A cryptocurrency acts as a medium of exchange which uses cryptography to secure your financial transactions, this digital currency is supported by a trust less peer-to-peer network or system called the block chain which allows you to send and receive money from others without the need of third party services such as banks and so. A Blockchain which is a continuous growing list of records also called as blocks, validates each and every cryptocurrency coin.
Cryptocurrency from the last ten years has made blockchain the most buzzing word or it is a record keeping technology behind cryptocurrencies. Block chain is actually defined as “a distributed, decentralized, public ledger.” which is not so complex as it defines, In real the words block and chain mean the digital information called block is stored in a public database as a chain which are linked using cryptography.
Satoshi Nakamoto has invented Block chain to serve as the public transaction ledger for the first cryptocurrency Bitcoin. This has solved the double spending problem without the need or influence of any third party or central server.
Blockchain uses public key cryptography and private key as method to secure this chain process, a public key is a long string of numbers called as address on block chain and private key is like a password which gives access to the digital assets of their owners. This makes the data stored in block chain to be incorruptible.
Applications of Cryptocurrency
Cryptocurrencies are exchanged over the Internet or used primarily outside banking and governmental institutions. Cryptocurrency is now used as currency exchange in business which allows the customers to trade these digital currencies to other assets, and mostly in the online gambling industry. Cryptocurrency plays a vital role in the near future. Usage of Bitcoin is growing rapidly faster and is now being used in 96 countries, with 12,000 transactions per hour. Bitcoin is being accepted as a form of payment both online and offline by a lot of merchants, from scale retailers to small local shops. The cryptocurrency coins can also be used to pay a college degree too.
Pros and Cons of Cryptocurrency
Crypto currencies are considered by the economists as a short-lived fad or speculative bubble because the prices of these virtual currency are based on supply and demand, the rate at which they can be exchanged can fluctuate widely. Bitcoin is one such example where it has experienced reaching as high as $19,000 per Bitcoin in December 2017and returning to around $7000 in the following months. Another serious concern of such unregulated peer to peer global economy has become a threat to society. These altcoins may become tools for anonymous web activities. Bitcoin with a history of almost 10 years has been a subject of hacking and theft.
The Cryptocurrency has its own pros as it claims to makes funds transfer easier between two parties in a transaction without any third party interference such as banks. Fund transfers are done with minimal fee which avoids the high fees charged by most of the banking institutions.
Yet the economist, see cryptocurrency as the future hope which preserves value and facilitates exchange without the influence of government and central institutions, and also are more transferable than hard coins.