Cryptocurrency – what’s the great fuss about it? Everywhere we turn around, this word keeps ringing in our heads constantly. What is it and why does the internet create such a hype about it? Let’s dive in and see what it’s all about.
What is cryptocurrency?
Technology has changed the way people work, communicate, shop and even pay for goods. Companies and consumers don’t always prefer cash anymore, and this is what paved the way for cryptocurrencies.
A cryptocurrency, crypto-currency or crypto is a collection of binary data which was designed to work as a medium of exchange. It is a digital currency that can be used to buy or sell goods, services or even trade them for profit.
Why the name?
The name ‘Crypto’ might seem like a coded message that has an inner meaning. But, Crypto basically refers to the various encryption algorithms and cryptographic techniques that safeguard these entries, such as elliptical curve encryption, public-private key pairs, and hashing functions.
Cryptocurrencies work using a technology called blockchain. Blockchain is a decentralized technology spread across many computers that manage and records transactions. Also, this technology is what makes cryptocurrency so unique and special.
This cryptocurrency that has been the hype in recent times, was not something that was started yesterday. The first-ever cryptocurrency that was created is Bitcoin and that too in 2009, long before everyone even knew what net banking was.
This bitcoin was created in the wake of the 2008 financial crisis, which hit the world’s economic systems pretty hard. People were upset at banks and governments for a wide variety of reasons. One of these reasons was the implicit nature that citizens had to trust banks and governments, things completely outside of their control, with their hard-earned money. And to put an end to all of that or to create a new way to make things a little bit easier, Bitcoin was created.
Bitcoin – the origin
This Bitcoin was the first-ever cryptocurrency created by an individual or a group under the
pseudonym ‘Satoshi Nakamoto’. Thus, Bitcoin was created as a way for people to engage in financial transactions without relying on banks or governments. It’s a peer-to-peer currency. No one controls your money, but yourself.
After Bitcoin became a huge success and created a name, numerous other cryptocurrencies came up and created their own identity. By Aug. 2021, the aggregate value of all the cryptocurrencies in existence is over $1.8 trillion—Bitcoin currently represents approximately 46.5% of the total value.
What makes cryptocurrency different?
A cryptocurrency is more like a virtual token that is a more secure form of exchange. It is almost impossible to forge a cryptocurrency. And that is because it operates on a blockchain which is the distributed ledger. The “block” is composed of chunks of encrypted data. The “chain” is the public database in which the blocks are stored and sequentially related to each other.
Every block in the blockchain has a specific code that distinguishes itself from all other blocks in existence. This unique code is called a hash. Each and every code makes a cryptocurrency unique and difficult to replicate. This makes it easier to transfer funds without a third party like a bank or a credit card company.
Are they safe?
While there might be so many reasons that make cryptocurrency unique and special, there are things that we need to learn and be aware of. Anonymity might serve as a huge boon to most of us, but it also serves as a huge tool for crimes like money laundering and tax evasion.
The cryptocurrency market is a volatile one, so be prepared for ups and downs. You’ll see dramatic swings in prices. If your investment portfolio or mental wellbeing can’t handle that, cryptocurrency might not be a wise choice for you.
Is it the best choice?
Investing in cryptocurrency takes up a lot of courage and trust, and that isn’t something easy to do. This hype and all that it creates makes it all even more exciting. But this network of cryptocurrencies is still in its infancy stage and so it is quite unstable as it has its ups and downs. But if you still wanna take a leap of faith and go for it, make sure you learn everything possible about it and then step in.
Do your research, get in and do the best you can!
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