Cryptocurrency is a form of digital money created to serve as a means to purchase goods or services. Meaning, cryptocurrency doesn’t have a physical form but has value. Unlike currencies like Rupee in India, Dollar in the USA, Yen in Japan that are regulated by their respective governments; cryptocurrency isn’t regulated by any institution or organization.
The first cryptocurrency was introduced in 2009 popularly known as ‘bitcoin’. It was found by Satoshi Nakamoto amidst the financial crisis of 2008 to help people control their money on their own without any dependency on banks, companies, etc. But the identity of Satoshi Nakamoto is pseudonymous; it could be a person or even a group of persons.
Features of cryptocurrency
- It doesn’t have any physical form.
- It has a monetary value.
- It is built on computer algorithms.
- Its value changes very frequently.
Advantages of cryptocurrency
- It has lesser chances of fraud because of blockchain technology.
- The transaction cost is negligible due to the elimination of third parties.
- The speed of transactions is lightning fast.
Disadvantages of cryptocurrency
- It is not backed by the government or institution.
- The crypto exchanges might not be very safe.
- It promotes the chances of illegal deals.
Working of cryptocurrency
|FACT: Blockchain technology was first invented in 1991 by a group of researchers that remained unused until 2009 when cryptocurrency was invented. In a circular released by RBI in 2018 the trading of cryptocurrencies was banned in India but after numerous petitions received to Supreme Court quashed it and allowed their trade in India.
- Cryptocurrency works on a technology known as blockchain. As the name indicates blockchain is a chain of blocks that store information in them.
- Each block contains data, a unique hash of itself and hash of the previous block.
- Instead of having a centralized authority blockchain uses peer-to-peer network and is open to anyone.
- When a new block is created it is sent to everybody on the network.
- Therefore, in case someone tries to tamper with the data it becomes invalid and gets flagged.
- This way, once information is stored on the block it becomes nearly impossible to change it.
Top cryptocurrencies and their worth
Initially, the number of cryptocurrencies could be counted on fingers but now it’s just not possible. There are over thousands of different types of cryptocurrencies in the world with a market capitalization of billions of dollars. According to CoinGecko, the global market capitalization of cryptocurrencies has just crossed $1 trillion.
Legality of cryptocurrency
|In a circular released by RBI in 2018 the trading of cryptocurrencies was banned in India but after numerous petitions received to Supreme Court quashed it and allowed their trade in India.
The legality of cryptocurrencies varies from country to country. While some countries have given a green signal to the trade of cryptocurrencies, some have put a complete ban on them. And in some countries including India, there are no clarified laws around cryptocurrencies as of now. Moreover, a recent cryptocurrency scam of ₹ 2.5 crore makes it overly important to have a regulatory authority set up soon. Here in this article, we have covered more details about Cryptocurrency – What lies in the future?