Cryptocurrency is the term used to describe a type of digital or electronic currency which is secured using cryptographic techniques and is free from direct management by a central authority such as the government. Unlike Bitcoin, started 2009 by an anonymous person or group known as Satoshi Nakamoto that is both still the most popular cryptocurrency and also the first, today there are thousands of different types of cryptocurrencies coming into the market.
Cryptocurrency has one key character this is its decentralized end. In contrast to the central banks and financial institutions issuing traditional currencies, cryptocurrencies are created and managed on distributed ledgers called Blockchain networks. These blockchains are decentralized, with each chain stored across a network of computers, thereby making them unalterable and immune to tampering or censorship.
Cryptocurrencies are usually stored on digital wallets, and the owners use private keys to carry out transactions. These wallets enable sending and receiving the cryptocurrencies, keeping track of balances and transaction histories, and so on. In cryptocurrency transactions, the data are saved on the blockchain, which makes them less likely to be tampered with.
Crypto privacy and anonymity are among the main features of cryptocurrency and it is what lures many people towards it. The blockchain, therefore, is a public ledger, but the identities of the parties to the transactions are protected by the means that the means they are represented by cryptographic addresses, not real names. This may be taken up as an offering for privacy that is not possible in traditional banking systems.
Apart from made privication, cryptocurrency also has other benefits such as reduced transaction costs and instant transaction speeds compared to conventional banking systems. Moreover, cryptocurrency transactions are borderless in that they do not take a long time in currency conversion hence they are well-suited for international payments and remittances.
While cryptocurrency is not without risk and challenges, it has tremendous potential as an alternative to fiat currencies. Cryptocurrencies are capable of volatility of the highest degree, with prices exposed to extremely fast changes. With that, safety issues have risen, with regulators scrutinizing these digital currencies and illegally activities such as money laundering and tax evasion.
