Cryptocurrency: Is it the 21st-Century Unicorn or the money of the future?
Cryptocurrency is an internet-based mode of exchange that uses cryptographical functions to conduct financial transactions. Cryptocurrencies leverage blockchain technology to acquire decentralization, immutability, and transparency.
The vital feature of a cryptocurrency is that it is not handled by any central authority: the decentralized nature of the blockchain makes cryptocurrencies immune to the old ways of government control and interference.
Cryptocurrencies can be transacted straight between two parties through the use of private and public keys. The transfers can be done with small processing fees, letting the users avoid the expensive fees charged by traditional financial institutions.
However, beyond the noise and the press releases, the majority of people have very limited knowledge about cryptocurrencies. They sometimes fail to even understand its basic concepts.
What is cryptocurrency?
Cryptocurrency is an internet-based mode of exchange that uses cryptographical functions to conduct financial transactions. Cryptocurrencies leverage blockchain technology to gain decentralization, transparency, and immutability.
Cryptocurrencies are often called digital gold. They are fast and comfortable means of payment with a worldwide range, and they are private and anonymous to serve as a means of payment for black markets and other outlawed economic activity.
Cryptocurrencies gave birth to a dynamic, fast-growing market for investors and speculators. At the same time, the Initial Coin Distribution (ICO), facilitated by Ethereum’s smart contracts, gave life to successful crowdfunding projects, in which the idea is enough to collect millions of dollars. With the case of “The DAO,” it has been over 150 million dollars.
What are the Existing Cryptocurrencies?
Bitcoin is still by far the most popular cryptocurrency and most other cryptocurrencies have a zero non-speculative impact, investors and users should also keep an eye on many cryptocurrencies.
The first and most famous cryptocurrency. Bitcoin serves as a digital gold standard in the crypto industry, and it is used as a global means of payment and it is the de-facto currency of darknet markets or ransomware.
Created by Vitalik Buterin, Ethereum has ascended to second place in the pyramid of cryptocurrencies. Its blockchain does not only validate a set of accounts and balances, but also the so-called states. It means that Ethereum cannot only process transactions but complex contracts and programs.
Ripple has a native cryptocurrency – XRP – it is focused on a network to process IOUs than the cryptocurrency itself. Its currency, the XRP doesn’t serve as a medium to store and exchange value, but it is more of a token to protect the network against spam.
Unlike Bitcoin and Ethereum, Ripple has no mining because all of its coins are already pre-mined. Ripple has found massive value in the financial space as many banks are now joining the Ripple network.
It was one of the first cryptocurrencies after Bitcoin and it was tagged as the silver to the digital gold bitcoin. Litecoin was a real innovation, perfectly tailored to be the little brother of Bitcoin, it is faster and has a larger amount of token and a new mining algorithm. A famous example is the Dogecoin.
It is the most prominent example of the CryptoNight algorithm. It was invented to add the privacy features that Bitcoin is missing. With the introduction of a concept called ring-signatures, the CryptoNight algorithm has been able to cut through that trail.
Monero’s popularity was boosted in the summer of 2016 when some darknet markets accepted it as a currency. This resulted in a steady increase in the price, while the real usage of Monero is still small.
The crypto market is fast and wild. Every day, new cryptocurrencies emerge, and some die, also early adopters get wealthy while investors lose money. Each cryptocurrency comes with a promise, mainly a big story to turn the world around. Few survived the first months, and most of them are pumped and dumped by speculators and live on as zombie coins until the last hodler loses hope to see a return on his investment.
The revolution is now happening. Institutional investors start buying cryptocurrencies. Banks and governments are now realizing that this invention has the potential to draw their control away. Cryptocurrencies change the world, little by little. Each individual can just watch and observe or can become part of history in the making.
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