What is Cryptocurrency?
Cryptocurrency is all the rage right now. Everyone is talking about it, indulging in it, and more. So why be left behind?
Cryptocurrencies are a crucial tool in the increasingly digital world we have today. However, a lack of proper knowledge about it can make it seem intimidating when it is one of the most accessible tools out there. So read on to find what is all the hype about cryptocurrencies and why they matter now.
In simplest terms, cryptocurrency is a virtual or digital currency. The specialty about it is that digitalization is done via cryptography. This makes it very secure and almost impossible to steal or counterfeit.
Cryptocurrencies are available on blockchain technologies and a decentralized network. The network is enforced through a distributed ledger. The blockchain network is spread over several nodes or computers. It is difficult to hack into all nodes simultaneously. This is what makes them secure.
At the same time, it is this decentralized network that keeps them outside of any regulations or interference from bodies such as the government. As a result, they hardly stand a possibility of collapsing. Moreover, the decentralized ledger makes sure no one party can have a lopsided claim on this digital currency bank.
How Did Cryptocurrencies Come to Exist?
Cryptocurrencies have been here for a while. However, they only gained mainstream popularity in 2017. This was primarily because crypto prices had suddenly risen by a lot. One of the first digital currency makers was bitcoin.
One of the primary reasons why bitcoin became immensely popular and continues to dominate the market today is that it was one of the first digital currencies to utilize a secure blockchain for functioning. This made it truly decentralized. Moreover, the decentralized ledger is not changeable, which keeps it secure nevertheless.
What is the Value for Cryptocurrencies?
The value of cryptocurrencies depends on their supply as well as their demand. Users of a specific cryptocurrency can purchase tokens in the blockchain. The more a particular cryptocurrency token is used, the more its value will rise.
Cryptocurrencies can be linked to real-world assets as well, from real estate to digital assets too. In turn, the value of these assets also influences the value of the cryptocurrencies they are linked to. Most popular cryptocurrencies are so either because they have a craze in the purchase or their linked value has risen in value substantially.
Throughout the years, many different cryptocurrencies have emerged. Here are some of the most popular cryptocurrencies in the market currently.
Bitcoin is currently one of the most popular and valuable cryptocurrencies in the market. The collective network issues them. It has a low processing fee, making it feasible for any crypto user. It is also one of the most widely available ones.
Blockchain technology is being used to create applications that go beyond just enabling a digital currency. Launched in July 2015, Ethereum is the largest and most well-established, open-ended decentralized software platform
Ethereum enables the deployment of smart contracts and decentralized applications (dApps) to be built and run without any downtime, fraud, control, or interference from a third party.
Cardano is another popular cryptocurrency that is emerging these days. It is a research-based cryptocurrency. Currently, Cardano has the eighth biggest market cap in the world. Although it is comparatively a newer cryptocurrency, it has already established itself as having serious potential in dominating the market.
Although often considered a joke and known as the “memecoin,” Dogecoin is also a promising cryptocurrency. It is currently the 13th biggest cryptocurrency in the world. One of the reasons why it continues to have a high value and in demand is because it has value in some of the world’s biggest valued companies, including Elon Musk’s SpaceX.
Tether is always a good choice because of its stability. One of the biggest apprehensions about cryptocurrency is its volatility. There is no such fear with the Tether coin because its value is tied to a stable currency and other external assets. This makes its value more or less stable and less susceptible to any volatility.
Difference between FIAT and Crypto
FIAT or fiat money is in the form of legal tender. It is tied up to physical currency, which is issued by a central or federal government. As we have understood earlier, Cryptocurrency is a digital currency that has no ties with any government or regulatory body.
Check this wikipedia article if you want to know more about FIAT money
With fiat currency, intermediary bodies need to be gone through as per government norms. However, in the distribution of cryptocurrency, there are no intermediaries required. Therefore, it is much easier and quicker to do transactions via cryptocurrency.
This way, cryptocurrency is also more decentralized, where everyone who subscribes to it has an equal stake in its proceedings. On the other hand, fiat currency can provide more stake to the regulatory bodies than the general people involved. This way, cryptocurrency can also be seen as more profitable.
Benefits of Cryptocurrency
There are many benefits of cryptocurrency, which is why people choose it these days. Here are some of the most profitable advantages of cryptocurrency.
Decentralized cryptocurrency is one of the most secure ways to make payments these days. With more and more digital transactions being carried out, it is advantageous to have such a medium. And it is cryptocurrency’s blockchain tech that helps keep it secure.
Cryptocurrency is available to everyone worldwide regardless of the physical borders in between. This makes it very accessible and fast because there are no logistical issues to go through, which is present in the real world when currencies are transferred across borders.
There are certain disadvantages of cryptocurrency, too, like its volatility and lack of a stable tie-up in most cases. Moreover, transactions and operations with cryptocurrency take huge amounts of energy and leave behind an enormous carbon footprint, harmful to the environment.
Nevertheless, there is much to be explored on this front. Also, its humongous advantages make it a very lucrative option to invest in as well as use. But, at the end of the day, the most crucial part is to make an informed decision and use it according to one’s means.