A popular belief about cryptocurrency was that it would be a big fail but the recent returns of Bitcoin and altcoins proved all of us wrong.
What is Cryptocurrency?
Cryptocurrency is a digital currency whoever ownership and transactions data are recorded on an electronic ledger.
In fact, this electronic ledger is a cryptocurrency’s blockchain that updates together on over 10, 000 computers around the world.
Further, the protocol becomes the creation and proof for the transactions of cryptocurrency
In other words, the protocol is a list of rules define how the process will carry out to update the position into the ledger.
Moreover, the transactions are in the form of unique codes and secured by cryptography principles.
Cryptography allows the transactions such as creation, change of ownership, etc. to record in several listings through blockchains
But, the blockchains can be public or private.
If it is public, anyone can write the list of transactions and it doesn’t have any gatekeepers to say yes to or decline the parties
whereas,
If it is private, then the allowed gatekeepers have full authority to say yes to or decline parties to use any transactions.
For such as: Bitcoin and Etherum belong to the public blockchains.
The huge expansion of crypto has created an entirely new and global industry.
How does Blockchain technology works?
At first, the term “Blockchain” looks very hard to figure out, this is why most of us don’t attempt to know about it.
But, it’s easy to know about it as it is simply managed by software running on computers that communicate with each other forming a network.
The following tasks have been performed by the network: --
Connect with other members in the network
Download the blockchain from other participants
Store the blockchain
Search for the new transactions
Verify and store those transactions
These Blockchain stores data in batches called blocks.
Each block is like a webpage of a digital ledger or record book to form a reliable linked line in a sequential way.
Each block consist of three elements:
1. DATA
A block’s data offers the details about the transaction including sender, radio, number of coins, and so on.
2. HASH
A hash in the blockchain is similar to a fingerprint or signature which is unique in nature.
3. HASH OF THE PREVIOUS BLOCK
The last element makes a blockchain become secure.
Thus, the block of transactions has a date and time stamps that require the permission of everyone to improve.
How secure to do cryptocurrency transactions?
Security is one of the most essential factors to do any transactions.
Such transactions involve banks and third parties to secure the transactions.
But the crypto transactions don’t need an authorized, it makes itself secure and exchanges carried out with no error.
The first way a blockchain secures itself is by hashing.
Block’s hash can instantly change on tampering with any of the blocks in a blockchain.
In fact, changing a single block makes all the following blocksinvalid.
Additionally, Evidence of work and peer-to-peer distribution gives extra security to crypto transactions.
Proof-of-work (PoW) is a method that delays the construction of blocks.
For such as. In Bitcoin’s case, it takes about ten minutes to calculate the mandatory PoW and add a new block to the archipelago.
This timeline makes disrupting a block very difficult because if you interrupt one block crypto drainer , you need to interrupt all the following blocks.
A simple blockchain contains hundreds of thousands of blocks, so it might take 10 years to control it.
What is Bitcoin?
In 08, Satoshi Nakamoto launched the first-ever cryptocurrency named “Bitcoin”
It is the first crypto transaction over the internet with no alternative party involved to say yes to or refute it.
Bitcoin located notice in 2017 when its value increased by 1317%.
Such growth in the value of Bitcoin counts it as an instrument of value investing.
Some of the main features of Bitcoin are: --
1. Bitcoin’s trading symbol is BTC. 2. It is minable and involves computers in resolving problems. 3. It is created through proof-of-work. 4. Transaction time is between thirty minutes and a day. 5. It requires a lot of energy to my own.
Not to mention, Bitcoin has been declared dead over 1000 times! But it lives on with the high trading prices.
Finally, the people invested hugely in Bitcoin and give it the title of digital gold.
What is Etherum?
Etherum is the second most popular crypto after Bitcoin. It was planned in 2013 by European American Vitalik Buterin
Etherum was built up to improve Bitcoin’s design like speed, security, anonymity, and more.
Like Bitcoin, Ethereum is also a bunch of protocols written out as code recorded on Ethereum’s blockchain
Some of the main features of Bitcoin are: -1. Ethereum’s expression symbol for investors is ETH. 2. It is minable. 3. It is created through proof-of-work (PoW). 4. Transaction time is as little as 14 seconds5. Ethereum requires less energy than Bitcoinmining.
What is Cryptocurrency Mining?
Mining is the process to create the blocks through computers, chips, and designed software.
The proportion of mined blocks is roughly comparable to the hashing power.
The mining requires special-purpose chips called ASICS to unravel problems for the validity of transactions in the blockchain network.
Miners solve the difficulties to obtain the created cryptocurrencies (such as Bitcoins) and transaction fees.
What are Initial Coin Offerings?
Initial Coin Offerings (ICOs) are like Initial Public Offerings (IPO’s) to increase the funds for the companies.
To launch the ICO’s, companies describe a particular service or product in a document called a whitepaper and announce their ICO.
Benefits of cryptocurrency
Cryptocurrency is qualified to solve the difficulties that are important for the rise throughout the market. These are: --
1. REDUCING FILE CORRUPTION
Crypto is not under the power of a single thing or person. Although, many people or members over the network have distributed power to avoid the use of power destroying by a single individual which finally results in no file corruption
2. ELIMINATE THE MONEY PRINTING
The costa rica government authorized the banks to print the money and it becomes extreme when the economy of a nation dropped.
But, the printing of money leads the other problems such as devaluing the currency. As a result, inflation increases, and the value of money means bathroom paper.
On the other hand, digital currency like cryptocurrency doesn’t need printed money to determine its value.
3. NO MEDIATORS CONTROL INVOLVED
Not to mention, traditional cash is controlled and regulated by banks and the government.
But, crypto cannot govern by any regulatory body and only you can access your crypto for transactions.
4. EASY ACCESSIBILITY TO EVERYONE
It is a fact that a big the main world doesn’t have easy accessibility to banks.
Thus, crypto can solve this problem as anyone can access their funds even through mobile phones.
What are the risks involved in crypto investing?
Till now, we discussed the crypto benefits and how it can change the world but noting can be workable only with the nice things.
Thus, it is necessary to know about the risks involved in crypto. These are: --
1. HIGHLY VOLATILE
The crypto is highly volatile. On one day, you will find a return of 100%, and the very following day, it accidents like a terrible.
2. NO REGULATIONS
Since there is no regulation in crypto. Hence, the risk of steal and can be claimed illegally anytime by the government is very high.
Nevertheless, the costa rica government can frost nova your account or demonetize the currency anytime.
3. CAN BE USE BY CRIMINALS
Indeed, the crypto transactions don’t reveal the person’s identity, which cannot give any data that it is using by a criminal or a person.
Crypto investing made many of its investors rich but you need to not invest blindly in it.