A cryptocurrency is a digital currency that is built-in with cryptography technology to secure financial transactions, control the creation of additional units, and verify the transfer of assets in which encryption techniques are used, operating independently of a central bank . While cryptography is a method of protecting information and communications through the use of codes to ensure data remain private from a third party. In other words, cryptography refers to securing information which techniques derived from mathematical concepts and a set of rule-based calculations called algorithms. Essentially, cryptocurencies are limited entries in a database that is unchangeable by just about anyone unless specific conditions are met.
The most important feature of a cryptocurrency is that it is not controlled by any central authority. Most cryptocurrency systems are decentralized and maintained by a distributed network of computers (nodes) available around the world. This is due to the usage of blockchain technology in the programming of cryptocurrencies. Blockchain is a distributed open ledger system that contains block of data that allows everyone in the system to control and monitor the information at the same time. The decentralized nature of blockchain makes cryptocurrencies theoretically immune to the old ways of government control and interference.
One of cryptocurrency’s primary functions is to work as a medium of exchange within a peer-to-peer (P2P) economic system. Financial transactions may occur directly between users (P2P) without the need for intermediaries. As a digital currency, it is highly convenient for users to bring their cyrptocoins as they travel as there is no need for them to exchange it to any country’s currency in order to be used. Besides, as cryptocurrency is stored in either soft wallet (online) or hard wallet (such as Nano Ledger), it is safe to bring them anywhere despite the amount users are carrying.
Today cryptocurrencies have become a global phenomenon known to most people. While still somehow geeky and not understood by most people, banks, governments and many companies are aware of its importance. As many have familiarized with the market, cryptocurrencies can now be used to make payments both online or offline. There are now a lot of merchants that accept Bitcoin – one of the cryptocurrecies as the form of payment. Up to this day, cryptocurrencies can be used to pay for flight tickets, accommodation fees, jewelry, software application and even a college degree fees!
With the emergence of cryptocurrencies, financial transactions are made easy, for transfers are simplified through use of public and private keys for security and privacy purposes. These transfers can be done with minimal processing fees, allowing users to avoid the steep fees charged by traditional financial institutions. As cryptocurrencies become widely embraced, individuals and businesses should be keeping a close eye on how this technology develops and consider how it could be use to advantage.
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A keen researcher who believes in enriching her knowledge. For Shuhada, the crypto world intrigues her sense and offers plenty of high delicious 'crypto cuisines'.