In simple terms, Cryptocurrency is digital currency that uses cryptography to ensure security and to regulate the generation of currency.
Examples of Cryptocurrency:
Blockchain forms the basis of the Cryptocurrency. In Blockchain, the data is stored in verifiable and non-tamperable chain of blocks. This data is stored in a decentralized format i.e. it is stored on multiple computers across the globe. As a result, unavailability of one computer doesn’t stop one from verifying the chain.
Cryptocurrency was invented with the need to have a decentralized system to manage / transact currency. People can use this currency using public key and private key pairs to make a transaction. The transaction is stored using blockchain technology, also referred as ledger. Due to it’s distributed nature and encrypted format, it is very difficult to tamper these transactions.
The algorithm used to generate the Cryptocurrency typically allow a finite sum of currency to be generated. This is different from physical currency which is controlled by governments and federal banks of various countries.
Even if strong encryption techniques have been used, cryptocurrency is not yet fully safe from theft or hacking attempts. Bitcoin itself has seen the theft of cryptocurrency multiple times. However, this technology still gives hope to many observers and experts to have a transportable currency which is outside the influence of governments and central banks across the world.
Exchange value of the cyrptocurrency is also determined by demand and supply. To facilitate the exchange of these currencies, several exchanges are now available across the globe.
Legal status of these currencies varies widely across the globe. Some countries have acknowledge its existence similar to property asset while some have banned. It would take few more years to have wide acceptability of this currency across the world.
Related Links:
Related keywords:
Cryptography, Bitcoin, Litecoin, Namecoin, Digital Currency
4 Replies to “Cryptocurrency”