What Is Cryptocurrency?

What is cryptocurrency? Is it the same as the currency that we are using to shop for some groceries and pay our bills? Perhaps, you might have already heard about cryptocurrencies before but to give you more idea of what it really is, we would be discussing it in this article.

What is a cryptocurrency or digital coin? – This is one of the common questions that people have in mind. Well, it is a virtual currency and that is why many people call it the money of the future. It consists of a network of peers wherein each one of them has a record of all the history of the transactions and balance of every account.
So, how does it work? When someone requests a transaction, it would then be broadcasted to a P2P network that is consists of computers or also known as nodes. Then, these nodes would validate and transaction. It uses a known algorithm to check the status of the user. After the transaction has been verified, it would then keep data for the ledger that is then added to the already existing blockchain. After that, the transaction is complete.

Now, if you are still quite confused on what is cryptocurrency, then there is a need for you to know that it is also the medium of exchange that has been created and stored by electronic means. It makes use of encryption techniques in order to control monetary unit creation and at the same time, to verify that the funds have already been transferred. In other words, it has no intrinsic value nor physical form. The transactions done are also not determined by a central bank. More than anything else, it has a completely decentralized network.

What is cryptocurrency and is it easy to counterfeit? Well, when it comes to counterfeiting cryptocurrencies, it is not that easy to do that because of its security features. In addition to that, with the fact that the central authority does not issue it, the government would not be able to interfere or manipulate it. This is the reason why more and more people have been turning to it and has been using it instead of the traditional currency. In fact, the most popular cryptocurrency even up to date, which is Bitcoin has been circulated. In fact, in 2017, there has been a total market value of $3.4 billion of Bitcoins.

On the other hand, many people are still doubtful about what is cryptocurrency and the things that it offers to people, especially with the fact that it has an anonymous nature. Hence, it is also being used by an ill-intention individual for tax evasion, money laundering, and other illegal acts. Nevertheless, not all people are using it to do harm to others for there are also people who are only using it in order to transfer funds to another party much easier with confidentiality and with a minimal processing fee. So, its existence is both a good and bad thing.

Posted on July 4, 2017 by yaki