A cryptocurrency or crypto is the collection of binary data which works as a medium of exchange. A ledger which is a computerized database using strong cryptography to secure transaction records is used to store the individual ownership of the coin. It helps monitor the transfer of coin ownership and controls the creation of coins. Crypto does not exist in physical form and is not issued by a central authority. It is a digital form of money, build on blockchain, which only exists online. According to statistics, the number of users of various cryptocurrencies has grown by 66 million up until 2020.
Cryptocurrency uses encryption to authenticate and protect databases and transactions. At present, there are over 5, 000 cryptocurrencies in the world. Many people invest in it with the belief that this is the key to a fairer future economy. These below-mentioned reasons are the reasons why people assume this as the future of finance:
The dawning of decentralized finance (DeFi):
It is not new news that the current centralized financial system has failed to provide financial freedom and credibility to its users. Defi, may help ease this process. It is quickly gaining traction in investing, trading, that catalyzes a revolution in today’s financial services. With the increase in the cryptocurrency market, the popularity of DeFi is increasing as well. It’s believed that in near future, cryptocurrency will change the centralized financial system to DeFi, which shall allow more access to financial services.
Varied Values of Cryptocurrency:
Since the cryptocurrency does not have an asset value, so it holds value in various ways. It can be used to buy goods and services without requiring a trustworthy third party. Also, since it is limited, so storage might influence their value. Every people who have no access to traditional banks can enter the financial system with its help.
Transaction and Banking Benefits with Cryptocurrency:
As cryptocurrency has been proliferating, the techniques and technology also keep evolving. There are many benefits the cryptocurrency system can offer as a financial system. It helps maintain anonymity as the system is powered by the use of various different cryptographic techniques. Since it is carried out using cryptocurrency so there is no chance that it will be changed or forged.
Most popular Cryptocurrencies that one might start to invest in:
At present, there are more than a thousand Cryptocurrency, most of which have the least, or no values. There are however few selective ones that are highly recommended by the experts. It is anticipated that if we make a wise investment in the potential cryptocurrency in present, it shall yield astonishing outcomes in the future. The cryptocurrency news outlets maintain a coin desk of the 20 most popular cryptocurrencies that are being brought and sold.
It is the first decentralized cryptocurrency. It is the most followed and owned cryptocurrency. It was initially created to be used as a digital payment system, but experts soon claimed that it is still too volatile to be used for that. Bitcoin market price as of today is $48,916.47.
It is the cryptocurrency of the Ethereum network. It is an open-source blockchain upon which developers can build apps and other cryptocurrencies. Besides, bitcoin is the largest cryptocurrency by market cap. Its value has risen to $3,000 for one token but still lacks behind $40,000 per coin to bitcoin.
It is a cryptocurrency of the Ripple digital payment network. XRP has been built for insuring digital payment and markets itself as a faster and more efficient way to power global payment. Ripple and XRP allow for third-party development on other users for XRP.
It is a stable coin, the largest stable coin by market capitalization, which was one of the first cryptocurrencies to tie its value to fiat currency, in this case, the U.S. dollar.
Cardano uses a technology called ouroboros. It is a peer-reviewed blockchain protocol. It describes itself as a secure and scalable way to maintain decentralization.
Polkadot (DOT) allows different blockchains to exchange information and transactions with one another. Their website plays up data and secure identity, allowing the users to be in control.
Stellar’s native cryptocurrency is the lumen (XLM), which is designed as an “Open Network for storing and moving money”. It allows people to create, send and trade digital money. If you have some Lumen cryptocurrencies, it will allow you to trade and sell all digital Moines.
USD coin defines itself as the world’s digital dollar. It is created by a global financial firm called the Circle. Since the USD Coin is tied to the U.S. dollar, its price is much higher than other cryptocurrencies. Due to its stability, it has more potential to lend itself towards digital payments.
Dogecoin (DOGE) was created as a parody cryptocurrency, but soon it soar in value in the early summer of 2021. After gaining the support from the Tesla CEO, Elon Musk, there has been tremendous growth in its value and popularity.
It ensures security and reliability by the uses real-world data.
What is a Blockchain? and its role in Cryptocurrency
A blockchain is a distributed database. It is shared among the data structure of the computer networks. It stores the information’s electronically in a digital format. They play a critical role in the Cryptocurrency system. It helps maintain a secure and decentralized record of the transaction, maintaining anonymity at the same time. It guarantees the security of the data and generated trust without the need for a trusted third party.
If you are wondering about how this is any different from any other database, well it is because of how the data is structured in it. A blockchain collects information’s in a group termed as blocks that hold sets of information. Each block has a certain storage capacity and once the capacity is met, it is closed and linked to previously filled blocks. All the fresh information added to the block is compiled into a newly formed block which will further be added to the chain once filled.
Its main goal is to allow digital information to be recorded and distributed, without any access to being edited. Blockchain is the foundation for immutable ledgers that cannot be altered, deleted, or destroyed.
Crypto Ban: Countries Action on Cryptocurrency
Crypto has been in controversy since the very first. The use of the crypto coins for the exorbitant use of electricity to mine is seen as a safe option during the economic crisis. Some country, however, has placed a ban or limitation on crypto transaction.
Cryptocurrency is banned since 2018.
Since 2014 is a use of the bitcoin complete ban in the country.
China has issued a warning against the digital asset market and clamped down on mining since August of 2021. There was a complete ban on cryptocurrency since September 2021.
Colombia restricted the crypto ban since 2014.
Egypt has had a tight banking system in order to prevent the crypto trading system since September 2020.
Crypto is banned in Indonesia since the start of 2018.
India has started to show a negative impression regarding crypto. Since November 2021, the Indian government has been trying to discourage crypto transactions.
Crypto has been banned in Nepal since August 2017.