What is Cryptocurrency? Introduction, Pros & Cons of Crypto

Cryptocurrency is the digital currency that was created by Japanese developer Satoshi Nakamoto in the year 2009 in the form of the first cryptocurrency Bitcoin. It’s more than 10 Years now and still, it is a new term for the majority of the people in the world. Most people must have listened to the term Cryptocurrency, but only a few understand what is cryptocurrency?

What is Cryptocurrency? Introduction and Pros & Cons of Crypto

Why Currency was Evolved?

To understand cryptocurrency let’s first understand the history of currency.

In the very first form of Currency, the barter system was used. In this system, people exchange their things as per their requirements. Suppose, I have a Cow that gives milk and you have a hen that gives eggs. So in the barter system, I give you the milk of cow if I want eggs from you. In those times there was no money or currency. Only the barter system was used.

So, by time due to the various drawbacks of the barter system, various metal coins were introduced, and finally, the Gold emerged as the winner due to its tendency to break down into smaller pieces and availability in limited sources. So, the people started using gold for trade and buying items they want.

Later on, due to some drawbacks in using gold as currency, the present-day currency notes came into the picture and it also evolved the central agency controlling the currency notes. Actually, the currency note is a piece of paper created by a central agency (like RBI) which assures that it is responsible to pay you for the amount of that note. The equal value Gold is deposited with the Central Agency.

Why Cryptocurrency was Evolved?

First, it should be kept in mind that cryptocurrency was not evolved intended to replace the current FIAT currencies. Rather it provides an option to the people to use another mode of currency that is not controlled by anyone.

The FIAT currencies (like Rupee, Dollar, Pound, etc) are controlled by the central agency (like RBI in India). They can be issued, banned, replaced under the control of the centralized agency.

The concept of cryptocurrency came into existence with the need for currency to be decentralized. So that it can’t be controlled by any person or agency. So that no one can change it. It was made possible with the help of blockchain technology.

What is Blockchain Technology

Blockchain is the type of Data Storage in the form of Blocks that are connected to each other. It’s like bookkeeping. We write some information in a book in the form of lines. The first transaction in the first line and the subsequent transactions are in the proceeding lines. Blockchain technology works with the same concept. It stores the data/ entry/ transaction in the form of a block and the next transaction in the form of the next block connected with the previous block.

Advantages of Cryptocurrency

Cryptocurrency is being said to be the currency of the future. The advantages of cryptocurrency are given below.

  • It is a decentralized currency that is not controlled by a single person or agency.
  • It is higly secure and Private.
  • No limit on international transactions.
  • Easy Transfer of Funds
  • Protection from Inflation.
  • No middleman like Banks are required for transactions

Disadvantages of Cryptocurrency

  • The cryptocurrency is highly volatile (Its value may increase or decrease suddenly)
  • Its not regulated so the Govt cannt control its tranactions.
  • It may be used for the illegal activities without any control
  • The mining of the Cryptocurrency is high energry consuming

Frequently Asked Quesitons

Is Cryptocurrency a Money?

Cryptocurrency is not money but it can be used to transfer value for something. There is no physical existence of Cryptocurrency, it is present only electronically.

Can Cryptocurrency be converted to cash?

Yes, not directly but through a broker or exchange.

Which are the main cryptocurrencies?

Bitcoin, Ehtereum, Tether, Binance Coin, Ripple, etc.

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