CRYPTOCURRENCY: A DIGITAL GOLD OR A DIGITAL BUBBLE?
Technology has gone skyward in the recent past. Everything has undergone a sea change with the development of technology. People, now just can’t imagine a life in the absence of technology. We have started to buy and sell goods online and payments are also done online, which everyone finds very comfortable. Now a days, companies and customers prefer cashless payment. Human community will go cashless in the near future. Evidences of such a transformation is already seen in the society with much acceptance of Cryptocurrency .
This excerpt provides you with more information about cryptocurrency,its functioning, advantages and disadvantages, explains Bitcoin and also Etherum
Cryptocurrency strikes the news bulletin frequently, now a days.It has become a common word with financial sector and has drawn good number of investors since its introduction in 2008. This digital gold was introduced to solve the flaw in banking and double spending.
DEFINITION OF CRYPTOCURRENCY
Cryptocurrency is a digital currency intended to use as a mode of exchange and services to earn profit.
UNDERSTANDING CRYPTOS / CRYPTOCURRENCY
The prefix “crypto” literally means hidden or concealed. In this context it means anonymous.
Cryptos,like real world currencies, are meant for transaction. But, interesting part is, the identity of people involved in transactions remain hidden.
And, it does not have any physical form like Rupees and Dollars. There will be no third party interference;ie.,no government agencies or central authority involves in the transactions.
The transactions are maintained by a network or an online ledger, using blockchain technology which is highly secured by cryptography. It is regulated by its community of users and every one record all o their transactions at the same time.
Its not esay to fool the bitcoin community,if at all anyone does,they will get noticed and their payment will get rejected. While normal banking system does not provide any security and hence risk of hacking and manipulation is high. The two popular crypto coins are Bitcoin and Erethreum.
Block chain technology enables the existence of cryptocurrency.
Crypto currency is only a small function of blockchain technology. With cryptos, it maintains an online ledger thereby providing no space for hackers. It operates across over network of computers. It is not only about financing.
Block chain helps people to trust each others and also enables to transact anything like money, music, votes, their identities etc. Scholars call it an effective software that distributes database that’s managed independently and the underlying combinations makes it a utility,makes it a software effectively that has a value in the chip.
Block chain as name suggests is a chain of data,made up of units called blocks.These blocks have informations of each transactions done,which includes date and time,its value,details of buyer and seller and also an unique identification code for each exchange. These entries done in a chronological order, results in a chain of blocks.
- A public ledger that records every transactions of cryptos.
- Record is distributed across network of computers.
- These records cannot be manipulated.
- Blockchain transactions are thought to be more secure than any other mode payment mechanism.
- Made up of units called blocks.
- Blocks store informations of the transactions done.
Bitcoin is the name of the best known cryptos like Euro,Dollar etc.It does not have any physical form but exists as digital currency.
There are 4000 plus cryptos available in the market. Ethereum (ETH), Litecoin (LTC), Cardano (ADA), Polkadot (DOT) etc are some other popular cryptocurrencies. There is a limit to how many bitcoins can exist.Here with bitcoins there is a maximum of 21 million units. After this number no more bitcoins can be produced.
Related: Bitcoin MLM Software
HOW DO WE GET BITCOINS?
We get bitcoins through the process known as ‘mining’. It is the mechanism of adding new transactions to the crypto blockchain. People who intends to mine bitcoins,is given several mathematical puzzles to solve which is deployed across computers in a race. People are rewarded with bitcoins to keep racing to solve the puzzles and support the overall system,there by adding new transactions to the blockchain.
- Most popular cryptocurrency.
- Blockchain based.
- Participants are given complex mathematical problems to solve.
- Rewarded with bitcoins.
- Securde by cryptography.
- Decentralised in nature.
Ethereum or Ether is the second popular crypto currency after Bitcoin. But, Ethereum is not only a currency. It is networking platform with own programming language called’solidity’.
Ethereum also uses blockchain technology for transactions. Blockchain technology enables to maintain a public ledger which is distributed across a network. The distribution is done in such a way that ,the people who participates in ethereum network will have an identical copy of the ledger, allowing them to see all the transactions done in the past. Participants are enticed with cryptocurrency tokens for the Ethereum system ,as bitcoins are rewarded for mining. These tokens are called Ether.
Ether can be used for transactions,like bitcoin. But Ethereum can also be used to built our own applications that ‘run’ on blockchain,known as DAPPS. One of the major aim of Ethereum is to decentralize internet. Ethereum enables people to connect with each other without third party intervention. Ether supports Dapps on Ethereum network.
- Second popular currency.
- More than a currency.
- Public software programme.
- Block chain based.
- Decentralised in nature.
- Enables to built Applications.
- Programming language ‘solidity’.
- Participants are rewarded with tokens called Ether.
WHAT IS CRYPTOGRAPHY?
In simple words, cryptography refers to use of technology of encryption and decryption to provide security for communication or transactions in the presence of middle man with ill-intent. It uses certain codes and algorithms to guarantee security for transactions.
The whole world is divided on the concept of digital currency. People have attributed both bright and dark side of the concept Cryptocurrency.
- Very secure : – Satoshi Nakamoto, an anonymous person, 2008 came with this way where people transacting, doing business with peer to peer and trust is not achieved by middleman. It is very secured by cryptography.
- Easily verifiable : – The clever computational codes or hashing algorithms easily verify the transfer of funds. It also helps us to determine whether a transaction is done or not
- Decentralized mode : – Unlike traditional banking they work independent of central banking authority or any form of government agencies like RBI.They work in a decentralized manner, ie., it offers liberty from age old rules and regulations of filling up of forms, waiting for their consents. No one will force to pay fee for your payments and free from any kind of policing.
- Less manipulative : – Since it’s a decentralized currency, external interference is low and there by chances to hack and manipulate is less.
- Time saving : – As already pointed out, there is no filling up of forms, no need to wait for anyone’s consent, hence transactions happen very fast. Ones you install free software every transaction takes place within minutes.
- Irreversible: – This is one of the demerits pointed out by experts about cryptos . Ones you’ve done the transaction, that is done .Nothing can stop it.
- Volatile in nature : – Currencies are new and no one knows the real value of this form of currency. The value of cryptos keep on fluctuating as in stock market. Its price is determined by demand and supply.When the demand increases the prices go up and some times vice versa .Because of this volatile nature, people hesitate to invest here and is not ready to accept it as a form of payment.
- Environmental Issues: – As this form becomes popular, large number of mass will start using computers for mining. Mining requires powerful computers and large amount of electricity. In order to solve the problem, we need to double the generation of electricity ,which may cause environmental issues.
FUTURE OF CRYPTOCURRENCY
Predicting the future of cryptocurrency before stamping its feet in the market is quiet difficult. It has just start rolling up and is in its very early stages to determine its long run.But since its introduction back in 2008, it succeded in finding enough investors,though not in large number. Its features took business world with surprise,and the business world began trusting it for its decentralized nature.
The transactions are done so fast here ,using block chain technology, is another interesting factor to grab the attention of the mass. Long waitngs for the transactions are over. High security it offers is yet another intresting factor. People always look forward to the system that makes their assets secure. Cryptocurrency is highly secured with cryptography. All these factors will definitely make people to receive cryptocurrency whole heartedley.
Anyhow cryptos have already set its journey and already found 12-13 crores of inverstors across the world. By 2030 it will become inevitable part of our life. People like Billgates , Algore gave thumbs up to cryptos while Warren Buffet, Paul Krugman and Richard Schiller, both Nobel laureates,call it a ponzi scheme and means for criminal activities. Let us wait and see what cryptos have in stock for future.