Cryptocurrencies, off late, have become a very common and global phenomenon and a topic of conversation amongst ‘cyberjunkies’. Cryptocurrency is also being touted to be the money of the future. In fact Square Inc, which is a financial services company based in San Francisco, recently reported a 100 percent increase in Bitcoin profit over Q1. Square, which added Bitcoin trading to its peer-to-peer payments app toward the end of last year, reported in its unaudited quarterly financial statement that it brought in $37 million in Bitcoin revenue over the three month period ending June 30, according to a report in CCN.
However, cryptocurrency despite its increasing popularity still remains to be unheard off to several people in the public domain. So, let us now go into what is cryptocurrency, how it works and its importance in the current market.
What is Cryptocurrency?
Cryptocurrency, in layman’s terms, is digital cash. Cryptocurrency is a digital asset, which can also be called as digital currency, virtual currency or alternative currency, designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets. The process of confirming transations and adding them to the Blockchain is called ‘mining’. In short cryptocurrency is only available in the digital form and not in physical form, although it exhibits properties of physical currency.
Cryptocurrency, as opposed to central banking systems, uses decentralized control. All confirmed peer-to-peer transactions of the cryptocurrencies are stored in a public ledger called Blockchain, which is a system that keeps an overview of cryptocurrency units and their ownership. Bitcoin, mined by Satoshi Nakamoto in 2009, is the first known decentralized cryptocurrency.
What Can Cryptocurrency Be Used For?
Cryptocurrency could be used to buy goods from online retailers; though not all merchants accept cryptocurrency, some retailers like NewEgg and overstock are known to accept it. People are also known to have used cryptocurrency as an investment like shares. According to a report on Business Insider, millionaires have bought the luxury car Lambhorgini using Bitcoin. However, cryptocurrency is yet to take its giant step towards being used as digital cash across all platforms.
Five of the Popular Cryptocurrencies?
Ever since Bitcoin was first mined in 2009, nearly 4000 alternative coin or altcoins, which are variants of Bitcoin, have been created. Some of the popular cryptocurrencies are as follows:
LiteCoin first went live on 13 October 2011, and aims to process a block every 2.5 minutes, rather than Bitcoin’s 10 minutes, which achieves a much faster transaction confirmation.
Ethereum was first proposed by Vitalik Buterin in 2013 and went live on 30 July 2015. It is now split into two separate blockchains namely Ethereum and Ethereum Classic . Its block time is only 14 to 15 seconds.
Ripple apparently has no mining or miners and transactions are powered through a ‘centralized’ blockchain to make it more reliable and fast.
Dash, which was launched in January 2014 by Evan Duffield, features instant transactions, private transactions and a self-funded, self-governed organizational structure.
Monero, which was created in April 2014, makes the public ledger more difficult to understand, wherein anybody can broadcast or send transactions, but no outside observer can tell the source, amount or destination.