The technology is so rapidly advancing now a days that it has brought some major changes in the society. One major development in the economy and finance sector is the invention of cryptocurrency. It has influenced the way of transactions and trading business. In this Social media-revolutionized life, if you tell me that you haven’t ever come across this term, then I will have no other choice other than not to believe you.
A cryptocurrency is a virtual/digital currency that uses encryption techniques to safeguard, verify and manage transactions along with controlling the creation of new units of a particular cryptocurrency. They are also known as virtual currencies, digital currencies, alternative currencies or altcoins. Bitcoin was the first cryptocurrency created in the year 2009. Since then, thousands of other virtual, peer-to-peer currencies have emerged to attempt to emulate Bitcoin’s success. Few cryptocurrencies also attempt to address perceived short-comings in Bitcoin and to provide competitive advantages. Few popular ones include Ethereum, Ripple, Bitcoin Cash, Litecoin, Cardano, NEO, Stellar, EOS, Dash, IOTA, OmiseGo etc.
Why were cryptocurrencies invented?
Technically, the idea of an electronic peer-to-peer currency was being tinkered with decades ago, but it wasn’t truly successful until 2008, when bitcoin was conceived. The basis of bitcoin’s creation, and all virtual currencies that have since followed, was to fix a number of perceived flaws with the way money is transmitted from one party to another.
It seems that the sheer success of Bitcoin which has seen it leap from being a shadowy entity to an all-star affair overnight has also hurt its long-term viability. It remains to be seen if Bitcoin can move beyond its niche to gain wider acceptance, and for the time being the cryptocurrency remains quite volatile, and a gamble to investors that has been likened to the tech bubble of the 1990s.
- It is a decentralized digital currency without a central bank or single administrator that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries; its a form of electronic cash.
- Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain. It can be exchanged for other currencies,products, and services.
- It offers anonymity. Bitcoin has been criticized for its use in illegal transactions, its high electricity consumption, price volatility, thefts from exchanges, and the possibility that bitcoin is an economic bubble. Bitcoin has also been used as an investment, although several regulatory agencies have issued investor alerts about bitcoin.