A  cryptocurrency is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions, to control the creation of additional units, and to verify the transfer of assets.

It is a currency associated with the internet that uses cryptography, the process of converting legible information into an almost uncrackable code, to track purchases and transfers.

A defining feature of a cryptocurrency, and arguably its most endearing allure, is its organic nature; it is not issued by any central authority, rendering it theoretically immune to government interference or manipulation.

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                  Cryptocurrency Basics 

Public Ledgers:

All confirmed transactions from the start of a cryptocurrency’s creation are stored in a public ledger. The identities of the coin owners are encrypted, and the system uses other cryptographic techniques to ensure the legitimacy of record keeping. The ledger ensures that corresponding “digital wallets” can calculate an accurate spendable balance

Transactions: 

A transfer of funds between two digital wallets is called a transaction. That transaction gets submitted to a public ledger and awaits confirmation. When a transaction is made, wallets use an encrypted electronic signature (an encrypted piece of data called a cryptographic signature) to provide a mathematical proof that the transaction is coming from the owner of the wallet. The confirmation process takes a bit of time (ten minutes for bitcoin) while “miners” mine.

Mining:

 In simple terms, mining is the process of confirming transactions and adding them to a public ledger. In order to add a transaction to the ledger, the “miner” must solve an increasingly-complex computational problem (sort of like a mathematical puzzle). Mining is open source, so anyone can confirm the transaction. The first “miner” to solve the puzzle adds a “block” of transactions to the ledger. The way in which transactions, blocks, and the public blockchain ledger work together ensures that no one individual can easily add or change a block at will.The mining process is what gives value to the coins and is known as a proof-of-work system.

        Advantages and disadvantages of cryptocurrency

        Advantages

     

Fraud:

 Individuals cryptocurrencies are digital and cannot be counterfeited or reversed arbitrarily by the sender, as with credit card charge-backs.

Lower Fees:

 There aren’t usually transaction fees for cryptocurrency exchanges because the miners are compensated by the network (Side note: This is the case for now). Even though there’s no bitcoin/cryptocurrency transaction fee, many expect that most users will engage a third-party service, such as Coinbase, creating and maintaining their bitcoin wallets. These services act like Paypal does for cash or credit card users, providing the online exchange system for bitcoin, and as such, they’re likely to charge fees. It’s interesting to note that Paypal does not accept or transfer bitcoins.

Identity Theft:

 When you give your credit card to a merchant, you give him or her access to your full credit line, even if the transaction is for a small amount. Credit cards operate on a “pull” basis, where the store initiates the payment and pulls the designated amount from your account. Cryptocurrency uses a “push” mechanism that allows the cryptocurrency holder to send exactly what he or she wants to the merchant or recipient with no further information

Access to Everyone:

 There are approximately 2.3 billion individuals with access to the Internet or mobile phones who don’t currently have access to traditional exchange, these people are primed for the Cryptocurrency market. Kenya’s M-PESA system, a mobile phone-based money transfer, and microfinancing service recently announced a bitcoin device, with one in three Kenyans now owning a bitcoin wallet

Recognition at universal level: 

Since cryptocurrency is not bound by the exchange rates, interest rates, transactions charges or other charges of any country; therefore it can be used at an international level without experiencing any problems. This, in turn, saves lots of time as well as money on the part of any business which is otherwise spent in transferring money from one country to the other. Cryptocurrency operates at the universal level and hence makes transactions quite easy.

There is no other electronic cash system in which your account isn’t owned by someone else.

Take PayPal, for example: if the company decides for some reason that your account has been misused, it has the power to freeze all of the assets held in the account, without consulting you.

   In Simple

Ultra secure and inexpensive to secure

Political neutrality

Controlled, capped supply

Trustless operation, no need to trust others to hold and perform transactions

Permission less, no need to get permission to spend in any way you see fit

Low transaction fees and fast operation, particularly for largish transfers

Better identity control, though not anonymous, instead pseudonymous, with likely anonymous operation in the future

Impossible to counterfeit

Perfectly divisible, great for micro-transactions once payment channels are in place

            Disadvantages of cryptocurrency

  

The adoption is very slow, can you go and pay for a car, get a coffee, or do your shopping with this. NO! If you ask the average person on the street what a crypto currency is, they will laugh at you.

It is difficult to keep abreast of the issues that miners and experienced experts are dealing with. The technology issues are complex.

• There is a tremendous amount of hype. It’s difficult to learn in an environment undergoing constant change.
• The regulatory framework is incomplete.
• Too many people see it as a panacea for corruption and greed. They said the same thing about the internet itself.
• It’s impossible to predict which related businesses will be successful.
• Dealing with naysayers, fear, uncertainty and doubt.