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What is Cryptocurrency and How Cryptocurrency Actually Works

There was a time when there was no currency in the world. Only goods were exchanged for goods. But after that notes and coins came into existence. And the way of doing business changed completely. Today these notes and coins are our main currency. But apart from this, there is also a currency, which is completely digital. It is called Cryptocurrency. But the question is, what is this cryptocurrency after all? And how does it work? Also, What are its advantages and disadvantages? Let us know in detail.

Cryptocurrency

Today you have every country’s Currency (currency ‘s). Like India has Rupee, America has Dollar, Saudi Arabia has Rial. Similarly, other countries also have their own currency. But the question is, what is currency? So the answer is such a money system, Which is recognized by a country and used as a medium of money by the people there. Also, which has any value, it is called currency. That is in exchange for which any item or service can be bought it is currency.

For Example:- You can buy fruits with 50 rupees note. That’s why it is currency. But you cannot buy anything with the old Rs 500 note. Because neither it is recognized by the government nor does it have any value. That’s why it’s not a currency. Currency is usually printed on pieces of paper or metal (coins). That is why it is called Physical Currency. That is, it is possible to touch it and carry it around in the purse. But this is not the case with Cryptocurrency. 

What is Cryptocurrency?

What is Cryptocurrency

Cryptocurrency is a digital currency, which is managed by a decentralized system. In this, each transaction is verified by Digital Signature. And with the help of cryptography, its record is kept. In other words, cryptocurrency is a virtual currency based on Blockchain Technology, which is Secured by Cryptography. It is almost impossible to copy.

In fact, cryptocurrency is a  peer-to-peer cash system built on a computer algorithm. That is, it does not exist physically. It stays online only in the form of Digits. And its biggest feature is that it is completely Decentralized. That is, there is no control of any country or government on it. That is why it was initially termed illegal. But later given the popularity of Bitcoin, many countries made it legal. But many countries are still against it.

Why Does Cryptocurrency Have Value?

However, cryptocurrency is not printed in the form of notes and coins. But still, it has its own value. That is, you can buy goods with Cryptocurrency. can trade. And you can also invest. But you can’t keep it in your safe. Nor can it be kept in the bank’s locker. Because it stays online in the form of Digits. That is why it is also called Digital Money, Virtual Money, and Electronic Money.

If we talk about Cryptocurrency Value, then its value is much more than Physical Currencies. And the value of some top cryptocurrencies is thousands of times more than the dollar. But there is also a truth that this value does not remain constant. That is, the cryptocurrency market fluctuates very fast. Due to which its prices change several times a day.

How Does Cryptocurrency Work?

Cryptocurrency actually works through Blockchain. That is, a record of transactions is kept in it. Also, it is monitored by Powerful Computers, which is called  Cryptocurrency Mining. And by whom it is Mining, they Miners called (Miners).

When a transaction (in Cryptocurrency Transaction is). So his information is recorded in the Blockchain. That is, it is kept in a block. And the work of security and encryption of this block is done by the miners. For this, they solve a  cryptographic puzzle and find the proper hash (a code) for the block.

When a miner secures the block by finding the right hash. Then it is added to the Blockchain. And it is verified by other nodes (Computers) present in the network. This process is called Consensus.

If the block is confirmed to be secure in Consensus. And it is found to be correct. So the miner who secures it is given crypto coins. This is actually a reward, which is called  Proof of Work.

Live Cryptocurrency Chart

» Learn more: What is Bitcoin.

Cryptocurrency Market Crash

Kriptokrensi market, that is the place where  Cryptocurrencies of purchase and  Trading are. It is also known by names like Cryptocurrency Exchange, Digital Currency Exchange (DCE), Coin Market, and Crypto Market. Here you can buy, sell and invest in any Cryptocurrency. Such as Monero, Ethereum, Bitcoin, Redcoin, Litecoin, Voicecoin, etc.

Cryptocurrency exchanges usually accept payment by credit card, wire transfer, and other digital means. Here you can convert Fiat Money (paper currency) to Cryptocurrency and Cryptocurrency to Fiat Money.

If we talk about Top Cryptocurrency Exchanges, then the following websites are prominent in this list:-

CryptocurrencyMarket Capitalization
Bitcoin$849.5 billion
Ethereum$357.5 billion
Binance Coin$67.1 billion
Tether$64.1 billion
Cardano$63.7 billion
XRP$51.2 billion
Dogecoin$38.1 billion
USD Coin$27.5 billion
Polkadot$23.6 billion
Solana$22.5 billion
Data current as of Sep. 10, 2021.

These are just a few of the Cryptocurrency Markets that count. About whom close people know. And also use. Because these are quite popular and reliable markets. But apart from these, there are also hundreds of Cryptocurrency Markets. About which you can search on Google. And you can get a list of all the cryptocurrency markets.

» How Does Bitcoin Work?

Cryptocurrency Market In India

If we talk about Indian Cryptocurrency Markets, then CoinSwitch, CoinDCX, WazirX, and Unocoin are the most popular Cryptocurrency Exchanges in India. With the help of which you can buy hundreds of Crypto Coins from Bitcoin to Ethereum, XRP, YFI, YFII, Doge, and Tron. And you can pay INR. India  WazirX is the most popular and trusted Cryptocurrency Exchange.

Top 10 Cryptocurrencies In 2021

On hearing the name of the cryptocurrency, only one name comes to mining Bitcoin. But Bitcoin is not the only cryptocurrency in this world. Apart from this, there are thousands of Cryptocurrencies. Which most people don’t know about. Well, come on! Know about some popular Cryptocurrencies.

» Bitcoin (BTC – ₿)

Bitcoin is the world’s first cryptocurrency, which has become so successful. It was created by Satoshi Nakamoto in 2009. Although there have been many attempts in the past regarding Digital Currencies. But could not succeed. Even Bitcoin had to struggle a lot in the beginning. But today it is the most expensive digital currency in the world. And the bitcoin price is touching the sky at the moment.

» Tether (USDT)

Tether was launched in July 2014 under the name Real coin. But on 20 November 2014, its name was changed to Tether. Since then it has been known as Tether. It is also known as Stablecoin. Because it was always designed to cost $1.00.

» Ethereum (ETH)

It is a decentralized open-source blockchain. Which is the second largest Cryptocurrency in the world by Cornmarket Cap. It was launched in 2015. Ethereum is the most actively used Blockchain Network in the world. It is also known as Ether.

» Litecoin (LTC)

Litecoin is a peer-to-peer cryptocurrency. Which is based on an open-source cryptographical platform. It started in October 2011. Litecoin uses Scrypt instead of SHA-256 (Secure Hash Algorithm) in its Proof of Work algorithm. It also conducts transactions four times faster than Bitcoin.

» Currency (XMR)

Monero is a Decentralized Open-source Cryptocurrency. Which basically focuses on Privacy and Decentralization. It is quite famous for its security features. But it is mostly used to buy illegal things on the Dark Web. That is, it is the most popular cryptocurrency of the Dark Web. It was launched in 2014.

» NameCoin (NMC – ℕ)

Namecoin is basically based on Bitcoin. And it uses the proof-of-work algorithm. Namecoin can store data in its Blockchain Transaction Database. Its biggest feature is its censorship-resistant Domain Name, which is .bit. Although it is a top-level domain like .com and .net. But ICANN (Internet Corporation For Assigned Names And Numbers) has no control over it.

» BitTorrent (BTT)

BitTorrent Cryptocurrency was created by the Tron Foundation. It is a peer-to-peer file-sharing protocol. Which is based on Blockchain Technology. Its basic purpose is to facilitate file transfer between untrusting process participants. With its help, users can earn BitTorrent Token (BTT). And convert them into fiat money.

» Ripple (XRP)

Ripple is a Real-time Gross Settlement System and  Blockchain Network. It was founded in 2012 by the American company Ripple Labs Inc. was created by. Along with cryptocurrency, it is also a Cryptocurrency Exchange.

» Cosmos (ATOM)

Cosmos is a network of Blockchain Networks. That is the Network of Blockchain Networks. It is also called the Internet of Blockchains. Because it works to connect Blockchain Networks and establish communication between them. Basically, the purpose of Cosmos is to help in Communication, Data Sharing, and Transactions between Blockchains. And for this, Cosmos has a long-range of products and tools.

» Peercoin (PPC) 

Peercoin is also known as PP Coin, P2P Coin, PPC, and Peer to Peer Coin. It is a peer-to-peer cryptocurrency. Which is based on the Bitcoin Framework. But its energy efficiency is 100 times more than bitcoin. Also, Peercoin is the first such cryptocurrency. Which uses the combination of Proof of Work and  Proof of Stack. Peercoin was launched in 2012.

» Why is Bitcoin Needed?

Advantages of Cryptocurrency

When it comes to the use of Cryptocurrency, the question that definitely arises in the mind is why? Why use cryptocurrency after all? Why use cryptocurrency? After all, what are its benefits? So I would like to tell you that there are many benefits of cryptocurrencies. As if:-

  • Cryptocurrency is a digital currency. There is very little scope for Fraud in this.
  • Buying, selling and investing in cryptocurrencies is very easy. Because there are many Digital Wallets  available for this.
  • No bank is needed for cryptocurrency.
  • Cryptocurrency is a very good option for investment. Because its prices go up fast.
  • Cryptocurrencies are not controlled by any state or government.
  • Cryptocurrency is a Secure Currency.

Disadvantages of Cryptocurrency

Everything has two sides. There are some advantages and there are also some disadvantages. The exact same thing applies to cryptocurrencies. That is, Cryptocurrency also has some disadvantages. Let us know about the disadvantages of cryptocurrencies:-

  • The biggest disadvantage of cryptocurrency is that it is not controlled by any authority. That is, no one can control its prices. That is why its prices fluctuate unexpectedly.
  • The second disadvantage is that it is a digital currency. That’s why it can be hacked. And this has already happened with Ethereum.
  • The third biggest disadvantage is – Use in Illegal Activities. That is, cryptocurrencies can be used to buy Illegal Weapons, Drugs and Stolen Credit/Debit Cards.
  • Also Cryptocurrencies have no physical existence. That is, it does not have notes and coins.

Is Investing in Cryptocurrency Legal?

Although many countries have legalized Cryptocurrency. But it is still completely banned in many countries. In such a situation, the question arises that is Cryptocurrency legal in India? The answer is – Yes. Actually, Cryptocurrency is now completely legal in India. And you can buy and sell any Cryptocurrency.

Hope you know what Cryptocurrency is through this article? How does it work? What are the Top Cryptocurrencies? And important information related to the legalization of cryptocurrencies will be found. If you liked this article then like and share it. And subscribe to techsavvy.com for more such articles. So that whenever we publish a new article, you will get the information about it.

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Vimal K. Vishwakarmahttps://technovimal.in
Hello friends, I am Vimal K. Vishwakarma, Technical Author & Co-Founder of Techno Vimal. Talking about education, I am an Engineering Graduate. I enjoy learning things related to new technology and teaching others. I request you to keep supporting us like this, and we will keep providing further information for you. :) #We TechnoVimal Team Support DIGITAL INDIA

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