The world is changing and technology is leading this change. The way financial transactions are made is not like how it used to be in the past. Ever since the introduction of Bitcoin, cryptocurrencies have taken the world by a storm. There are thousands of cryptocurrencies that are available today by people from across the globe. Some of the popular variants include Litecoin and Ethereum. If you want to learn more about cryptocurrencies, then, this post is just for you as it covers everything you need to know about cryptocurrencies.
So What Is Cryptocurrency?
In the simplest of words, cryptocurrencies are limited entries in a database which cannot be changed by anyone unless specific conditions have been met. Moreover, this is just how a currency is defined. Think about the money in your bank account, it is nothing more than just entries in the database which are also only changed unless specific conditions have been met. Similarly, you can consider physical notes and coins. They are nothing more than entries in the public physical database which is only changed if certain conditions are met. When it comes to money, it is simply a verified entry in a type of database of transactions, balances, and accounts. Thus, to provide a more proper definition, cryptocurrency is a medium of exchange facilitated by the internet. It relies on crypto-graphical functions for conducting the financial transactions. Blockchain technology is utilized by cryptocurrencies to provide immutability, transparency, and decentralization.
How Are Cryptocurrencies Created?
To establish a cryptocurrency such as Bitcoin, one has to first take over the responsibility for maintaining track of all transactions instead of relying on banks. Hence, the financial transactions will need to be managed on their own. The first step to establishing a currency is creating a ledger for payments which will be used by all. The ledger would keep track of people who owe money and to whom. Moreover, the payments made by everyone will also need to be recorded.
It is crucial that people are prevented from any sort of cheating such as by adding transactions which the other party would not agree to. An easy way to resolve such an issue is by making it a requirement for both parties to the transaction to sign off on transactions. The parties will add a digital signature using private/ public encryption. Thus, the transaction will be considered legitimate.
However, there is one problem which also has to be addressed which is the ownership of the ledger. Now, when it comes to the traditional currency system which we normally use, it is the bank which maintains the ledger. But, since cryptocurrency does not require any banks, hence, the question regarding who exactly owns the ledger. Instead, for cryptocurrencies, everyone will be provided with their own ledge and each transaction would be made public. Therefore, everything will be updated in the ledger all the time.
This offers a safe way for people to exchange money without having to worry about their money being used by other people. Cryptocurrency forces everyone to be fair with each other rather than trusting a government or central bank to insure their transactions. Although cryptocurrencies are still new and in their early stage, it is believed that they are the future of transactions.
Decentralized Control
The main reason why cryptocurrency have gained so much recognition is because of the fact that it is not controlled by any type of central authority. This decentralized control is the latest breakthrough that is believed to power the future. Blockchain in itself has a decentralized nature which makes cryptocurrencies immune to any sort of government interference or control.
Instant Transactions
If you are tired of having to wait days for money to be transferred across continents, then, cryptocurrencies are just what you need in life. They can be sent directly to just about anyone in the world in an instant. All one needs to use are public or private keys. It is quite simple as compared to the lengthy banking process where the bank requires a ton of information and paperwork before your transaction can even be considered.
Minimal Processing Fees
As the world becomes increasingly global, it can be expensive to use the traditional mode of transaction for sending and receiving money. However, cryptocurrencies offer a much cheaper alternative. With minimal to no processing fees, you will get to send and receive more money than ever before. Unlike traditional financial institutions which charge up to 20 percent in processing fees, cryptocurrencies are cheaper to transfer.
How Did Cryptocurrency Come Out To Be?
You might be wondering that just how cryptocurrency came out to be. The truth is that cryptocurrencies are in fact a side product of Satoshi Nakamoto’s invention. The unknown creator of Bitcoin never really intended to create a currency. It was back in late 2008 when Satoshi had mentioned that a peer-to-peer electronic cash system was to be introduced. The goal was to create something that many people had attempted to invent but failed.
The main invention of Satoshi that led to the breakthrough of Bitcoin was that he managed to find a way which allowed for a decentralized digital cash system to be built. In the past, many individuals and companies alike had tried to create a similar system but had failed due to their centralized attempts. However, Satoshi approached the subject differently as he tried to create a system that did not have a central entity. This led to the creation of cryptocurrency.
Best Cryptocurrency
There are many cryptocurrencies that are available today. One of these is Chainlink token sale which has quickly made a name for itself. Check out the Chainlink review to learn more about the cryptocurrency. Created in 2017, Chainlink has reached daily volumes of over a hundred million dollars and more. The price of the cryptocurrency has also skyrocketed. Not many coins have managed to achieve such success. Relying on smart contracts, Chainlink is a great cryptocurrency that is extremely popular.