So you finally got to know about a new term “Cryptocurrency”. Well, if you search that on Google, it’ll define it as “a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank”. After that, you may go haywire because of some complicated words used by Google. But today, we will simplify it for you so that you don’t have any doubts about Cryptocurrency.
Before we learn about Cryptocurrency, first let us tell you about Cryptography. Cryptography is a method used to secure transactions and to control creation of new coins. Now, Cryptocurrency uses cryptography for the purpose of acting as a medium of exchange which is actually designed for exchanging currency in a digital format and also gets some rules applied by cryptography.
We do have a lot of Cryptocurrency today, but the one that was made first before anyone was Bitcoin and it’s still the most preferred digital-asset. Other cryptocurrencies are referred as Altcoins. Let’s make it more simplified for you if you still don’t understand what Cryptocurrency is.
Cryptocurrency is nothing but converting electricity into lines of programming codes to money and thus it is also referred as “Digital Currency”.
They don’t have any Centralized Bank Systems like the Federal Reserve System, Reserve Bank of India, etc where government have their control on the value of country’s currency. Cryptocurrency is completely decentralized that means government have no control over it to change their values. Crypto Currencies like Bitcoins are designed to get a decrease in production over time and thus they get more market gain. Bitcoin doesn’t allow more than 21 Million Coins to be circulated and this system is now being widely used which was invented by Satoshi Nakamoto.
There are different specifications available for different Cryptocurrency and most of them are based on two of them: Proof of Work or Proof of Stake. A community of Cryptocurrency Miners always maintains all the Cryptocurrency available out there. The community consists of general public that have set up their computers or ASIC machines to participate in the validation and processing of transactions. Cryptocurrency is legal in most of the countries but some countries like Iceland and Vietnam oppose it.
I hope this summarizes what you wanted to know about Cryptocurrency. And we’ve a small tip for you. If you want to stay in touch with what’s going with Cryptocurrency then Reddit is the best way. Here’s a subreddit called CryptoCurrency which will keep you updated with what’s happening with the system.