What is the meaning of Cryptocurrency?
If you are new to the word ‘Cryptocurrency’ then this article is just written for you. Many of you already know what is the meaning of Cryptocurrency but yet you still need to know a lot more if you want to dive into it and make profit. In simple layman’s language Cryptocurrency is a digital currency or virtual currency and is a kind of digital asset. Since it has got no physical presence it cannot be felt nor it could be seen with your bare eyes.
Here are some facts that you should know before jumping into cryptocurrency?
Before trying out something new in your life its always a good idea to make a through investigation about that thing and that’s why I have written this article. Well! Here are some facts and information about cryptocurrency that you might consider to learn:
Cryptocurrency uses Crypto or Cryptography technology
This technology is considered to be highly secured in terms of data encryption and so is adopted for Cryptocurrencies. This technology helps the data to be encrypted in such a way that any messages or transactions that occur are available and accessible only to the concerned parties. This technology also helps preserve anonymity and secrecy. To know more reliable information about Cryptography check out these website links on: Kaspersky website, Investopedia website
Cryptocurrency also uses Blockchain technology
Blockchain is a fast growing powerful technology that is used to maintain distributed database. This technology works best in handling distributed ledgers on a peer to peer computer network. This technology is said to be highly reliable as it cannot be mutated because the data is recorded chronologically and chained together. Every piece of new data is recorded in separate blocks, is organized in hierarchy and linked together. Once the data is entered it stays forever and cannot be altered or deleted. Refer these sites to know more on this topic: IBM website, Microsoft website.
From this we can clearly understand that Cryptography technology is used for encryption and Blockchain technology is used for maintaining shared database.
Did you know that there are video games that use Blockchain technology and are probably called as the Blockchain games?
Adoption of Blockchain technology in online game industry changed paved a way to use cryptocurrency to play, buy and sell game assets. Some of the Blockchain games offered assets worth real world value. Blockchain video games started to surface during the period 2017. The first one was CryptoKitties developed by Dapper Labs a Canadian based game studio company. This game in particular allowed players to buy and sell virtual cats with Ethereum cryptocurrency. Most of the Blockchain based video games allow users to buy and sell NFT (non-fungible token) kind of assets only. The NFTs are highly secured because they cannot be transferred without the owner’s permission. Not only that, the most important thing is that they cannot be duplicated.
Although many gaming companies implemented cryptocurrency, some of the popular companies such as banned crypto because of its misuse. Yet there are other gaming companies that still want to go with cryptos. You can google What is the meaning of Cryptocurrency? to know more.
Types of cryptocurrencies
As of 2022, the statistics show that there are thousands of cryptocurrencies circulating around the world. But very less are popular and widely used. Since the source code of cryptocurrencies are most probably opensource, developers can modify it to create a new cryptocurrency. This means that anybody can create them! Among all cryptocurrencies, the Bitcoin was the first and still the most popular crypto in the world. It is said that an annonymous person named Satoshi Nakamoto was responsible for the invention of Bitcoin in the year 2008 and it was roughly released in 2009. The initial price of a Bitcoin was $0.00 and the current price of one Bitcoin is roughly $35851.70. Refer to the image below:
The demand for Bitcoin is consistantly growing every year and there are forecasts that predict higher growth possibilities in future as well. So if one by luck possessed few Bitcoins few years back, then he or she could have become a millionare by now!
If you put Bitcoin on one hand and all other cryptocurrencies on the other hand, Bitcoin would weigh more! Cryptocurrencies can also be categorized in this manner as well. You can term Bitcoin as one set of cryptocurrency and all other cryptocurrencies as altcoins, that is alternate coins or non Bitcoins.
Next to Bitcoin, some of the other popular cryptos are: 0x, Algorand, Avalanche, EOS, Ethereum, Binance Coin, Bitcoin Cash, Cardano, Chainlink, Dash, Decred, DigiByte, Dogecoin, Internet Computer, Litecoin, Monero, NEM, Neo, Polkadot, Polygon, Solana, Stacks, Stellar, Storj, Tether, Terra, Tezos, Tron, USD Coin, VeChain, XRP, ZCash to name a few. Please note that I have listed them in alphabetic order and not their popularity.
Now that you have some hints about What is the meaning of Cryptocurrency? lets proceed to know about their pros and cons.
Advantages of Cryptocurrencies
- Transacting with cryptos are very easy as compared to traditional currencies. Anybody can easily buy and sell cryptocurrencies and send them to their digital wallets without any kind of restrictions. Even there are Bitcoin ATMs available at some places that allow you to buy Bitcoins for an exchange of cash.
- Cryptocurrency transactions are highly secured. Hackers cannot steal them unless they know the private keys of a particular wallet. Hence its almost impossible for any kind of security breaches.
- Transactions happen very quickly with lightening speed.
- Transacting with cryptos incurr a very less fee as compared to other traditional transactions. As it is decentralized it doesn’t require any banking organization or such to carry out the transactions and hence no intermediaries of any sort required. Its very helpful especially when you do some cross border and international transfers.
- You have more privacy as compared to other traditional transactions.
- Cryptos are highly accessable and one can do transations from anywhere and anytime. All required is an internet connection.
- Transactions cannot be undone or irreveresed as nobody can mutate them.
Disadvantages of Cryptocurrencies
- One of the biggest disadvantage is that Cryptocurrencies are decentralized and not regulated by and government bodies or organizations. So nobody can question if anything goes wrong. And hence there is a high risk with this always. If you want to invest in it then you should understand the risk, think several times and then take an action.
- The second major disadvantage is that Cryptocurrencies could be used in limited places. What is the use of cryptos when you can’t use them just like traditional currencies. Since the vast majority around the globe have still not accepted them, one can hardly use them to buy and sell real world things or do some money exchange.
- Market value of Cryptocurrencies are inconsistant and perhaps there could be a sudden increase or decrease which may result in both huge profit or huge loss.
- Risk of loss due to technicalities such as crash of hard drive data due to virus or any other technical reason. It could be a bad luck if you lose your data resulting in loss of assets. Hence there could be a possibility that a richer person could become nothing in seconds.
- Payments once done is done for ever and could never be recovered.
- Because there is no one to control or command, there is a high chance of misuse. Often there is a threat that Cryptocurrencies could be easily used by anti-social elements for illegal activities very easily.
Cryptography and Blockchain technology are really awesome because they are highly secure and reliable. As far as Cryptocurrencies are concerned they are not widely adopted yet and there could be no predictions made in this regard. There are chances for making both huge profits or huge losses so one should bear the risks of Cryptos before investing. I hope that this article on the topic What is the meaning of Cryptocurrency? is useful.