The Basics About Cryptocurrency In 2021
By Juliana Murray
For the last few years, Cryptocurrency has been on the top of the talks. People have given it different types of names, from the money of the future to an extremely risky asset. There are also doubts about its legitimacy.
But what is Cryptocurrency actually? Standing in 2021, many of us still do know the answer to this question. But with the increasing popularity of this, we have now realized that it is really important to know the basics about Cryptocurrency in 2021.
What Is Cryptocurrency?
The first question that comes to our mind after hearing the term Cryptocurrency is what is it? In simple words, Cryptocurrency is a digital currency. As it is purely digital, and there is simply no existence of any bills or coins tied to it.
Any valuable assets do not back up Cryptocurrency. In the real world, there is nothing to back it up. This is the reason why we witness so much fluctuation when it comes to the price rate of Cryptocurrencies.
While bonds, stocks, real estate, artwork, or precision metals have their own value, Cryptocurrency has no value or use outside of possession. Money is the only cost for Cryptocurrency .
So, in return for money, someone will be ready to give you the Cryptocurrency Crash you have.
The fiat currency that we use in our regular life has basically two problems. And these problems are,
● To fraudulent creation, they fall victim to.
● A central authority is always required to regulate their production, authentication, and value.
In order to combat these problems, in the year 2009, Satoshi Nakamoto introduced the first Cryptocurrency, Bitcoin. It is just a form of Cryptocurrency along with others. Both the problems that I have mentioned earlier were addressed by high-level encryption and the blockchain system.
As Bitcoin or any other Cryptocurrency is highly encrypted and also automated, no central authority is required here for regulating it. Apart from this, no transactions can be fraudulent.
The Basics About Cryptocurrency
For understanding the concept of Cryptocurrency, there are some technologies and principles that are also important to know.
Cryptography is utilized in Cryptocurrency. This is a method of revealing and distinguishing information in order to ensure the user’s security. By saying user’s security, I mean user information and transactions. Both are safe with this.
Have you heard of DLT or distributed ledger technology? A blockchain is a form of DLT. in case you are wondering what a distributed ledger technology is, let me tell you; it is essentially a database that is spread over multiple operators.
These operators include computing devices, nodes, and many more. This is the technology behind the whole concept of Cryptocurrency. This digital ledger is responsible for verifying transactions, balances, and accounts.
Apart from financial purposes, Blockchain is used in supply chain management, digital collectible, and even tracking art ownership. In this section, I have also mentioned the term node. So, what is a nod?
A nose is basically an individual part of the larger data structure, which is actually a Blockchain. Without the existence of nodes, this entire system will fall apart within a second or two.
With the help of Blockchain and Cryptography, one can create new coins, create a secure system, and enforce legitimate transactions.
Decentralization simply means that all the authoritative powers of this system are distributed among the peers of this network. And there is no one individual point of failure. No central body is present here to regulate everything.
Here is an example for you, in order to hack bitcoin, one needs to hack into at least 51% of the larger network that consists of a number of computers that are responsible for running Bitcoin. This is practically considered an impossible task.
So, as now you get the basic idea about Cryptocurrency, let’s get to know some names of the best Cryptocurrencies.
Among these, Bitcoin is the most popular and successful Cryptocurrency. The name Bitcoin is even used as the synonym of Cryptocurrency.