Cryptocurrency is one of the most talked-about topics at the moment. Many people have various questions about this currency. Today we will try to know the details of that discussed and criticized cryptocurrency.
- What is cryptocurrency?
- The history behind it.
- Transaction process.
What Is Cryptocurrency?
Cryptocurrency is a type of digital currency system that has the same financial value as conventional currency. It is a kind of virtual currency system, the number of such currencies traded online is now more than eight thousand. Currencies have no real form, but they are digital and decentralized.
There are two words in cryptocurrency (crypto + currency), let’s find out what these two words mean.
Crypto – The Latin word kryptos meaning ‘hidden’ and the French word ‘grapy’ meaning ‘writing process’. So it means a kind of cryptography. Where the research is done on different ways to hide information.
Currency – A currency is a type of token that has a fixed value by which goods or services can be exchanged.
Then by cryptocurrency, we understand that it is a hidden currency system, which is safe and usable and has the same financial value as conventional currency.
The Story Behind It
People have been improving the monetary system for ages. Once upon a time, there was a system of exchange, people used to exchange goods. At that time there was no currency system. That exchange system evolved and we have entered today’s monetary system.
Efforts to invent crypto have been going on for a long time. Researchers found out that it is possible to invent such a currency from cryptography in the eighties. But they failed to solve some problems. David Chaum, an American cryptographer, first introduced the concept of digital currency in 1983.
In late 2008, Satoshi Nakamoto, a Japanese citizen, successfully solved the problem of cryptocurrency and sent it to an internet forum. He was supposed to be a software scientist, but no trace of him has been found so far.
Surprisingly his solution worked, the first cryptocurrency was invented based on the blockchain he gave. This newly discovered virtual currency is known as Bitcoin.
We have already come to understand that crypto is a kind of virtual currency. These virtual currencies are exchanged online. Let us now know how this coin is exchanged.
There are also two people involved in exchanging money normally. It is a direct (peer-to-peer) interaction between two users online. But no one can know anyone’s identity before or after the exchange here. These currencies are exchanged online between two users anonymously. All information related to these transactions is hidden through the blockchain network.
These currencies are exchanged online between two users anonymously. All information related to these transactions is hidden through the blockchain network.
This information is constantly updated on the central server of the blockchain, which no one ever knows. And there is no central bank intervention to monitor the whole matter of these currency transactions.
These coins are deposited in the customer’s account after exchange or purchase. If he wants, he can sell these coins or buy products using them.
1. Cryptocurrency currencies can be traded very quickly. Since it is exchanged online, there is no need for extra time. Rather, a huge amount of money can be exchanged in a moment.
2. No third party is required for the exchange of these coins. Transactions take place directly between the customer and the sender, so no one else knows who or what is exchanging these currencies here.
3. The cost of exchanging these digital currencies is very low. These currencies can be easily transferred in a matter of moments at a low cost. The funny thing is that there is no VAT to be paid for this currency transfer and another advantage is that it does not depend on the money sent. The cost of sending one bitcoin is the same as sending one million bitcoins.
4. Cryptocurrencies cannot be counterfeited. As it is a digital currency, it has no real shape. Once this currency has been transferred, it cannot be returned or exchanged in any way.
5. Cryptocurrencies do not have inflation, so there is no chance of the value of these currencies declining. It cannot be printed like money and the amount of these coins is predetermined.
6. The biggest advantage of these currencies is that they can be easily sent to any part of the world. There is no need to spend any money on it.
7. As cryptocurrencies are decentralized, the transaction process is safe and secure.
1. There is a separate private key for each cryptocurrency user. If a user ever forgets or loses a private key because it is too large, it is not possible to retrieve it. So users are likely to suffer in this regard.
2. Due to the decentralization of this digital glue, it is not possible for third parties to control it and it is not possible to know who is using this currency for any purpose. There are opportunities for activities like money laundering, terrorism, and illegal transactions.
3. One of the pitfalls of Bitcoin is that if a user ever makes a mistake and transacts money at another address, there is no way to get it back or get it back.
4. Although these coins are safe and secure. But these digital coins are more likely to be hacked. If for some reason they are hacked, there will be no way to get back the stolen coins. These currencies can be hacked in various ways such as Hackers can take away the user’s computer and hack private keys. Either way, if the user’s private life goes into the hands of someone else, a rich person can become poor in an instant.
5. These digital currencies are banned in many countries around the world and have many legal complications. If many of the developed countries of the developed world have allowed the use of this bitcoin.
However, despite some problems and limitations, by using cryptocurrency correctly and appropriately, we can easily enjoy a lot of benefits from this digital currency system.