6th July 2021, Kathmandu
Lately, we hear a lot about cryptocurrency. We hear many words like Bitcoin, Blockchain, Dogecoin, Ethereum, NFT (non-fungible token), etc. But do you know what all this means and how it works?
What is cryptocurrency?
There was nothing like money in the development of human civilization. At that time, people used to exchange goods. But when people were not satisfied with this kind of exchange, money was used. In the early days, they made precious metal coins, including gold and silver, and used them to buy the things they needed.
The government began to control money because of the belief that there would always be a system. Paper money was also used in place of metal coins. Although paper money was not as valuable as metal coins, it was recognized in the system introduced by the government, which made paper money more valuable than metal coins.
This means that paper money is proof that the government has recognized that you have assets. But as time went on, the developed society made its own favorable policy rules. In recent times, people started using credit cards and debit cards instead of using money to buy goods.
Our money is being limited to digits only. If you buy something similar, the digits in your bank account are reduced, and the digits are paid to the person you paid.
Thus, passing through various stages, human civilization has reached the use of cryptocurrency in search of its convenience. In today’s world of cryptocurrency, people are starting to take cryptocurrency as the most convenient medium. Cryptocurrency is a virtual medium of exchange. The Bitcoin logo is just like a coin.
But cryptocurrencies have neither coins nor paper money. It exchanges your digital assets. However, its basic concept is the same. Just as sending and receiving money from one bank account to another decreases, so does cryptocurrency.
The only difference is that in banking transactions, different banks have their separate accounting records, whereas, in cryptocurrency, each transaction has the same large record, which is called a ledger.
Why cryptocurrency?
In recent times, people around the world have been following cryptocurrency. In fact, virtual trading has its advantages over other trading systems. The first advantage is that cryptocurrency has decentralized the trading system. The record of each transaction in cryptocurrency is kept in the same large ledger, which also has many copies.
The ledger is available to everyone connected to the cryptocurrency network. Also, since a person’s business record goes to all the ledgers, it is easy to find out that someone has misused it.
You have probably heard of cryptocurrency mining or bitcoin mining. Bitcoin can only be extracted after solving a complex problem using a powerful computer, which can be captured and placed in a Bitcoin wallet, a process also known as mining.
Millions of people worldwide are involved in bitcoin mining, and you can earn extra bitcoin if you make good use of your computer skills in bitcoin mining. However, Bitcoin is only one type of cryptocurrency.
Due to the decentralization system in cryptocurrency, it cannot be easily hacked. For example, if you use different numbers to hack into the laser of one of the computers in the cryptocurrency network, you will be caught as soon as it is different from the numbers on the other computers.
Thus, when cryptocurrency is very organized in terms of security, people’s attraction towards it has increased. People seem to be attracted to it as it promotes transparent business.
The second reason is that people no longer need a cumbersome banking business. Because everything in cryptocurrency is under the control of everyone in its network, you can do it in no time if you have to do international business without paying any exchange rate, interest rate, and any other transaction fee.
The most interesting thing is that cryptocurrency is called a cryptocurrency because it is protected through cryptography. For example, like other cryptocurrencies, Bitcoin uses blockchain.
Blockchain is a secure ledger, which manages the records in the ledger as blocks. That is, if you have made a transaction through Bitcoin, that transaction is recorded as a block in the ledger. The block records who gave how much bitcoin to whom.
Types of cryptocurrencies
There are now around 4,000 types of cryptocurrencies around the world, each with its own unique characteristics. Among the world’s second-largest cryptocurrencies, Ethereum trades faster than Bitcoin.
Similarly, Cardano is considered technically superior to other cryptocurrencies, while Litecoin cryptocurrency has used a new algorithm. All cryptocurrencies have their own unique characteristics.
The downside
Despite the popularity of cryptocurrency in the market and its strong security, many people still do not believe in it. Many are reluctant to invest in cryptocurrencies because of the volatility of their prices.
On the other hand, because it is brand new and digital, it is not easily accepted. Similarly, it is not recognized in many places even today. Cryptocurrency payments do not work in many places, and some countries have declared them illegal. Even the world’s largest companies, including Microsoft and Tesla, have not introduced the use of cryptocurrency.
The third downside is environmental concerns. This is the energy it uses to be very safe. Excessive use of electricity for cryptocurrencies is also being criticized.
Finally, due to its characteristics, it has been discussed that it can increase crime and criminal transactions. Because the data used in the cryptocurrency can be traced, it is believed to give credit to criminal activity, while there is no such thing as tracing on paper money.
