Crypto means hidden or secret. So, literally cryptocurrency is the (private digital) currency which is concealed. To put it in simple words, this currency does not exist physically but digitally in secret. When someone trades using cryptocurrency then the transaction is being registered through public ledger. Some of the famous examples of the cryptocurrency are Bitcoin, Ripple, Dogecoin and Ethereum etc. With passing of time, the popularity of cryptocurrency has risen up.
How does Cryptocurrency work?
The ledger where the transactions through this currency happens is being maintained by a lot of computers with the help of a lot of people which is popularly known as Peer to Peer Network. These transactions are being recorded as the blocks. With increment of each transaction, new blocks keep adding up to create a chain which is called as Blockchain. No one can disturb this order of Blockchain with any kind of fraud as it is present in a network of computers with full transparency. It is easy to track any kind of trickery with such a high level of transparency.
The software or computers which carry out these transactions are called Miners and the process through which these transactions is being carried out is called Mining.
As the transactions are registered on public ledger, so to maintain the privacy of the money that one person have, all the money and transactions are being coded which is called as cryptography.
The idea of making currency decentralised gave birth to cryptocurrency. So that everyone can try out their luck to have more and more money. But to handle the situation of how much money in this currency should be produced, the prices are being fixed prior to any trade. So, the price of any currency would be determined according to its supply and demand.
What are the advantages of Cryptocurrency?
- It is a centralised currency. So, no one can have monopoly over it.
- There is no government control over it. Countries conflict would not affect the value of money of the people.
- Cryptocurrency is limited. There is no issue regarding printing more paper currency in Bitcoin.
- Cryptocurrency is more reliable due to the usage of Blockchain technology.
What are the disadvantages of Cryptocurrency?
- There is no authority which can resolve the issues regarding the cryptocurrency.
- There can be unethical or immoral use of cryptocurrency that we can come to know in near future.
- It is not eco-friendly to use as making of cryptocurrency drains a lot of power and resources.
In India, it has not been recognised as the legal tender of the money. So, people can’t use cryptocurrency fully here. But investment in cryptocurrency is legal in India. Nonetheless, what new changes cryptocurrency will bring into this world are yet to be seen..