Why is Cryptocurrency trending in the E-currency blog sphere? I was speculating until I decided to carry a slight research on it so as to expose to you guys what it’s all about before you venture into it.
So without getting so hyped-up; Cryptocurrency is a digital currency that uses encryption (Cryptograph) to generate money and to validate transactions.
In a more technical term, it’s an encrypted, peer- to- peer virtual currency made up of codes and it’s just like any other medium of exchange like US dollars, but in this aspect, the exchanges make use of encrypted details and exchange of digital tokens in a distributed and decentralized way.
Up until the invention of Cryptocurrency, it was impossible for two parties to transact electronically without employing the service of a third party or a trusted intermediary. The reason was ‘double-spending’ problem, which affected all attempts to make electronic cash since the birth of the internet.
In 2008, Satoshi Nakamoto presented a form of Cryptocurrency known as Bitcoin which completely overcame the problem of ‘double-spending as the transactions took place between the users directly without a third-party.
He was able to make this possible by introducing the use of public key cryptography, peer- to-peer networking and a proof-of-work system.
Another notable introduction by Bitcoin was the employment of Ledger which was referred to as Block Chain. The work of the block chain was to store and settle all the transactions of the Bitcoin economy.
The blockchain is not controlled by a central authority like another electronic cash system (PayPal) but it is a public file distributed in a peer-to-peer system across thousands of nodes in the Bitcoin network. This also made it easy ti track digital exchanges and prevent cheating.
IMPORTANCE OF CRYPTOCURRENCY
- Secure and transparent digital currency to deal with and the world is generally moving towards that. Since Cryptocurrency is digital and cannot be forged or reversed arbitrarily by the sender as with credit card chargeback.
- It cuts out the need for a third party in exchanges and protects wealth against exchange controls or capital controls. Because Bitcoin and other forms of Cryptocurrency are basically digital, the location of the two parties of the transaction is irrelevant. The transaction can be done anywhere.
- It makes a transaction to be highly non-disclosure or anonymous which appeals to consumers who prefers non-disclosure and privacy.
- It encourages exchanges free of supervisory meddling and promotes what is referred to as low-cost banking because it can be done anywhere as long as the consumer has access to a cellphone.
- Cryptocurrency uses a ‘push’ mechanism that allows the Cryptocurrency holder to send exactly what he or she wants to the mercantile or recipient with no additional information. This helps avoid identity theft as seen in the case of credit card where you give a merchant your credit card details and access to your full credit line.
- Lower fees: There aren’t usually transaction fees for Cryptocurrency exchanges because the miners are rewarded by the network.
- Most importantly you are in full ownership of your account, unlike another electronic cash system where there is a company managing your account. With Cryptocurrency you own the private key and the corresponding public key that makes up for your Cryptocurrency address and no one can take that from you.
Original article has been posted on Steemit . Minor edits has been done by the author