Everything About Cryptocurrency and Its Meaning

What is Cryptocurrency?

Preface

The Word Cryptocurrency is combination of two-word, Crypto meaning concealed or secret and currency means a system of money in general use. So, guys basically what is Cryptocurrency?

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Cryptocurrency is a digital currency in which encryption techniques (specifically Blockchain mechanism) are used to regulate the generation of units of currency and manage the transfer of funds, which is operating completely independent of central bank.

The first decentralized cryptocurrency, bitcoin, was invented in 2009 by presumably pseudonymous developer Satoshi Nakamoto. It used SHA-256, a cryptographic hash function, as its proof-of-work scheme.

Working

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We can also say that it is a digital currency which is designed to work as a medium of exchange. Cryptocurrency use Block-chain mechanism to verify and transfer of funds. It is sort of whole new currency system which is basically decentralized.

Working of cryptocurrency is similar to that of bank credit on a debit card. So here in both the cases a complex system that issues currency and record transactions and balances works behinds the scenes to allow people to send and receives currency electronically.

The main difference between cryptocurrency and bank credit is that instead of banks and governments issuing the currency and keeping ledgers, an algorithm does.

Now if we go a bit technically then it works like this, Transactions are sent between peers using software called cryptocurrency wallets. The person creating the transaction uses the wallet software to transfer balances from one account (AKA a public address) to another.

Future                   

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I think recently the crypto market is booming, and well in future also it has great impact on our digital currency system. Some economic analysts predict a big change in crypto is forthcoming. Some also predicts that all that crypto needs are the verified exchange traded fund (ETF).

So by this an ETF would make it easy for the people to use this digital system.

Cryptocurrency too have limitations such as one’s digital investment can be erased by a computer crash or a virtual wallet may be hacked, so this all together puts a person in dilemma whether to invest or not.

For India if I talk then here more than merely a medium of exchange cryptocurrency is a future investment.

I think when in 2013 Bitcoin gain a lot of attraction likewise in future also increasing popularity of cryptocurrency have to face more regulations and the government scrutiny 

A cryptocurrency that aspires to become part of the mainstream financial system may have to satisfy widely divergent criteria. It would need to be mathematically complex (to avoid fraud and hacker attacks) but easy for consumers to understand; decentralized but with adequate consumer safeguards and protection. So all these are criteria to satisfy, it is possible that some of most popular cryptocurrency in a few years have heavily-regulated system.

 

Should you Invest in Cryptocurrencies?

So, guys in India Cryptocurrencies are not legal tender, but however its exchanges are legal. So, in simple words trading is legal, it is very complex so.

If you are considering investing in cryptocurrencies than I would prefer to treat your investment as serious as you would treat in any other highly speculative venture.

Why I am saying it because a cryptocurrency has no intrinsic value apart from what a buyer is willing to pay for it at a point in time. And due to this it makes it very easy for huge price swings, which in turn increases the loss of an investor.

And so, if you don’t want to take risk, I would suggest you should invest somewhere else...

 Conclusion

My conclusion is after the invention of Bitcoin in 2009 there is a more prominent debate on the future of bitcoin and many other cryptocurrencies. I think there are some one at the other end who are making out huge sums of money from this.

The success of Bitcoin has inspired the creation of many types of cryptocurrencies like Ripple, Lite-coin and many more, giving competition and better options for the investors.

A cryptocurrency that aspires to become part of the mainstream financial system should have to satisfy very divergent criteria. Bitcoin’s success or failure in dealing with the challenges it faces will determine the fortunes of other cryptocurrencies in the years ahead.