Cryptocurrency: Definition, Types, History and Advantages and Disadvantages

Cryptocurrency related updates

Cryptocurrency exchange Coinbase is set to be listed on the US Stock Exchange. For this, Coinbase will do its IPO on April 14. The company will raise $ 114.9 million, or about Rs 856 crore, from the primary market through this IPO. If Coinbase's IPO is successful, the company will be listed on NASDAQ under the name Coin.
With this, Coinbase will become the first cryptocurrency exchange to be listed on the NASDAQ. Ahead of the IPO, the company released its quarterly results this week. In the first quarter of the year 2021, the company's total revenue was more than $ 1.8 billion or Rs 13,400 crore.
There are currently 12 cryptocurrencies in the Billionaires list of Forbes (Forbes World's Billionaires list 2021). Last year, there were only four cryptocurrency billionaires on this list. Bankman Fried, the founder of Almeida Research, is the richest cryptocurrency billionaire in the world with a net worth of $8.7 billion. It is followed by Brian Armstrong, CEO and founder of Coinbase, the second largest crypto billionaire with $6.5 billion.
The list includes Ripple co-founders Chris Larsen ($3.4 billion), Twin Brothers, Cameron Winklevoss and Taylor Winklevoss (3-3 billion all), Micro Strategy CEO Michael Sellar ($2.3 billion), Coinbase founder Fred ($1.9 billion). Dollar), Binance founder Changpeng ($1.9 billion), digital currency group founder Barry Silbert ($1.6 billion), Block & Crypto chairman Matthew ($1.5 billion) and Silicon Valley venture capitalist Tim Draper ($1.5 billion) for crypto billionaires are on the list.

What is Cryptocurrency?

A cryptocurrency, or crypto, is a virtual currency that is cryptographically secured. It is designed to serve as a medium of exchange, where individual ownership records are stored in a computerized database. The defining quality of a cryptocurrency is that they are not issued by any country's government agency and make them immune against any interference and manipulation.

Definition of cryptocurrency-

In simple words, Cryptocurrency is a digital asset spread through multiple computers in a shared network. The decentralized nature of this network protects them from any control by government regulatory bodies. The term "cryptocurrency" itself is derived from the encryption techniques used to secure the network. According to computer experts, any system that falls under the category of cryptocurrency must meet the following requirements.

Absence of any centralized authority and is maintained through distributed network.
The system keeps records of cryptocurrency units and who owns them.
This system decides whether new units can be created in the case of advertising, decided the terms of origin and ownership.
The ownership of cryptocurrency units can be exclusively proved cryptographically.
The system allows transactions in which the ownership of cryptographic units is changed.

Types of cryptocurrencies:

The first type of crypto currency was bitcoin, which is by far the most used, valuable and popular. Along with bitcoin, other alternative cryptocurrencies have been created with varying degrees of functions and specifications. Some are iterations of bitcoin, while others are built from the ground up. Bitcoin was launched in 2009 by an individual or group under the pseudonym "Satoshi Nakamoto".

As of March 2021, there were over 18.6 million bitcoins in circulation with a total market cap of approximately $927 billion. The competing cryptocurrencies that were created as a result of the success of bitcoin are known as altcoins. Some of the famous altcoins crypto currency names are as follows:

Litecoin
Peercoin
Namecoin
Ethereum
Cardana

Today, the total value of all cryptocurrencies in existence is approximately $1.5 trillion – bitcoin currently represents over 60% of the total value.

Advantages and disadvantages of cryptocurrencies:-

Cryptocurrencies have the following advantages-

Fund transfer between two parties will be easy without the need of third parties like credit/debit cards or banks.
It is a cheaper option as compared to other online transactions.
Payments are safe and secure and provide an unprecedented level of anonymity.
Modern cryptocurrency systems come with a user "wallet" or account address that is accessible only by a public key and a pirated key. The private key is only known to the owner of the wallet.
Fund transfer is completed with minimal processing fees.

Cryptocurrencies have the following disadvantages.

The almost hidden nature of cryptocurrency transactions makes them easy to be the focus of illegal activities such as money laundering, tax-evasion and possibly terror-financing.
Payments are not irreversible.
Cryptocurrency is not accepted everywhere and its value is not stable
There is concern that cryptocurrencies like bitcoin are not contained in any physical objects. However, some research has identified that the cost of producing one bitcoin, which requires a large amount of energy, is directly related to its market value.

History of cryptocurrency

In 1983, American cryptographer David Chaum conceived of an anonymous cryptographic electronic money called Ecash. Later, in 1995, they implemented this through Digicash, an early form of cryptographic electronic payments that required user software to specify specific encrypted keys before withdrawing notes from a bank and sending them to the recipient. is required. This allowed the digital currency to be untraceable by the issuing bank, government or any third party.

In 1996, the National Security Agency published a paper to be published on an MIT mailing list for the first time describing a cryptocurrency system, How to Make it to Mint: The Cryptography of Encrypted Electronic Cash. The first decentralized cryptocurrency, bitcoin, was created in 2009 by possibly pseudonymous developer Satoshi Nakamoto. It used SHA-256, a cryptographic hash function, in its proof-of-work scheme.

How does cryptocurrency work?

A cryptocurrency (or "crypto") is a digital currency that can be used to purchase goods and services, but uses an online ledger with strong cryptography to secure online transactions. Most of the interest in these unregulated currencies is to trade for profit, with speculators at times causing prices to skyrocket.

How to make money from cryptocurrency?

The most common way to earn money from cryptocurrencies is buying coins like bitcoin, litecoin, ethereum, ripple, and more and wait until their value increases. Once their market value rises, they sell at a profit.

What is the main appeal of cryptocurrency technology?

Central to the appeal and functionality of bitcoin and other cryptocurrencies is blockchain technology, which is used to keep an online ledger of all those transactions, thus providing a data structure for this ledger that is fairly secure. and is shared and agreed upon by the entire network of individual nodes, or computers that maintain a single copy of the ledger.