Cryptographic codes, known as “hashes,” or passwords are used to chain and secure the blocks.

Unlike the traditional currency, Cryptocurrency is a free currency with no central authority overseeing the database, or transactions. This currency is not in the control of any single authority. Traditional currencies such as the rupee, dollar, euro, etc., are regulated. In contrast, Cryptocurrency is not controlled by any state, country, institution, or government.

Origin of Crypto Currency

You should know that the first cryptocurrency- Bitcoin- was introduced in 2009. It was made by an engineer named Satoshi Nakamoto of Japan.

Apart from, using cryptocurrency for online transactions, people also invest and trade on cryptocurrency for profits and wealth creation.

Charactoristics of Cryptocurrency

  • Built on Encyption technology
  • Digital Assets distributed on a network of computers
  • Decentralised structure
  • Blockchains technology to ensure the integrity of transactional data

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What is CryptoCurrency: the popular Cryptocurrencies

(As of 22.11.21)

According to the research firm, www.coinmarketcap.com, today, more than 14,500 different cryptocurrencies are traded publicly. And Bitcoin continues to lead them in terms of market capitalization, user base, and popularity.

The following is the list of the top ten Cryptocurrencies by market capitalization.

RankingName of the CurrencyPrice ($) Market capitalization ($)
01Bitcoin (BTC)56,2311.06T
02Ethereum (ETH)4,154489.20B
03Binance Coin (BNB)57996.01B
04Tether (USDT)1.0072.49B
05Solana (SOL)21264.32B
06Cardano (ADA)1.7758.84B
07XRP (XRP)1.0448.86B
08Polkadot (DOT)39.2038.53B
09USD Coin (USDC)1.0036.62B
10DogeCoin(DOGE)0.224529.36B

What are the Advantages and disadvantages of cryptocurrency?

Advantages

  • Easy to operate; Quick and straightforward process
  • You can use your smartphone; ensures quick access from anywhere
  • Every transaction is recorded in a public list and well guarded
  • As a user, you can view it
  • No intermediaries, so no payment of processing fees
  • More acceptability by large organisations, entities in various extended sectors

Disadvantages

  • Risk of losing virtual wallet or deletion of your currency
  • Risk of thefts from websites where you store your cryptocurrency remotely
  • Risk of using it for wrongful puposes by vested interests
  • Increased price volatality leading huge losses also
  • It remains an unregulated market/exchanges and attracts related risks/threats
  • Continuity is not quaranteed
  • Increased risk of cyber attacks/hacking, scams

Are cryptocurrencies banned in India?

Not presently; but the Government of India will likely prohibit all private cryptocurrencies with some exceptions like Bitcoin in the future. According to reports, Government will soon introduce the Cryptocurrency and Regulation of Official Digital Currency Bill 2021 in the Parliament to regulate the circulation of cryptocurrencies in the country. It has also planned to introduce an official cryptocurrency using Blockchain technology.

What is Cryptocurrency meaning in hindi?

क्रिप्टोकरेंसी ऐसी प्रणालियाँ हैं जो ऑनलाइन सुरक्षित भुगतान की अनुमति देती हैं, जिन्हें वर्चुअल “टोकन” के रूप में दर्शाया जाता है, जो सिस्टम में आंतरिक लेज़र प्रविष्टियों द्वारा दर्शाए जाते हैं। “क्रिप्टो” विभिन्न एन्क्रिप्शन एल्गोरिदम और क्रिप्टोग्राफ़िक तकनीकों को संदर्भित करता है जो इन प्रविष्टियों की सुरक्षा करता है, जैसे अण्डाकार वक्र एन्क्रिप्शन, सार्वजनिक-निजी कुंजी जोड़े और हैशिंग फ़ंक्शन।

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