Cryptocurrency: The Digital Money That is Fast Taking on the World

Published October 27,2017 1 year ago Posted By Justinas Danis

Reading Time: 3 minutes

Cryptocurrency is a type of digital money which is designed in such a manner that it is completely secure and in many cases used anonymously.This type of currency is used only over the Internet where Cryptography is implemented, which is the process of transforming legible information into a code that is almost impossible to crack and enables accurate tracking of purchases and transfers.

Cryptography is not a new concept. It dates back to World War II when the need for secure communication was immense. With the advent of digital era, it has evolved to be the most secure way of communication, money line and information with the application of computer science and mathematical theory.

The most significant example of cryptocurrency is bitcoin. It came into being in 2009 and is still the most important one. There has been a rapid increase in the presence of cryptocurrencies in the period of last ten years and one can find on the internet cryptocurrencies exceeding 900 in number.

Why cryptocurrencies are popular?

The most popular way of exchanging value has been paper money and gold, but cryptocurrencies have made this secure, anonymous and empowered the users with greater control. Transaction in cryptocurrencies cannot be reversed or faked. Being digital and decentralized, unlike the previous modes like paper money and gold, they rule out the need for intermediaries, facilitate lower fees, and of course far greater control of funds.

Things to know about cryptocurrencies

The increasing popularity of cryptocurrency calls for a clear understanding of what it is about. Here’s what you need to know about cryptocurrencies:

How do cryptocurrencies work?

Cryptocurrencies operate with the aid of decentralised technology that allows users to pay securely and store money, while sparing them the need to share their identity or use the services of a bank. These currencies make use of blockchain which is a distributed public ledger that records all transactions that currency holders may update and hold.

Every unit of cryptocurrency is generated with the help of a process called mining, which involves solving of complicated math problems by computers. Users can, however, purchase the cryptocurrencies from brokers, and make transactions or store them through cryptographic wallets.

What are the most common cryptocurrencies?

Bitcoin: Most people have heard more about Bitcoin than any other cryptocurrency. In 2009 Satoshi Nakamoto developed this cryptocurrency. It is the most commonly transacted cryptocurrency till the present time, and enjoys market capitalisation of approximately $45 billion as of July 2017.

Ethereum: This cryptocurrency enjoys second place after Bitcoin in terms of popularity and value. Ethereum was developed more recently in 2015, and is the currency token utilised in ethereumblockchain. As of July this year, the market capitalisation of this cryptocurrency was around $18 billion. The currency had to face plenty of problems after a hacking attack in 2016, after which it got split into two currencies. In recent times, its value has fluctuated between extremes, from being as high as $400 to being as low as 10 cents.

Ripple: Founded in 2012, this distributed ledger system is used not just to track cryptocurrencies, but other types of transactions as well. Banks like UBS and Santander have used Ripple, and its market capitalization is about $6.3 billion.

Litecoin:  It is pretty similar to bitcoin, but has gone through several innovations that allow quicker payments and capabilities to deal with variety of transactions.  This cryptocurrency has estimated $2.1 billion of total market value.