What Is Cryptocurrency? Beginners Guide What It Is, How It Works

Crypto-Currency

What if yours invested money increases by 400 percent within a week?

Obviously you will invest more same happened with the cryptocurrency Dogecoin.

But what is cryptocurrency and how does it works?

Let us understand every aspect of Cryptocurrency.

Cryptocurrency–It is basically a digital currency which doesn’t exist like our 100 rupees note and it can be exchanged for goods and services online. It uses cryptography technique to verify or authenticate all the transaction which is done on cryptocurrency and all this transaction history is stored using block chain technology.

Cryptography–In this process normal data is converted into data which can’t be read by normal person and it can only be understood by those who created it or for whom it is intended. The biggest benefits of cryptography is that the data can’t be altered.

Block Chain Technology -  When the data is generated through cryptography it must be stored. The data generated is stored in a block and it has some storage capacity and once the block is filled the remaining data is stored in another block. The two storage block are connected with each other and that’s the reason it is called block chain technology.

The entire cryptocurrency network is decentralized it means that it doesn’t belongs or is controlled by a single institutions like our traditional currency system. The entire system is stored at different locations around the world and when a transaction is done miners verify the transaction at different locations.

Some famous cryptocurrency :-

·        Bitcoin –It was released in January 2009. In 2011 one bitcoin was equivalent to 21 rupees or 0.30 dollars. The market of cryptocurrency skyrocketed and as of now 1 bitcoin is equivalent to 29 Lakh rupees. As of now it’s the biggest cryptocurrency according to it’s market capitalization.

·        Ethereum –It was released in July 2015 and it is most active cryptocurrency as of now. In 2016 value of one ethereum was 62 rupees but as of now it is 22 Lakh.

There are many other cryptocurrency like Polka-dot, Ripple, Dogecoin etc.

Some of the apps that can be used to trade cryptocurrency’s are Binance, Coinbase, Robinhood,Wazirx etc.

Earlier there was ban on trading cryptocurrency in India because RBI restricted the same in 2018 but Supreme Court of India lifted this ban in 2020. As of now almost 10000 crores of Indian rupees is invested in various cryptocurrency and it is big relief for them.But still there are many concerns over the same because Bank and RBI do have concerns that cryptocurrency can be used for money laundering or otherwise illegal activities and Supreme Court rejected the order of RBI because they don’t have any evidence supporting their ban.

Other than legality around the cryptocurrency there are many other concerns because mining of bitcoin uses a lot of electricity resulting in carbon emissions which is big environmental concern.As it is decentralized but still some people like creators or organization have control over the same so the may manipulate the rates of the same and if there is data loss in anyway it may result in the financial loss.

The biggest advantage of cryptocurrency is that it is secure and fast and the exchange of currency can be done easily and it is protected from inflation.