Cryptocurrencies, which are also known as digital currencies, have received much attention recently. A variety of cryptocurrencies have come up as well and people have started using these digital currencies to make their day to day transactions. Therefore, it has become important for all the people who live out there in the world to have a clear understanding about crypto money.
Cryptocurrencies can simply be defined as a type of digital currency. In other words, they are a kind of electronic token or electronic money, which can be used as a liquid asset. The functionality of crypto coin is pretty much similar to traditional money. However, cryptographic methods are being used in order to deliver few unique properties to them.
It’s not an easy task to define cryptocurrency rules in simple terms because it is based on complex mathematics and computer encryption techniques. These currencies are never backed up by the banking system or central bank of a country. As a result, cyber currency is decentralized. Due to the same reason, people who purchase electronic currency would be provided with the opportunity to gain enhanced control over it. In other words, no central government is there to control the currency, which creates an ideal environment for people to take control.
What is decentralized digital currency based on ?
Traditional money is based on gold or silver. In other words, you will be able to trade traditional currency that you have to gold or silver. But Cryptocurrency is based on complex algorithms and mathematics. Cryptocurrencies are mined using mathematical equations. However, the formula used for mining purposes is opensource. Therefore, any interested person can view it. Moreover, you will be able to verify the functionality offered by the source code as well.
What are the characteristics of crypto market ?
You will be able to find some notable differences in terms of the characteristics in decentralized digital currency. As mentioned earlier, cryptocurrency is not centralized. They are not stored within a centralized authority. All the devices that are associated with cryptocurrency transactions are a part of the network. They work together to control the overall currency. Therefore, a single centralized authority does not have the ability to create any impact on the working mechanism of the cryptocurrency. On the other hand, no authority has been provided with the ability to take away or meltdown the currency. If a specific area of the crypto network goes online, the remaining parts are capable of carrying forward the functionality.
If you go to a bank, you will be asked to fill out a lot of papers, even when you want to open a bank account. But if you want to open a merchant account or a savings account, you will have to go through additional frustration. But you will not be able to experience such issues when you go ahead and make financial transactions with Cryptocurrency. It would only take few seconds for you to set up a Cryptocurrency wallet. You will never be asked any questions at all. On the other hand, you will not even have to make any upfront payments to get the job done.
A person is provided with the ability to maintain multiple cryptocurrency wallets. They can have different addresses. There is no restriction at all for maintaining multiple wallets. This is not something that you can do in a bank.
All the transaction that takes place in the crypto market is stored. A massive ledger is being used to store all these transactions. This ledger is named as Blockchain. Blockchain has the ability to keep all useful information related to cryptocurrency market transactions.
All people who create cryptocurrency wallets would be provided with a public address. This address can be used to send and receive the cryptocurrencies. On the Blockchain, it is possible to see how many cryptocurrencies are stored within a specific Blockchain. However, no person has the ability to figure out the owner of a specific cryptocurrency address.
People who are concerned about privacy can think about changing the public cryptocurrency address on a regular basis. But if a person transfers too much of cryptocurrency to a specific address, privacy issues can arise. There is no transaction fee associated with cryptocurrency payments as well. It is possible to send the cryptocurrency to a person who lives in another part of the world without experiencing any hassle. The payments initiated in the cryptocurrency would get completed within a short period of time as well. However, it is important to keep in mind that a sender doesn’t have the ability to reverse a cryptocurrency transaction under any circumstance. The recipient will have to send it back at all times.
Is digital currency better than traditional currency ?
Yes, there are some obvious reasons to justify how digital currency is better when compared to traditional currency. Traditional currency is printed based on the demand. But there is no such demand for cryptocurrencies and they can be mined as much as needed. However, it is also important to keep in mind that a cryptocurrency is associated with a supply cap of 21 million. Due to this cap, people will be tempted to save the digital currency. This can increase purchasing power in an effective manner as well.
With traditional currencies, it is possible to monitor the wealth of public. It is not something possible with the cryptocurrencies. It is not an easy thing to track cryptocurrencies because a person can have multiple wallets. On the other hand, there is no capability to figure out the specific owner of a cryptocurrency wallet. Due to this reason, most of the people prefer to store their wealth in the form of cryptocurrencies. Such people are also provided with the ability to make transactions anonymously. Hence, it can be considered as a perfect method available to purchase many products, which cannot be bought with traditional currencies. With the current trends, we can also predict that cryptocurrencies would be strong enough to dominate the world in future.