THE IMPORTANCE OF CRYPTOCURRENCY
Table of Content
1. What is cryptocurrency
2. How does it work
3. Why is it so important
4. Advantages and Disadvantages
What is cryptocurrency (A Brief History)
In the past era when there was no use of currency. People used to do trade using barter system that is when you buy something from any shopkeeper than instead of paper money you have to give something that can be a product, material or gold. For example, some might exchange six oranges for six apples. Barter system had many flaws in it therefore, that system cannot be used and continued.
When barter system couldnot work very well than in 110 B.C, official currency system was introduced. Later on in 1250 A.D gold coins systems was introduced. However after few years the paper currency was introduced and it was used all over the world as it gained much popularity. The paper currency ius regulated by the centralized regulatory authority of the state.
Cryptocurrency has removed all the banking failures and errors. You can transfer unlimited funds using cryptocurrency furtrhermore it is safe, easy to use and encrypted it cannot be hacked. As of 2018 there are more than 100 forms of cryptocurrencies available and everyday a new form is introduced to its user. Some of the famous examples are ethereum, litecoin, bitcoin and zcash. A cryptocurrency is a coded string of data representing a currency per unit. Furthermore, it is a digital or remote wallet which can e used as a medium of exchange it is same as the rela world currency but it doesnot have physical experience and it uses crypttography to work.
How does it work
Cryptocurrency works on distribute channels called ledgers called blockchain networks blockchain consists of all the customers transaction records which can be updated and maintained by the customer itself. Cryptocurrency is creating using mining. It involved robotics to solve complex mathematical problems. Once these problems are solved then coins are generated. Cryptocurrency is intangible customer can move its coins anywhere without the use of third party. Cryptocurrency is a growing term in financial sector and its more users are expected in future.
Why is it so Important
Bitcoin was the very first cryptocurrency which gain worldwide popularity. It was created by an individual it has financially grown very well. People who have invested in bitcoin are millionaires now. Now many banks, retailers and e-commerce owners have started accepted bitcoin as a method of payment.
Ethereum is similar to bitcoin. Ethereum has its own particular blockchain it has its own built in programming language which can be used to write for example smart agreements which can be used to transfer bonds.
Crypto user usually gets “buyers Beware” notice before buying as investing in crypto is full of nerves the user may lose all his money.
Cryptocurrency is important and it will grow more in the coming years. As it is faster, easy to use, secure and digital. It cannot be hacked it is encrypted. There cannot be any fraudulent activity. And cryptocurrency like bitcoin cannot be inflated. There is no possibility for any central bank to increase the overall amount of money in the system because the maximum number of bitcoins that can ever be created is about 21 million.
Advantages and disadvantages
There is no point of failure
Transactions are anonymous
As it is a digital method it is convenient to transfer funds
Anonymous transactions can be claimed for criminal uses
There is no third party. In banking system, the third party is a bank
It becomes very expensive to invest as there are chances that user can lose all his money
Returns can also be generated
Prices are high
