All you need to know about "Cryptocurrencies" !

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What exactly is "Cryptocurrency" ?

Cryptocurrency is a digital currency invented by Satoshi Nakamoto in 2008. The word 'Crypto' means 'secret' or 'hidden'. Cryptocurrencies run in a decentralized public ledger called the blockchain. This is a record of all transactions updated and maintained by currency holders and protected by encryption. Its value fluctuates according to supplies and demands.


How Cryptocurrencies work ?

Cryptocurrencies work by using a ledger called "Blockchain". Blockchain is a system that records information in a way that makes system changes, hacks or fraudulent impossible. Blockchain is essentially a digital ledger that is replicated and distributed throughout the network of computer systems on the Blockchain. The Blockchain has many blocks, making it difficult or impossible to hack. Each block contains a unique ID for a transaction called a "Hash", which is difficult or impossible to guess or modify. Even if the hash in a single block is guessed and changed, each block has a hash of the previous block. When the data changes in the current block, the hash of the block changes. This affects the previous block because the current block has the address of the previous block. Therefore, the transaction is no longer processed in that particular block.


How are Cryptocurrencies generated ?

Cryptocurrencies are generated by mining. Mining is used to regulate or maintain Blockchain servers. To maintain it, people solve difficult math calculations using supercomputers and then receive rewards in the form of cryptocurrencies. But in some case like Bitcoin, it has a limited supply. Only 21 million Bitcoins can be mined out of which 19 million Bitcoins have been already mined, leaving only 2 million to be mined. Experts assume that the remaining Bitcoin will be mined by 2140.


Disadvantages of Cryptocurrencies

  • Payments are irreversible
  • The hidden nature of cryptocurrency transactions makes them vulnerable to illegal activities such as money laundering, tax evasion, and even terrorist financing.
  • Cryptocurrencies are not accepted everywhere and have limited value elsewhere.
  • Understanding cryptocurrency takes time and effort
  • Cryptocurrencies haven’t proven themselves as a long-term investment yet


Popular Cryptocurrencies 

  • Bitcoin
  • Ethereum
  • Dogecoin
  • Stellar
  • XRP
  • Ripple etc

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