Why is Cryptocurrency trending in the E-currency blog sphere? I was wondering until I decided to carry a little research on it so as to reveal to you guys what it’s all about before you venture into it. Maybe I should call it the ABC of Cryptocurrency.
So without getting so hyped-up; Cryptocurrency is a digital currency that uses encryption (Cryptograph) to generate money and to verify transactions. In a more technical term, it’s an encrypted, peer- to- peer virtual currency made up of codes and it’s just like any other medium of exchange like US dollars, British pounds and Euro but in this aspect, the exchanges make use of encrypted details and exchange of digital tokens in a distributed and decentralized manner and these tokens can be traded at market rates for flat currencies. Until the invention of Cryptocurrency, it was impossible for two parties to transact electronically without employing the service of a third party or a trusted intermediary. The reason was ‘double-spending' problem, which affected all attempts to create electronic cash since the dawn of the internet.
In 2008, Satoshi Nakamoto introduced a form of Cryptocurrency known as Bitcoin which completely overcame the problem of ‘double-spending as the transactions took place between the users directly without the intermediary. He was able to make this possible by introducing the use of public key cryptography, peer- to-peer networking and a proof-of-work system. Another notable introduction by Bitcoin was the employment of Ledger which was referred to as Block Chain. The work of the block chain was to store and reconcile all the transactions of the Bitcoin economy.
The blockchain is not controlled by a central authority like another electronic cash system (PayPal) but it is a public document distributed in a peer-to-peer method across thousands of nodes in the Bitcoin network. This also made it easy to track digital exchanges and prevent cheating.There are over 700 forms of Cryptocurrency such as Dogecoin, Litecoin, Blackcoin, Auroracoin, Coinye,Decred, Dash, Ethereum, Mazacoin, Bitcoin (which started operation in 2009).
IMPORTANCE OF CRYPTOCURRENCY
Secure, trustful and transparent digital currency to deal with and the world is generally moving towards that. Since Cryptocurrency is digital and cannot be counterfeited or reversed arbitrarily by the sender as with credit card chargeback.
It cuts out the need for a third party in exchanges and protects wealth against exchange controls or capital controls. Because Bitcoin and other forms of Cryptocurrency are basically digital, the location of the two parties of the transaction is irrelevant. The transaction can be done anywhere.
It makes a transaction to be highly non-disclosure or anonymous which appeals to consumers who prefers non-disclosure and privacy.
It encourages exchanges free of regulatory meddling and promotes what is referred to as low-cost banking because it can be done anywhere as long as the consumer has access to a cellphone.
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. This helps prevent identity theft as seen in the case of credit card where you give a merchant your credit card details and access to your full credit line.
They help to complement existing services that now rely on standard currencies as seen in M-Pesa in Kenya where every 1 in 3 Kenyans now owns a Bitcoin wallet.
Lower fees: There aren’t usually transaction fees for Cryptocurrency exchanges because the miners are compensated by the network.
Most importantly you are in full ownership of your account, unlike another electronic cash system where there is a company managing your account. With Cryptocurrency you own the private key and the corresponding public key that makes up for your Cryptocurrency address and no one can take that from you.
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