In these modern times, technology has made unbelievable advancements compared to any past time. This evolution has redefined the life of man in almost every aspect. This evolution is an ongoing process, and thus, human life on earth is continuously improving day in and day out. One of the latest inclusions in this aspect is cryptocurrencies.
To answer what cryptocurrency is and how cryptocurrencies emerged as a side product of digital cash, we need to go back and start from the beginning.
In the nineties, there have been many attempts to create digital money,
Not until Satoshi's invention, they have all failed. The single most important part of Satoshi's invention was that he found a way to build a decentralized digital cash system in cryptocurrency.
This decision became the birth of cryptocurrency. They are the missing piece Satoshi found to realize digital cash. The reason why is a bit technical and complex, but if you get it, you'll know more about cryptocurrencies than most people do. So, let's try to make it as easy as possible.
What is Cryptocurrency?
A cryptocurrency is a virtual currency that exchanges goods and services through electronic transactions without going through any intermediary. The first cryptocurrency that started trading was Bitcoin in 2009. Many others have emerged, with other features such as Litecoin, Ripple, Dogecoin, and others.
Cryptocurrency is nothing but digital currency designed to impose security and anonymity in online monetary transactions. It uses cryptographic encryption to both generate currency and verify transactions. The new coins are created by a process called mining, whereas the transactions are recorded in a public ledger, which is called the Transaction BlockChain.
How are Transactions Made on Cryptocurrency?
When one user initiates a transaction, her computer sends out a public cipher or public key that interacts with the private cipher of the person receiving the currency. If the receiver accepts the transaction, the initiating computer attaches a piece of code onto a block of several encrypted codes known to every user in the network.
Cryptocurrency is an exchange medium in Australia. Timex is a popular Australian crypto exchange that helps and has been around for many years in Australia. The exchange provides an easy, fast, and safe way to buy digital currencies for the everyday person.
What is the advantage?
When comparing a cryptocurrency with the money in the bank, the difference is that:
They are decentralized: They are not controlled by the bank, the government, and any financial institution
It has no intermediaries: Transactions with cryptocurrencies are carried out from person to person
Quick transactions: to send money to another country, they charge interest, and often it takes days to confirm; with cryptocurrencies only a few minutes
1.) Irreversible: Bitcoins and any other virtual currency can be exchanged for any world currency. It cannot be faked because it is encrypted with a sophisticated cryptographic system.
After confirmation, a transaction can't be reversed in cryptocurrency. It's designed so that nobody can reverse a transaction. Not you, not your bank, not the United States president, not Satoshi, not your miner. Nobody. If you send money, you send it. No one can help you if you send your funds to a scammer or if a hacker stole them from your computer. There is no safety net.
2.) Pseudonymous: Neither transactions nor accounts are connected to real-world identities. You receive Bitcoins on so-called addresses, which are randomly seeming chains of around 30 characters. While it is usually possible to analyze the transaction flow, it is not necessarily possible to connect users' real-world identities with those addresses.
3.) Fast and global: Transactions are propagated nearly instantly in the network and are confirmed in a couple of minutes. Since they happen in a worldwide network of computers, they are entirely indifferent to your physical location. It doesn't matter if I send Bitcoin to my neighbor or someone on the other side of the world.
4.) Secure: Cryptocurrency funds are locked in a public key cryptography system. Only the owner of the private key can send cryptocurrency. Strong cryptography and the magic of big numbers make it impossible to break this scheme. A Bitcoin address is more secure than Fort Knox.
5.) Permissionless: You don't have to ask anybody to use cryptocurrency. It's just software that everybody can download for free. After you installed it, you can receive and send Bitcoins or other cryptocurrencies. No one can prevent you. There is no gatekeeper.
Unlike currencies, the value of electronic currencies is subject to the market's oldest rule: supply and demand. “Currently, it has a value of more than 1000 dollars, and like stocks, this value can go up or down the supply and demand.
Bitcoin is the first cryptocurrency created by Satoshi Nakamoto in 2009. Its peculiarity is that you can only perform operations within the network of networks. Bitcoin refers to both the currency and the protocol and the red P2P on which it relies.
1.) Controlled supply: Most cryptocurrencies limit the collection of tokens. In Bitcoin, the supply decreases in time and will reach its final number somewhere around 2140. All cryptocurrencies control the supply of the receipt by a schedule written in the code. This means the monetary supply of a cryptocurrency in every given moment in the future can roughly be calculated today. There is no surprise.
2.) No debt but bearer: The Fiat-money on your bank account is created by debt, and the numbers you see on your ledger represent nothing but debts. It's a system of IOU. Cryptocurrencies don't represent debts. They represent themselves. They are money as hard as coins of gold.
To understand the revolutionary impact of cryptocurrencies, you need to consider both properties. As an irreversible and pseudonymous means of payment, Bitcoin is an attack on banks and governments' control over their citizens' monetary transactions.
You can't hinder someone from using Bitcoin; you can't prohibit someone from accepting payment, you can't undo a transaction.
So, what is Bitcoin?
Bitcoin is a virtual and intangible currency. That is, you can not touch any of its forms as with coins or bills, but you can use it as a means of payment in the same way as these.
In some countries, you can monetize with an electronic debit card page that makes money exchanges with cryptocurrencies like XAPO. In Argentina, for example, we have more than 200 bitcoin terminals.
Undoubtedly, what makes Bitcoin different from traditional currencies and other virtual means of payment like Amazon Coins, Action Coins, is decentralization. Any government, institution, or financial entity does not control Bitcoin.
In Bitcoin control the real, indirectly by their transactions, users through exchanges P2 P (Point to Point or Point to Point). This structure and the lack of control makes it impossible for any authority to manipulate its value or cause inflation by producing more quantity. Its production and value are based on the law of supply and demand. Another interesting detail in Bitcoin has a limit of 21 million coins, which will be reached in 2030.
How much is a Bitcoin worth?
As pointed out, Bitcoin's value is based on supply and demand and is calculated using an algorithm that measures the number of transactions and transactions with Bitcoin in real-time. Currently, Bitcoin's low price is 16,581.80 USD (as of November 26, 2020, although this value is not much less stable, and Bitcoin is classified as the most unstable currency in the foreign exchange market.
The cryptocurrency is an exchange medium like regular currencies like USD, but it is mainly designed for exchanging digital information. And here are some of the reasons why cryptocurrency has become so popular in the recent past.
Asset transfers: The financial analysts often define cryptocurrency as the method that, on a certain level, can be used to enforce and execute two-party contracts on commodities like real estate and automobiles. Besides, the cryptocurrency ecosystem is also used to ease some specialist transfer methods.
Transactions: In conventional business dealings, legal representatives, agents, and brokers can add some high cost and enough complication to even the straightforward transaction. Besides, there are brokerage fees, commissions, paperwork, and some other special conditions that may apply. On the other hand, cryptocurrency transactions are one-to-one affairs that mainly occur on some peer-to-peer networking structure. This thing results in better clarity in setting up audit trails, greater accountability, and less confusion over making payments.
Transaction fees: Transaction fees often take enough bite out of a person's assets, mainly if they perform loads of financial transactions every month. But as the data miners do number crunching that generates primarily different types of cryptocurrencies, get the compensation from the network involved, and therefore, here, the transaction fees never apply. However, one may have to pay a certain amount of external fees for engaging third-party management services to keep up the cryptocurrency wallet.
Adaptability: There are a lot of cryptocurrencies present in the world today. Adequate proportional are used for specific cases, which depict the flexibility of this phenomenon.