New Delhi, Manish Kumar Mishra. Everyone seems to be talking about Cryptocurrencies nowadays. Like the stock market, now you will be getting to see the rates of major cryptocurrencies in the headlines early in the morning. Come, today we understand about these cryptocurrencies in detail. What are Cryptocurrencies, how do they work and what are the pros and cons of investing in them.

What are Cryptocurrencies?

Cryptocurrency is actually decentralized digital money based on blockchain technology and secured with cryptography. Now you would like to know what is this Blockchain? Simply put, a blockchain is a digital ledger (ledger) in the case of cryptocurrency, which only users have the right to use. This ledger records the transactions of various types of assets which include assets like money, house etc. The authority of the blockchain is shared with the users and the special thing is that the information available here is completely transparent, instant and secure enough that it cannot be changed by the users or even the administrator. Now let us understand the difference between centralized and decentralized money. Centralized money is Rupee for us, which is governed by Reserve Bank of India. There is no one to govern the decentralized money and no authority to supervise the fall or rise in its value.

History of Cryptocurrency

The ‘blinding algorithm’ was discovered in the 1980s and has been at the core of cryptocurrencies. This algorithm deals with keeping all digital transactions secure and impenetrable. In 2008, a group of people created Bitcoin, the cryptocurrency of today’s crypto market, and also formulated its principles. The pseudonym of the group of people who created bitcoin was ‘Satoshi Nakamoto’. Bitcoin was launched in the world in 2009. However, it took years to use it for payments to merchants, and in 2012 payments for WordPress began to be made with Bitcoin.

How to Buy and Sell Cryptocurrency

If you want to buy and sell cryptocurrencies, you can buy it from central exchanges, brokers or anyone who has it. You can also sell them through these mediums. The cryptocurrency is credited to your Digit wallet once you have purchased it. There are also two types of Digital Wallets – Hot and Cold. Hot Digital Wallet is connected to the internet and you can easily buy and sell the cryptocurrencies lying in your wallet. However, there is a risk of theft and fraud. Cold storage is safe but transactions are not easy.

Transactions via Cryptocurrency

You can easily transfer cryptocurrencies like bitcoin from one digital wallet to another and all you need is a smartphone. If you have cryptocurrency, you can use it to buy or trade any goods or services or take cash in return.

Advantages and Disadvantages of Cryptocurrency

Cryptocurrencies are private and secure. It is also decentralized and transparent, no one can tamper with its data. Some investors also use it for hedging against inflation like ordinary investors use gold. Along with these advantages, investing in cryptocurrency also has some disadvantages. A lot of investors don’t understand cryptocurrencies. Behind every currency there is an underlying value. For example, the government prints rupees on the basis of gold available in the country. Cryptocurrencies do not have any underlying value. There is a lot of volatility in these and here only the law of demand and supply applies. In view of these risks, cryptocurrencies are banned in many countries.

Edited By: Manish Mishra