Crypto means concealed or secretive. Cryptocurrency is a digital currency that is secured by cryptography(I t is a method of storing and dispatching data in a particular form, that only those for whom it is meant can read, process, or access it) . Cryptography’s potential makes it impossible to double-spend cryptocurrency. It basically exists on a distributed -blockchain technology and decentralized ledger. A distributed ledger is the opposite of a centralized ledger. A centralized l edger( record system of a company’s financial data) is more prone to cyber-attacks and fraud. Cryptocurrencies almost give the freedom from manipulation and control of the government.
WHAT IS A BLOCKCHAIN?
A blockchain is a decentralized ledger of all transactions across a network by which computers operate by individuals who can share information and resources directly without relying on a dedicated central server network. People do not need a central authority to clear and confirm the transactions with this technology. They also get the liberty of fund transfers, settling trades, and other issues.
To understand blockchain here are a few key points:
– Blockchain is a kind of a special database.
– It is different from a typical database because of the way it stores
– A blockchain collects information in groups, also known as blocks, that
hold sets of information.
– As there is a new data flow, it is entered into a fresh block. Once the
block is filled with data it is chained to the previous block. This
chaining system organizes data in chronological order.
– Mostly blockchain is used as a ledger for transactions but it can be
used to store different types of information. Many cryptocurrencies
use blockchain in a decentralized way so that no single group or single
person has control. All users can collectively retain control.
– Decentralized blockchains are immutable. The data entered is
– It is due to an irreversible timeline of data. When a block is filled it
becomes a part of the timeline. Every block is given a timestamp when
it becomes a part of the chain.
To understand the crypto it is necessary to understand how the process actually takes place.
– A new transaction is entered
– The transaction is then transmitted to a network of peer-to-peer
computers scattered across the world.
– The network then solves the equations to confirm the validity of the
– Once it is verified it is a genuine transaction, they are clustered into
– The blocks are then chained together creating a long history of
Bitcoin was launched in 2009 by the pseudonym “Satoshi Nakamoto. ” As of now there are over 18.6 million bitcoins in circulation. The total market capital is around $927 billion. The bitcoin if purchased worth 5000 INR in 2009 would be around 900 Cr in 2020. Bitcoin Mining is the process through which they are released into circulation. It generally requires solving puzzles and equations by the computer in order to discover a new block to add to the blockchain. For adding to the blockchain, miners are rewarded a few bitcoins.
But now Bitcoin has hit a bump on the road. Bitcoin has been ever falling since the tweet of Elon Musk. He said that Tesla will not accept bitcoin payments for electric cars. He claims that bitcoin mining is not friendly for the environment, contradicting the motto of Tesla. The low prices are not entirely based on that particular tweet. There is a ban in China by the Chinese government on trade deals in cryptocurrency. China has not completely banned cryptocurrency. It does not bar individuals from holding cryptocurrency. They said that they will not provide saving, trust, or pledging services of cryptocurrency.
Ethereum was launched in 2015. It was founded by Joseph Lubin. Ethereum is an open-source computing platform and operating system. One of the big projects around Ethereum is Microsoft’s partnership with ConsenSys. Ethereum i s also a programming language running on a blockchain, helping developers to build and publish distributed applications. The applications of Ethereum are wide-ranging and are powered by its native cryptographic token, ether. They are commonly abbreviated as ETH.
Ethereum was split into two separate blockchains, Ethereum, and Ethereum Classic in 2016. The new Ethereum has the base from the original software intended to protect against further malware attacks. As of May 2021, Ethereum was the second-largest virtual currency on the market, behind only Bitcoin. It is much faster to acquire ether currency than bitcoin. Ethereum was made with the motto to make a platform to facilitate immutable, programmatic contracts, and applications through its own currency.
Polygon and Cardano
These two cryptocurrencies in particular are seeing a huge rise in the market. It is because Elon Musk also said he is looking at other digital currencies that use less than 1% of the energy that Bitcoin does. Polygon is a “layer 2 solution” for the congested Ethereum network. It not only hosts decentralized exchanges but also marketplaces for NFTs and platforms for lending and borrowing.
“Litecoin is a powerful, political and economical tool which anyone, anywhere can use without permission to transact with anyone else in the world and partake in a genuinely global economy.” – Litecoin itself! Litecoin can produce a greater number of coins than Bitcoin. Its transaction speed is faster than bitcoin. Litecoin was founded with the goal of prioritizing transaction speed, and that has proven an advantage as it has grown ever since. The Bitcoin network can never exceed 21 million coins, whereas Litecoin can accommodate up to 84 million coins. Even though litecoin and bitcoin appear similar and the value is a major difference, the algorithm is the key difference. Litecoin uses a slightly new algorithm – scrypt.
Uniswap is a leading decentralized cryptocurrency exchange that runs on theEthereum blockchain. Most of the crypto trading takes place in exchanges such as coin base and finance. These platforms are governed by the company that operates the exchange. These require users to place funds under their control and use a traditional order book system to facilitate trading. The main problem is liquidity with these cryptocurrencies. Uniswap is fully decentralized. It has a new approach that goes by the new trading model called an automated liquidity protocol.
Dogecoin emerged in 2013. It is considered an altcoin. It is based on Litecoin and has the same technology behind its proof-of-work. Dogecoin has a community of supporters who trade it and use it as a tipping currency for social media content. It has mostly depended on the tweets and statements of influencing big-time tech, investing giants. The SpaceX company accepting Dogecoin as a payment method changed the value big-time.
Advantages of Cryptocurrency
Cryptocurrencies assure safe and easy transfer of funds directly between two parties. There is no need for a third party like a bank or any credit card company. These transfers are instead secured by the use of public keys and private keys and different forms of incentive systems, like Proof of Work or Proof of Stake.
In cryptocurrency systems, a user’s account address has a public key, while the private key is known only to the owner. The private key is used to sign transactions. These kinds of transfers help smooth processing and with minimal charge. There are no banks or any company’s fees charged. The cryptographic nature of the digital tokens make it impossible for a government body to tax or null the tokens without the cooperation of the owner.
Disadvantages of Cryptocurrency
The anonymous nature of cryptocurrency transactions often makes them a well-suited base of illegal activities, such as money laundering and tax evasion. However, cryptocurrency claims to highly value anonymity, privacy, and protection from repressive governments for activists. Some cryptocurrencies are more private than others.
Bitcoin is the most famous of all cryptocurrencies. But Bitcoin is a relatively poor choice for conducting illegal business online. The forensic analysis of the Bitcoin blockchain has helped authorities arrest and prosecute criminals. But there are more privacy-oriented coins that do exist, such as Dash, Monero, or Z Cash, which are far more difficult to trace.
The cryptocurrency has also taken a sharp turn, with the recent ongoing. Also, the investor Warren Buffett and Charlie Munger say that it is only for spectaculars and not investors. They are not very positively opinionated about cryptocurrency and he does not own any cryptocurrency. Warren Buffett also presses on to avoid bitcoin at all costs. It is very huge from the top most investors and the richest men. However profit-making, attractive and secure this seems, even a single person’s tweet is capable of causing loss to millions of people who have heavily invested in the crypto.
What is NFT?
NFT stands for Non-Fungible tokens. N on-fungible tokens are assets on blockchain protected with cryptography. They have unique identification codes and metadata that distinguish them from each other. Unlike cryptocurrencies, they cannot be traded or exchanged at equivalency. Cryptocurrencies are fungible tokens as they can be exchanged with an identical one of the same value. Therefore, it can be used as a medium for commercial transactions.
For example, one bitcoin is equal to any other bitcoin. This fungible characteristic allows cryptocurrency to be a medium for transactions in the digital economy.
NFTs shift the crypto archetype by making every token irreplaceable and unique. These represent digital assets and are linked to digital passports. They are also additive, in the sense that you can combine one NFT to another to get a third unique NFT.
NFTs also have an easy identification and transfer detail system. Owners can also add metadata or attributes concerning the assets in NFTs. For example, designers can easily sign their work with their own signature in the metadata. NFTs evolved due to the requirement of a minimum interface.
Why Are Non-Fungible Tokens Important?
Modern finance systems consist of very cultured trading and borrowing systems for different asset types. It depends from real estate to basics and essential services. By enabling digital representations of physical assets, NFTs are a step forward in the reinvention of this infrastructure. A combination of these benefits a tamper-resistant blockchain of smart contracts, then they become a potent force for change.
Perhaps, the biggest benefit of NFTs is market efficiency. The conversion of a physical asset into one streamline digitalization removes the middle man. NFTs representing digital or physical artwork on a blockchain removes the need for agents and allows artists to connect directly with their audiences.
Non-fungible tokens are even better for identity management. Let’s take passports. By converting individual passports into NFTs, each with its own unique identifying characteristics, it is possible to streamline the entry and exit processes for jurisdictions.
The most happening thing with NFT is there could be chances of creating new markets. Opening a whole new form of investment and opportunities. Let’s take the real estate – the different property types, like the beach facing, near a train station or in a county. Depending on its characteristics, each piece of land is unique, priced differently, and represented with an NFT.