What is Cryptocurrency (Part 1)


What is Cryptocurrencies
What is Cryptocurrency?

What is Cryptocurrency?


#Cryptocurrency is divided into two parts, one is cryptography and another is the currency. First, let us understand;


What is cryptography?


According to the general definition from Oxford "the art of writing or solving codes"

Further, we can understand cryptography as the process of converting ordinary plain text into the unintelligent text (which can't be understood) or nonsense and vice-versa. it is a method of storing and transmitting (transferring) data in a particular form so that only those for whom the same is intended can read and process it (understand it). it as good as Morse code used in particularly by military people for communication.

What is the currency?


We all know what is currency, Currency is a medium of exchange for goods and services. In short, it's money, in the form of paper or coins, usually issued by a government and generally accepted at its face value as a method of payment


As we all understood the meaning of two words Cryptography and Currency. it time to learn now what is Cryptocurrencies.

Cryptocurrency in layman term is nothing but Digital form of cash.


When we can say that this is Cryptocurrency?


Below is the list of few things that all Cryptocurrency must be for it to be called a Cryptocurrency:

  1. Digital - it is available only on digital platforms. No coins and no notes are available or involve. Also, no reserves in any countries central bank

  2. Decentralized* - They are don't have any particular central system (computer) or server where they are stored or monitored. They are spread over a (usually) network of thousands of computers.

  3. Peer to Peer - Cryptocurrency can be transferred from one person to another person online. they don't require to deal through the bank or any other third party (Paypal).

  4. Pseudonymous (bogus, fake, or fictitious) - This means to own or use Cryptocurrency you need not give any personal information. there are no rules or regulatory body for the same.

  5. Trustless - No third party is involved in the transaction using Cryptocurrency, hence user need not trust system for it to work as the user is in full control of their money and information at all time.

  6. Encrypted - Each user has special codes which prevent other users from accessing their information. This is called encoding and it is almost difficult to crack.

*Decentralized meaning - Network without any central system or server is known as decentralized.

From the above discussion let take out their advantages and disadvantages.

Advantages

  1. No Intermediary required

  2. No geographical barrier

  3. Lower Charges (will discuss later)

  4. Very fast

Disadvantages

  1. Transaction is irreversible

  2. Used for illegal activity.

Will discuss more on this topic in blog part 2 next week until then be prepared for exciting series of blog on cryptocurrency.

 
Resources -
1. www.investopedia.com 
2. www.bitdegree.org 
3. www.youtube.com