Cryptocurrency is the new hype nowadays. Everyone is into it, yet many don’t understand what it is and how it works. In just a few years, cryptocurrency changed from being a digital novelty that no one bothered with to a trillion-dollar technology that everyone wants to get their hands on. To answer the question of whether it is the future of money, let’s delve into the whole concept first.
In simple terms, cryptocurrency is digital money. Just like there are different currencies in other parts of the world, there are also different cryptocurrencies and bitcoin is one of them. The best thing about it, though, is that it is not linked to government or institutions like banks or companies, etc. It doesn’t connect one person to the real world at all.All the record of cryptocurrency being sent or received is stored at one digital place and anybody can access it. It cannot be stolen or seized and it can be used anywhere else in the world.
Cryptocurrency owners can buy everything from software or real estate to illegal drugs.In short, with cryptocurrency, it is possible to lend, sell, buy and borrow without having an identity, credit score, or a bank.
Types Of Cryptocurrency
There are many different types of cryptocurrency, but the most common of them are mentioned below:
- Bitcoin (BTC); considered to be the original cryptocurrency created in 2009; allows for peer-to-peer transactions; includes no central authority figure; coin limit is 21 million
- Litecoin (LTC); launched in 2011 as an alternative to Bitcoin; having faster transaction time as compared to BTC; coin limit is 84 million
- Ethereum (ETH); created in 2015
- Bitcoin Cash (BCH); includes improved features of Bitcoin; transactions are processed faster
- Zcash (ZEC); users can send/receive cash without disclosing sender, receiver, or amount transaction information
- Stellar Lumen (XLM); allows users to send any currency to another with a different currency
- Bitcoin Satoshi’s Vision (BSV); launched in 2018
- Chainlink (LINK); 2017; uses real-world data and off-chain computation all the while maintaining security and reliability
What all of these types have in common is that they are all completely decentralized meaning that there is no central authority for any of these cryptocurrencies.
How Is A Cryptocurrency Created?
Cryptocurrencies are mined, rather than created. The process of mining cryptocurrency includes using sophisticated computers to solve extremely complex maths problems. This enables miners to become an integral part of the cryptocurrency networking by securing the network along with generating more coins to be added into circulation. The available supply is gradually increased as more resources are used in the mining process. In short, cryptocurrencies are mined by solving complex mathematical problems, and the requirement for resources increases as time progresses.
Moreover, it takesonly ten minutes to create one bitcoin, assuming the hardware and software system owned by the miner is an ideal sort.
Also, mining systems for cryptocurrencies consume massive amounts of electricity. So much so that cryptocurrency mining is considered detrimental to the environment. To combat this issue, cryptocurrency miners switch their operations from electricity to renewable sources of energy that reduce their impact on climate change.
What Is The Fuss About Cryptocurrency?
The phenomena of cryptocurrency are appealing to their fan for a variety of reasons;
- They see cryptocurrency as something that is going to become the future of currency and are geared up to buy them before they become more valuable
- They like the idea that cryptocurrency can remove banks from managing the money supply since, in the real world, banks reduce the value of money
- Some like cryptocurrency due to its decentralized processing and recording system, which seems more secure than a traditional payment system
The Legal Status Of Cryptocurrency
Issues like its volatility, use in nefarious transactions, and exorbitant use of electricity to mine it has called for an array of restrictions on their usages. There are some countries around the world where cryptocurrency hasn’t been officially recognized as a currency, yet its citizen are heavily invested in it. In other places, there are strict laws against its usage and anybody found being involved in it will be tried at the court of law. China, Morroco, Nepal, Bolivia, and a few other countries prohibit their citizens from owning or mining cryptocurrencies. However, cryptocurrency is not banned or considered illegal in the US.
Cryptocurrency mining requires the dedication of time and effort and anyone can become a miner if they have a massive computing system loaded with software and a large amount of electricity to keep it going. Not to mention, the internet is also a prerequisite for cryptocurrency mining since the process involved computer processing hardware being utilized to verify transactions on the blockchain. Cryptocurrency miners only need to have a basic internet connection, as low as 15 Mbps, which they can also get from Xfinity internet plans. In conclusion, owing to its fast growth and decentralized nature, cryptocurrency doesn’t seem like it is slowing down anytime soon. If cryptocurrency replaces cash, the traditional currencies will all lose value. With ample speculation, anyone can guess that crypto could take over traditional currency.Regardless, it is out of anyone’s hands.