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A Brief Narrative on Cryptocurrencies

Now you have a fundamental knowledge of the word “Cryptocurrency”, Keen to know the past behind this innovative creation??? earlier in the 1980s attempted to create digital money but they completely failed due to fraud and the absence of faith. In 1983 David Chaum, an American cryptographer designed unidentified cryptographic digital cash called e-cash. Later in 1995, David Chaum performed via a digital cash framework, which permitted the virtual currency or digital money to be untraceable by the issuing bank, government, or any additional third party.

 In 1996, the National Security Agency (NSA) issued a paper that authorized ‘how to make a mint’: the cryptography of anonymous electronic currency, defining it as a cryptocurrency system.

 In 2008 the world faced a tough financial problem business failed, banks shuttered, and many people were in economic predicaments, unable to pay off debts and run daily chores. Multiple banks defaulted and announced bankruptcy.

This caused developers to think of a method of transacting acquisitions of financial value without any dependence on banks. In 2009, Satoshi Nakamoto released a paper on open source software on blockchain technology, this is how cryptocurrencies came into reality.

Also, the first bitcoin trade is said to be done by Satoshi Nakamoto in 2009. Moreover, the record of cryptocurrency is not too long but it is an interesting and eventful past.

Features of Cryptocurrencies

Since you now have a good knowledge of the basics of cryptocurrency, Let me deliver you an understanding of the characteristics and benefits of Cryptocurrency over ruling currency.

Decentralized

As cited, the cryptocurrencies in the markets are not assisted by any government but are disseminated among all coequals around the globe. Hence eradicating the complexities of transactions in the present economic design like trust-based trades via banks. With the execution of blockchain, the cryptocurrencies are being transferred on a peer-to-peer basis, eradicating third-party involvement.

Comfort

Blockchain also permits digital investments to be transacted with much ease as there is more nominal paperwork and delay time for trade assurances. Since most of the operations are computerized, there are very few problems associated with human blunders. 

Economical

Since the ruling currency was centralized and there was no additional choice other than utilizing banks or financial organizations like PayPal, which demand a weighty percentage of commerce. That problem has also been successfully handled by charging negligible transaction fees. 

Secure

No matter how secured the banks declare their techniques would be since human interference is required for validation procedures, there are still risks of scams and uncertain transactions. But Cryptocurrencies offer multilayer crypto algorithms and the protection of the entire system can be said to be unchanged until and unless the fraudster governs the utmost of the digital asset’s network. Most significantly, there is less involvement of humans, which annihilates the element of human mistake.

Anonymity

It is a great reason for concern, as to how broadly data is demanded by financial organizations for conducting transactions. Your banking details or significant identities may be robbed and misused. But using cryptocurrency offers a feature to save your individuality unidentified which is loved by many.

Accepted Worldwide

Cryptocurrencies do not have any boundary limitations, the users can transmit and accept payments anywhere and anytime.

Different Kinds of cryptocurrencies

There are various types of cryptocurrencies in the market based on their functionality. Yet, they are all brought concurrently by Blockchain ledger technology. The different kinds of cryptocurrencies are detailed below: 

Payment Currencies

Payment currencies, as the word signifies, are currencies mainly used to pay for the buying of goods and services. These are identical to ruling money. 

Some examples of payment currencies are Bitcoin (BTC), Litecoin (LTC), and Bitcoin Cash (BCH ).

Defi Tokens

Blockchain has made cryptocurrency payments easier but also paved the way for a parallel ecosystem of Decentralized apps (Dapps). 

These ecosystems allow users to construct platform-specific digital tokens which are called Platform tokens. Platform tokens are utilized to help or run services and functions provided by various Dapps.

Platforms such as Ethereum(ETH), Ethereum Classic(ETC), and NEO are Blockchain ecosystems. The tokens used on these media are called Platform Tokens.

Privacy coins

Privacy coins are developed specifically to preserve the solitude of the transactions carried out. Just the sender and the receiver know the digit of coins/digital investments transferred. Privacy coin wallet addresses are also private coins.

Altcoins

Altcoins, the abbreviation of Alternate coins, other than the bitcoin all the coins are referred to as an altcoin. There are more than 7000 cryptocurrencies listed on different platforms.

Stablecoins

The coins are investments that are linked/attached to ruling cash such as the USD to keep stability. Since cryptos are very flammable (volatile), people who desire a long-term investment or dealers who want to protect their digital investments use this.

Non-Fungible Tokens

These are tokens are created mainly to hold a unique value of the subject. They are utilized for specific use-case scenarios. Let us assume that an NFT is designed specifically as a key to a private concert. That NFT can only be used to join the concert and nothing else.

Cryptocurrency Mining

The method of verifying the transactions to obtain rewards uses significant computing power (computer hardware storage). Note that you make sure you have significant access to electricity and should be capable to maintain your computing tools called “Mining Rigs”.

You don’t have to do any computations or calculations manually. All you have to do is maintain a capable electronic machine and install the application that the developers prefer. The CPU in your device will do those mathematics for you. It may be compulsory in some cases to keep the electronic devices linked to the internet. 

Trading Cryptocurrencies on exchange Platforms

One can purchase or trade the cryptocurrencies according to their demand value at a provided period and adequately market liquidity. It’s like trading on the stock market but, it’s a 24*7 process. 

You do not receive any physical investments but only receive the addresses of the digital assets that you have bought, which can be stored in your wallets. There are trustworthy platforms such as Binance, Coinbase, Pionex, etc for trading purposes. But do review for transaction fees before you trade on any of these platforms.

Where to buy Cryptocurrencies?

Cryptocurrencies can be purchased from the exchanges which are developed for crypto trading. same as the stock exchanges, the cryptocurrencies are listed on these exchanges from where an individual is required to register and trade.

There are primarily two types of exchanges

Centralized 

Decentralized

A centralized exchange has a unique entity that decides on the characteristics of the features of the currency. The fortune of the centralized cryptocurrency coin relies upon the organization.

Decentralized Exchange is controlled by its users on a distributed ledger system. Generally, a blockchain acts as a public monetary transaction database.

How do protect & store cryptocurrencies?

Same as we use wallets for protecting ruling money, there are software called cryptocurrency wallets which are specifically developed to store your public key – The key which is like an address to your account, and a Private key- A sensitive key which is the password to operate your wallet.

those who have access to your private key can register in a public ledger by effectively spending the associated cryptocurrency.

 

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