Understanding the Cryptocurrency and Its Benefits Notes

Mar 16, 2021 by admin in Notes

Over the past several years Cryptocurrencies will be much more popular.
It is a simply a crypto currency is a digital currency.
A medium of exchange like normal currencies.
Crypto currencies are classified as a subset of digital currencies and also classified as a subset of alternative currencies and virtual currencies .
The most important feature of a cryptocurrency is that it is not controlled by any central authority.
In this article we are explain about Cryptocurrencies, how it is work, and benefit of Cryptocurrencies.

Since every one knows that currency is a very important of our life.
In the early system, people used the barter system.
In your mind one question is arise how batter system work.
To exchange goods and services among two or more people.
For Example: exchange seven apples for seven oranges.
But Barter system will be out due to some flaws.
Following Flaws like as:
- To meet people’s needs: Both people have some item but one people want exchange but secound people donot want to exchange.
- There is no general measure of value: You should first decide how many of your items are willing to trade for other items, and not all items can be split.
- The goods cannot be transported easily
So that Barter system work is not very well, people are realize.
First currency is introduce 110 B.C. But after some time in A.D. 1250, gold-plated florins were introduced. Paper currency introduce 1600AD to 1900AD and they are much more popular all over the world in this duration. Modern currency also introduce after 1900AD, it includes paper currency, coins, credit cards, and digital wallets such as Paytm, paypal and so on.
All of it is centralized controlled by banks and governments and limit is apply on every point.

A crypto-currency is a medium of exchange like normal currencies such as USD, but designed for the purpose of exchanging digital information through a process made possible by certain principles of cryptography.
So Cryptography is used to secure the transactions and to control the creation of new coins.

Difference between Traditional Currencies vs. Cryptocurrencies are as follows:

TRADITIONALS	CRYPTOCURRENCIES
Exchange of money to acquire something of value	Value is exchanged in the form of cryptocurrencies
They are physical medium of exchange	They are virtual medium of exchange
it is located a specific country	They are located global
Government controlled them	They are controlled by all users and blockchain technology
Currency issued by Government	Produced by a computer
Become part of the economic system through bonds	Become part of the market directly
Great inflation and interest rate influence	Supply/Demand is the only influence
Centralized: Issued and controlled by laws and bank	decentralized: not controlled by laws and bank
Value transfers are very slow and bureaucratized	Peer-to-peer payments are made instantaneously without intermediaries
Commission costs	Costs come from software maintenance
Not every person in the world has the power to have a bank account	They can be used by the whole society, including those parts of the population without access to financial resources
Represented by coins & bills For Example: euro, peso, dollar, rupees etc.	Represented by 1 Private & 1 Public pieces of code. For Example: Litecoin, Bitcoin, Davies, Ripple, Dash, Nero, etc.

User Request for the transaction. The transaction can be in the form of cryptocurrency, contracts, records, or other information.
- In this case, User A sends money to B User
The request is transmitted to the network of peer to peer with the help of nodes and scattered across the world.
- This request is transmitted to every node in the network.
The network of nodes to conform validates the transaction and the user’s status with the help of known algorithms or if the transaction is not valid then it is kicked out.
- In this case, your transaction is check for valid or not valid by cryptocurrency.
When the transaction is valid then it is stored in a current block of transaction.
- In this case your transaction is added in the block
The new block of the transaction is then ‘chained’ to the older block of transaction that is permanent.
- So cryptocurrency is issued every time a new block is created and received reward.
- Every ‘Chained’ to the older block of transaction.
After complete this whole process, we can say that transaction is confirmed.
- So the Money move from User A to User B

The most signiﬁcant advantage of cryptocurrencies is that they’re backed by the most dynamic technology in the world – the blockchain technology.

Blockchain technology is completely decentralized and it means that no central entity can claim control or ownership.
No transaction fees.
It boosts the business dealings, making it faster & affordable;
Blockchain provides a transparent ecosystem and cryptocurrencies are a part of this system.
To allow the users to record, view, and track their coins in the account.
Besides paving the way for transparency, blockchain also makes the system auditable & veriﬁable. These advantages make the environment stronger for the cryptos over the ﬁat currencies.
No hackers can attack the cryptosystems since they are not backed by a centralized network.

The major disadvantage of cryptocurrencies is that they are still virtual currencies and lack the value compared to ﬁat currencies.

Cryptocurrencies stand at the last in the line of the contemporary market.
There are no constant values for cryptocurrencies and they vary depending on the market value.
Lack of Awareness and understanding.
Risk of Volatility.
Still Developing.
Transaction are non-reversible.

As you can see, any crypto-currency until now is not perfect.
It have many advantages; however, it also has its disadvantages.
This is mostly due to the fact that it is still a relatively young and new currency.
People are just beginning to become more aware of it.
In order for Crypto-currency to succeed, more people need to understand what it is.

Tagged with: Blockchain

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