- Cryptocurrency is an internet-based medium of exchange which uses cryptographical functions to conduct financial transactions. Cryptocurrencies leverage blockchain technology to gain decentralization, transparency, and immutability.
- The most important feature of a cryptocurrency is that it is not controlled by any central authority: the decentralized nature of the blockchain makes cryptocurrencies theoretically immune to the old ways of government control and interference
- Cryptocurrencies can be sent directly between two parties via the use of private and public keys. These transfers can be done with minimal processing fees, allowing users to avoid the steep fees charged by traditional financial institutions.
The Ledger: Who Owns It
A cryptocurrency has a ledger, where all transactions are made public so that total visibility is provided. Having a ledger forces everyone to “play fair” and takes away the risk of double spending.
The ledger is a list of entries in a database that nobody can change without fulfilling specific conditions. Nobody owns the ledger or the cryptocurrency blockchain; instead, it’s decentralized meaning self-run and self-governed without the interference of outside parties.
How cryptocurrency works?
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, never intended to invent a currency. In his announcement of Bitcoin in late 2008, Satoshi said he developed “A Peer-to-Peer Electronic Cash System”.His goal was to invent something; many people failed to create before digital cash.
Top 10 cryptocurrencies by market
Bitcoin ($156.52 Billion)
Bitcoin became the first cryptocurrency after launching in 2009, and has since remained at the forefront of the market. Bitcoin essentially removed the “middleman” who controlled currency and replaced it with advanced blockchain technology. About three-fourths of all Bitcoin has already been mined – meaning its value should become more predictable moving forward.
Ethereum ($17.50 Billion)
Launching much later than top dog, Bitcoin, Ethereum joined the cryptocurrency market in 2015. While Bitcoin offers peer-to-peer digital currency, Ethereum offers smart-contract applications (a user can set specific conditions to trigger a transaction). Ethereum has a wide range of use cases that are attractive to consumers looking to do more than financial transactions.
Ripple’s XRP ($9.80 Billion)
Ripple is a cryptocurrency that was never actually intended to be a cash alternative and is mostly used by corporate institutions rather than individuals. Sending Ripple coins from one wallet to another only takes a few seconds; however, it’s a much more centralized process compared to competitors, since Ripple Labs controls the supply of XRP.
Tether ($4.11 Billion)
Tether differs from Bitcoin in that it’s a stablecoin – meaning that it is backed by a reserve assert and designed to offer price stability worth $1. It launched in 2014 to facilitate the use of fiat currencies (Canadian Dollar, Indian Rupee, European Union Euro) in digitally, and is the first blockchain-enabled platform to facilitate the digital use of traditional currencies.
Litecoin ($3.57 Billion)
In 2011 a hard fork caused Bitcoin to split in two: creating Bitcoin and Litecoin. Key factors that differentiate Litecoin from Bitcoin are transaction speed and block reward per block. Litecoin’s transaction time is about four times faster than Bitcoin’s, and has 25 block rewards per block compared to Bitcoin’s 12.5.
Cryptocurrency and India
In March 2020, things took a positive turn, and Bitcoin was declared completely legal in India. This is finally a big win for the Indian crypto enthusiasts and will be part of the Bitcoin country list. The question of whether Bitcoin is legal or illegal in India is now settled, and things take a positive turn in March 2020. The decision, which the entire crypto community has been waiting for, has finally prevailed and is a big win for the Indian crypto enthusiasts.
The crypto sector in India is showing significant growth with several crypto exchanges reporting a 10X increase in trading volumes and a substantial increase in new users. Despite the global corona virus pandemic and the nationwide lock down, new cryptocurrency trading platforms are launching in India.
Moving Into the Future
Cryptocurrency is a growing mega-trend, which is being recognized worldwide, adopted by major corporations, and woven into everyday transactions. Bitcoin, above all, has the fintech ecosystem and the resources to compete, whereas its counterparts are still trying to stay on top and fight other cryptocurrencies in the market space.
Top Cryptocurrencies will play an important role in the future, with the use steadily increasing over the past several years. Bitcoin is currently used in 96 countries and growing, with 12,000 transactions occur every hour. Understanding more about cryptocurrency is the first step, and the second is to try it.
Purchase a small amount of cryptocurrency through an exchange, test it out, and complete a few transactions. After you get a feel for the process, you may decide to try mining. But whatever your path, know that the future of cryptocurrency is bright, and the list of cryptocurrencies is only expanding.