Cryptocurrency also known as Digital Currency revolutionized the world and introduced us to a new phase in the face of money. Cryptocurrency is a currency that exists only digitally and not in physical form. It is secured via cryptography and can be exchanged through computer network only.
In the digital currency the records of all proceedings are maintained, verified and updated with the help of cryptography. It was set in motion in 2008 in the shape of Bitcoin.
The technology of blockchain rules the whole concept of cryptocurrency. This technology holds the capacity to alter the world not only in terms of financial infrastructure but also in several other ways. NFTs are a living example to this. With the invention of cryptocurrency money has become synonymous with technology instead of cash.
What actually cryptocurrency is all about?
Cryptocurrency is the brainchild the mastermind Satoshi Nakamoto. Satoshi unfolded a white paper to the world titled ‘Bitcoin: A Peer-to-Peer Electronic Cash System’ in 2008. Nakamoto presented a system based on cryptographic evidence that permitted any two willing parties to send or receive payments directly to each other without the need of any financial institution or bank.
Before cryptocurrency, the financial institutions of the country, till now, maneuvered the transactions in the world. It means that all the bank notes or the coins that we use are issued and printed by bank.
It was the centralized agencies and the governments which took charge of quantum of money that was to be put into circulation. All the online payments made through various modes were also enabled through these third-party intermediaries.
The second advantage of the Nakamoto’ s system was that it eliminated the problem of duplicating the currency as it is almost next to impossible to copy any cryptocurrency. So double spending could easily be checked as all the transactions recorded on blockchain come with a timestamp tag.
Apart from being economical, accelerated money transfer for international transactions has proved to be another ground for cryptocurrency to gain popularity among the masses. The new way to pay was also immune to any kind of system collapse.
Bitcoin was the first form of cryptocurrency devised by Satoshi Nakamoto. It was made available for public in 2009. Since then it has been the most booming and most sought after cryptocurrency which also makes it the highest market grosser. As per the data of November 2021, the total value of all the cryptocurrencies put together had reached over $2.1 trillion of which Bitcoin had a share of 41% of that total value.
Apart from Bitcoin the last decade has witnessed the outpour of scores of cryptocurrencies. Ethereum is the next most traded crypto after Bitcoin. It stormed the markets in 2013 and was chiefly designed by programmer Vitalik Buterin. Litecoin, XRP, Dogecoin, Tether are just a few more names among the many cryptocurrencies trending today. Each cryptocurrency avows to have unique specifications and purpose.
Nakamoto’s paper has become an inviolable document for the community of crypto enthusiasts. The abstract of the white paper as presented by Satoshi Nakamoto on 31st October 2008 reads:
“A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network. The network time stamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they’ll generate the longest chain and outpace attackers. The network itself requires minimal structure. Messages are broadcast on a best effort basis, and nodes can leave and rejoin the network at will, accepting the longest proof-of-work chain as proof of what happened while they were gone.”
What’s a blосkсhаіn?
It is the heart and soul of cryptocurrency. Blockchain, also cited to as Distributed Ledger Technology (DLT), makes the past transactions of any digital asset (like Bitcoin, Ethereum, NFTs, etc.) permanent and unchangeable. All the transactions recorded on blockchain are transparent as they are decentralized and have cryptographic hashing.
In simple words, Blockchain maintains a record of who owns what and how much. Unlike a bank account, details of a blockchain can be accessed by all the computers that are linked in a peer-to-peer network.
Any new activity that deals in a cryptocurrency of a specific type is recorded on this block chain. Whenever a new transaction takes place, a new block is formed. This block after verification from all the other members on the network of that particular cryptocurrency, is added to the blockchain. This feature makes it not only difficult but infeasible to replicate the cryptocurrency as the history of all the transactions is required to forge it.
Is Cryptocurrency Legal?
The way in which Cryptocurrency challenged and nullified the need of the third-party financial infrastructure was unconventional. It could eventually mean leaving the control over the finances of the country. And here lies the reason why so many nations of the world have still not legalized it. Though some countries allow trading in cryptocurrency, only a few have allowed it legally and some other like China have totally banned it.
The super economies of the world are still not sure about its repercussions. It also means that any unlawful activity in the field cannot be challenged as a case on the legal front.
The switchover to cryptocurrency may turn out to be something very enriching or may promote the dark businesses in the world. The highly volatile nature of cryptocurrency gives us another very valid cause to think before giving it a legal status in a country.
