Crypto - The Digital Currency

 What is Cryptocurrency ?

A cryptocurrency is a digital or virtual currency that is secured by cryptography (sort of coding) , which makes it almost impossible to counterfeit or double spend. Many cryptocurrencies are decentralized networks based on BLOCKCHAIN technology - a distributed ledger enforced by a disparate network of computers. A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering the theoretically immune to government interference or manipulation.

Understanding Cryptocurrencies

Cryptocurrencies are system that allow for secure payments online which are denominated in terms of virtual "tokens", which are represented by ledger entries internal to the system. "Crypto" refers to the various encryption algorithms and cryptographic techniques that safeguard these entries, such as elliptical curve encryption, public-private key pairs, and hashing functions.

Types of Cryptocurrency

• The first blockchain-based cryptocurrency was Bitcoin, which still remains the most popular and most valuable. Today, there are thousands of alternative cryptocurrencies with various functions and specifications. some of these are clones or forks of bitcoin, while others are new currencies that were built from scratch.   

•  Bitcoin was launched in 2009 by an individual or group known by the pseudonym " Satoshi Nakamoto". As of November 2021, there were over 18.8 million bitcoins in circulation with a total market capital of around $1.2 trillion, with the figure updating frequently. Only 21 million bitcoins will ever exist, preventing both inflation and manipulation.

• Some of the competing cryptocurrencies spawned by Bitcoin's success, known as "altcoins", include Solana, Litecoin, Ethereum, Cardano, and Eos. By November 2021, the aggregate value of all the cryptocurrencies in existence is over $2.4 trillion - Bitcoin currently represents appx 42% of the total value. 

Advantages and Disadvantages

Advantages:

• Cryptocurrencies hold the promise of making it more easier to transfer funds directly between two parties, without the need for a treasured third party like a bank or credit card company. These transfers are instead secured by the use of public keys and private keys and different forms of incentive systems, like proof of work or proof of stake.

• In modern cryptocurrency system, a user's "wallet", or account address, has a public key, while the private key is known only to the owner and is used to sign transactions. Fund transfers are completed with minimal processing fees, allowing users to avoid the steep fees charged by banks and financial institutions for wire transfers.

Disadvantages:

• The semi-anonymous nature of cryptocurrency transactions makes them well suited for a host of illegal activities, such as money laundering and tax evasion. However, cryptocurrency advocates often highly value their anonymity, citing benefits of privacy like protections for whistleblowers or activists living under repressive governments. Some cryptocurrencies are more private than others.

• Bitcoins, for instance, is a relatively poor choice for conducting illegal business online, since the forensic analysis of the bitcoin blockchain has helped authorities arrest and prosecute criminals. More privacy-oriented coins do exist, however, such as Dash, Monero, or ZCash, which are far more difficult to trace.

How do one can own Cryptocurrency?

• Any investor can purchase cryptocurrency through crypto exchanges like Coinbase, Cash app, and more.

Investing in cryptocurrencies and other initial coin offerings ("ICOs") is highly risky and speculative, and this blog is not a recommendation by the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions, Technicalheads makes no representations or warranties as to the accuracy or timeliness of the information contained herein.