Cryptocurrency is an internet based medium of exchange which use crypto graphical functions to conduct financial transactions.
It typically does not exist in physical form(like paper money) and not issued by central authority unlike old methods. Cryptocurrencies leverage block chain technology to gain decentralization, transparency and immutability. Cryptocurrencies can be sent directly to someone online without going through banks using private and public key. These transfers can be done with minimum processing fees.
People might use cryptocurrencies for quick payments and to avoid double pays. Some might get cryptocurrencies as an investment, hoping the value goes up.
Cryptocurrency is unique for many reasons. First; it’s function is to serve as a digital cash system that isn’t owned by a single party and second; cryptocurrency is decentralized with no central server. The network participants run software that connects them to other participants so that they can share information between themselves.
The decentralization of cryptocurrency network’s makes them highly resistant to shutdown or censorship. Whereas to disrupt a centralized network, you just need to disturb the main server. Cryptocurrencies are functioned 24 hours a day and 365 days a year. Public key cryptography, you have a public key and a private key. A crypto wallet is something that holds your private key. A private key is essentially a big numerical that would be impossible for anyone to solve.
As a name itself, you have to keep your private key secret. But from this key, you can generate public key. This public key can safely be handed out to anyone. You can also create digital signatures by rising data with your private key. Further, you can spend your funds if you have got corresponding private key while you make a transaction.
Cryptocurrency are exclusively meant to serve as money whether as a medium of exchange. Bitcoin and other early cryptocurrency were made as currency but later block chains ought to do more.
Few people know, but cryptocurrencies emerged as a side product of another invention. Satoshi Nakamoto the unknown inventor of Bitcoin, the first and still most important cryptocurrency.
Ethereum, on the other hand does not just provide currency functionally. It allows programmers to run codes on a decentralized network and to create tokens for a variety of application. Tokens can be used like cryptocurrencies but they are now no more flexible. They can serve as anything from digital bills, holding a stake in company to loyalty points.
A block chain is special kind of database which is used to keep online data of all transactions that ever seen conducted, thus providing data structure for this data that is quite secure and is shared upon by the entire network of individual node or computer maintaining a copy of data. Every new block generated must be verified by each node before being confirmed, making it almost impossible to forge transaction historics.
As Cryptocurrency becoming more and more mainstream, law enforcement, agencies, tax authorities and legal regulator worldwide trying to understand the very concept of crypto coins. And where exactly do they fit in existing regulations and legal frame work.With the introduction of bitcoin, the first ever cryptocurrency, a completely new paradigm was created.