What Are CryptoCurrencies
Digital currencies better known as Crypto-currencies exist only in a digital or virtual realm. Crypto currencies use cryptography for security which makes them quite difficult to counterfeit.
A defining feature of a crypto-currencies, and arguably their most endearing allure, is their organic nature; they are not issued by any central authority (Governments or Central banks), rendering them theoretically immune to government interference or manipulation. Furthermore; the anonymous nature of crypto-currency transactions makes them well-suited for a host of commerce and transactions.
The first crypto-currency to capture the public imagination was Bitcoin, which was launched in 2009 by an individual or group known under the pseudonym Satoshi Nakamoto. As of 2nd half of 2018, the total market value of Bitcoin is over $100 billion. Bitcoin’s success has spawned several competing crypto-currencies named Altcoins (Alternative currencies), such as Ethereum, Ripple, Dash and many more.
Advocates for Cryptocurrencies strongly believe that it will enhance the transfer of funds between two parties; these transfers facilitated using public and private keys for security purposes. These fund transfers are done with minimal processing fees, allowing users to avoid the steep fees charged by most banks and other financial intermediarys or wire transfers.
Central to the genius of Bitcoin is the block chain it uses to store an online ledger of all the transactions that have ever been conducted using bitcoins, providing a data structure for this ledger that is exposed to a limited threat from hackers and can be copied across all computers running Bitcoin software. Many experts see this block chain as having important uses in technologies, such as online voting and crowdfunding, and major financial institutions such as JP Morgan Chase see potential in cryptocurrencies to lower transaction costs by making payment processing more efficient.
The concept of a virtual currency is still novel and, compared to traditional investments; Bitcoin doesn’t have much of a long-term track record or history of credibility to back it. With their increasing use, Crypto-currencies and chief among them Bitcoin are becoming less experimental every day, still, after less than a decade; they (like all digital currencies) remain in a development phase, still evolving. “It is pretty much the highest-risk, highest-return trading opportunity among financial assets available today.”
Bitcoin is a digital currency in 2009. It follows the ideas set out in a white by the mysterious Satoshi Nakamoto, whose identity has yet to be verified. Bitcoin offers the promise of lower transaction fees than traditional online payment mechanisms and is operated by a decentralized authority, unlike government-issued currencies. There are no physical Bitcoins, only balances kept on a public ledger stored in the cloud (Global storage sites), that – along with all Bitcoin transactions – is verified by a massive amount of computing power. Bitcoins are not issued or backed by any banks or governments, nor are individual Bitcoins valuable as a commodity.
There are many Bitcoin supporters who believe that digital currency is the future. Those who endorse it are of the view that it facilitates a much faster, no-fee payment system for transactions across the globe. Although it is not itself any backed by any government or central bank, Bitcoin can be exchanged for traditional currencies; in fact, its exchange rate against the dollar attracts potential investors and traders interested in currency plays. Indeed, one of the primary reasons for the growth of digital currencies like Bitcoin is that they can act as an alternative to national fiat money and traditional store of value commodities like gold.
Launched in 2015, Ethereum is a decentralized software platform that enables Smart-Contracts and Distributed Applications (ĐApps) to be built and run without any downtime, fraud, control or interference from a third party. Ethereum is not just a platform but also a programming language (Turing complete) running on a blockchain, helping developers to build and publish distributed applications. The potential applications of Ethereum are wide ranging. The applications on Ethereum are run on its platform-specific cryptographic token, the “Ether”. During 2014, Ethereum had launched a pre-sale for ether which had received an overwhelming response. Ether is like a vehicle for moving around on the Ethereum platform and is sought by mostly developers looking to develop and run applications inside Ethereum. Ether is used broadly for two purposes; it is traded as a digital currency exchange like other cryptocurrencies and is used inside Ethereum to run applications and even to monetize work. The market cap of ether (ETH) by mid 2018 stood at 20 billion U.S dollars.
Other highly popular Cryptocurrencies are:
Bitcoin Cash (An offshoot – Fork from the original Bitcoin)