2023 Crypto Insights: What Is Cryptocurrency Unveiled!

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Curious about what is cryptocurrency and how it works? Learn about bitcoin, how to invest, and the top cryptocurrencies to add to your portfolio in this comprehensive guide.

At present, all these questions remain a matter of curiosity among the common investors in the financial world.

Yes, why not?

The huge increase in the price of bitcoin and other cryptocurrencies in the past years has attracted the attention of the whole world.

In such a situation, it becomes necessary that we know deeply about the new dimension of this currency in the changing world.

What is Cryptocurrency?

In the modern digital age, currency has also started taking a digital form. For example internet banking and UPI. Cryptocurrency is also one of them.

It is a virtual digital currency. Whose existence came in the form of bitcoin after the 2008 financial crisis of the world. Bitcoin is the most popular cryptocurrency today.

Crypto currency is a medium of exchange similar to money. But it is in digital form, never in physical form. That is, crypto currency is not like those coins or notes as we actually use Indian rupees or American dollars or other currency.

It is available only in the online form which is kept in the digital wallet. This is the reason why it is also called online currency or digital currency.

Actually crypto currency is the abbreviation of two Latin words cryptography and currentia – crypto + currency. Crypto means hidden / secret and currency which is a medium of exchange of goods or services i.e. money.

How Cryptocurrency Works?

To understand the working of Cryptocurrency one has to know about Blockchain. Because Cryptocurrency is completely based on Blockchain Technology.

Blockchain is a digital ledger. In which each data is stored as a block. All these data blocks are connected to each other through hash address.

Encryption technology is used to control the creation of cryptocurrency and to verify the transactions. Which is called cryptographic.

This process keeps the data more secure and secret. This is also a characteristic of cryptocurrency and a barrier to its adoption as a currency.

Because then it is difficult to trace wrong money transfers or transactions for illegal activities.

By now it must be clear to you that cryptocurrency is a type of currency. So to understand it more deeply, we have to know the history of currency.

What is the history of currency?

Trade has contributed a lot in the formation of human civilization from the very beginning. A ledger is required for business in which the transactions of two parties are mentioned.

In the beginning, there was an exchange of goods for goods (Barter System). Then metal and its coins were used. Which had many errors.

Especially there was a lack of a standard on the basis of which the price of the goods could be estimated and the other was the authenticity of the account.

Later, when gold started being used as a standard and a central entity (kings or governments) authenticated the account, then money (fiat currency) came into existence.

The current form of currency that we use today respectively are – Paper currency, Plastic money and Digital currency. Then what next? Maybe cryptocurrency!

History of Crypto Currency

We know that evolution is a law of nature. With the passage of time, things change and come into existence in a completely new form.

However, in the case of cryptocurrency, we cannot say so clearly. Two events are important in the history of cryptocurrency-

Cryptographic electronic money was conceived in 1983 by American cryptographer David Chaum and implemented in 1995 through Digicash, an early form of electronic payment.
The first cryptocurrency, bitcoin, was created (supposedly) in 2009 by a developer named Satoshi Nakamoto. Which uses SHA-256 cryptographic hash function in its blockchain. (Source: Wikipedia)

Why Cryptocurrency?

We can guess that crypto currency came into existence only to remove the existing discrepancies in fiat currency (not measured by gold). for example-

To promote decentralized system,
To make the transaction process more transparent and secure,
To meet the need for hard money to reduce the effect of inflation on the economy.

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Conclusion

Since today cryptocurrencies have started getting the status of assets as well as currency. That’s why now investing and trading in cryptocurrency has started.

Like the stock market, crypto market has also come into existence where you can buy and sell blockchain based digital currency.

Today there are about 6000 cryptocurrencies in the whole world. (Source: Statista)

But they will take time to set up. Volatility is also very high in the price of crypto because crypto markets are not yet regulated. Therefore, Bitcoin and Ethereum may be more suitable for investment.

On the other hand, it is also believed that Bitcoin or other cryptocurrencies have nothing intrinsic value. As a result, the demand for stablecoins has also started increasing given the potential and drawbacks of cryptocurrencies.

Stablecoins are digital currencies that have intrinsic value and whose prices are backed by the fiat currency of any country. Such as TetherUSD, Diem, Lakshmi.

What is Cryptocurrency- FAQ

Which is the crypto currency of India?

Polygon (Matic) is India’s first cryptocurrency which was started as a start up by three Indian software engineers – Anurag Arjun, Jayanti Kanani and Sandeep Nelwal.
CBDC (Central Bank Digital Currency)- This cryptocurrency is to be launched by RBI.
Lakshmi cryptocurrency- This will be the Government of India’s own cryptocurrency.
JIO Coin- This will be the future cryptocurrency to be issued by Reliance.

How many types of crypto currency are there?

There are mainly two types of crypto currency-

Bitcoin – which is an open source code.
Altcoins – which are modified versions of the source code of bitcoin. Like- Litecoin, Peercoin, Dogecoin, Dashcoin, Monero, Ethereum.