What is Cryptocurrency? ~ DEViate

You probably came here after getting trapped in buzz around the cryptic topic

and want to gain an in-depth knowledge on cryptocurrency and other related information.

You Landed To The Right Place.

To understand about cryptocurrency we first need to ask ourselves what money is?

Money = Value

Its something which we use to transfer value or to payback what we owe. Its something we all validate and accept as a safer and reliable medium for transfer.

We learnt through the human history the various medium of exchange.

First the human exchanged goods and services to payout for the works , then came coins like that of nickel, copper, silver and gold. It is basically something we all find valuable. Like in present day we have currency notes which are valuable to all of us, the paper itself doesn't hold value but it's the government which is responsible for making sure it holds a certain value and is acceptable as a medium of exchange through out the country.

Today around the world we see that the paper money printed is centralised i.e. controlled by a single authority and if the government of a country collapses, its value and trust through out the world deteriorates. Money becomes worthless if printed too much.

More notes are inversely proportional to value of the currency.

An ideal currency should always remain stable no matter what happens to the central authority.

So, for an ideal currency, the two conditions which needs to be fulfilled are:

1.Limited

2.De-Centralised

To solve this problem , cryptocurrency comes into the picture.

In Simple words, Cryptocurrency is a form of digital currency which can be stored on your computer or phone and can be sent from Peer-to-Peer (i.e. with each other) with no bank or any intermediatory agency.

Now-a-days when we send money through Net banking or any other methods like UPI, usually banks confirm your identity, to make sure that you are the same person or you have enough money to make this transaction. Putting it in simple words, to make sure that the transaction is Legitimate.

It is the work of the bank to maintain the record about the transaction i.e. this person have spent that much money and is now left with this much.

For solving such problem many cryptocurrencies like bitcoin and ethereum works on block chain technology where there is one centralised leisure/records on which all the transaction info is written. You probably must be thinking why a decentralised network have centralised records at the same time. Because having centralised records helps in faster transaction, less time spent on validation and upgradation of the data. It is actually the BLOCK CHAIN technology.

For understanding what is block chain technology you can see my upcoming post on BLOCK CHAIN.

To explain it in few words, blocks have pieces of information (here info about transaction) and each block have its own reference number. The block when goes forward it holds not only the new information but also the past information which is linked to it with help of reference number of preceeding blocks .

ADVANTAGES

Now Understand what are the advantages of cryptocurrency and how it may blossom as the next primary mode of exchange or FUTURE MONEY :

1. It is DE-CENTRALISED - There is no centralised authority which can fluctuate its value whenever and however they want. So, no central control.

2. NO TRANSACTION RESTRICTION - It is available to every body of any nationality. People sometimes confuse it as illegal but its only unregulated crypto rules and laws.

3. SECURE- It provides an unalterable records of all transaction made on the network. Nobody can change it .

4. PRIVACY - These transactions can be anonymous.

5. LIMITED- You just can't print more cryptocurrencies for example there will always ever only be 21 million BitCoins thats it! NO MORE!.

THATS WHY PEOPLE CALL IT DIGITAL GOLD.

BECAUSE ITS FINITE

MINING

Cryptocurrency is created by a comparative and de-centralised process called Mining.

Mining is just like digital version of digging for gold.

Miners usually process the transactions and are rewarded by the network in their currency (like Bitcoin).Miners use powerful computer to compete with each other in order to obtain crypto coins by solving complex math problem that gets harder over time. The chances to win a bitcoin decreases over time and hence people prefer to hoard them. The less the crypto coins available and more the people are interested in hoarding them. This increases the value of the currency and more the value increases, more people are interested in buying and thus driving the cycle upwards.

Hence, people who don't have the knowledge to mine it; they tend to buy it from the people who hoards it.

BUT HOW HAS CRYPTOCURRENCY LIKE BITCOIN, ETHEREUM BECAME SO VALUABLE

Ultimately, if there are huge number of people who believe that a thing is valuable it will some or the other day gain value. People think that things are valuable if that thing is rare and can't be easily replicated.

It is tradable; As the time is going on, more companies are coming forward to accept them as a medium to trade and hence increasing its value.

KEYWORDS: what is money in economics, cryptocurrency, bitcoin value, ethereum, dogecoin value, blockchain technology, mining cryptocurrency, mining bitcoin, future of bitcoin, future of cryptocurrency