CRYPTOCURRENCY

 WHAT IS A CRYPTO-CURRENCY......

In Simple Terms to understand in a laymans language I have given with an example :Suppose we buy something in a store. If the retail does not have enough money, the shopkeeper will give a token. You can buy the item for that amount or get it in cash by taking the token back to him.

If you put the same token in digital form, it is the cryptocurrency. The difference is that no one distributes the token. Also, cryptocurrency  is accepted in some parts of the world.

EL SALVADOR becomes the first country to accept Bitcoin as currency

In simple terms, cryptocurrency means digital coins or in accountancy terms we can refer as intangible asset(means we can’t touch and feel unless like other fixed assets like gold or silver or currencies like dollar or Indian rupee). Though still it is not categorised in accountancy terms.  Crypto cannot be created fake. Each crypto  has a specific value. The value of each coin will climb up or down according to the market demand and supply.

Fiat currency or paper currency which can be printed at en number of times by countries as per their requirements  and  regulations

The entire article I have taken an example of bitcoin (one of the top and familiar crypto traded all over the world)

With respect to Bitcoin, the founders “seeded” the market by providing algorithms to early “miners” who accumulated the first stock of Bitcoins; and holders of such stock benefited from subsequent price increases.

 By using computers intensively and incurring high electricity costs, subsequent participants could mine for Bitcoins, of which a total of 21 million is the fixed supply. The supply function for the coins is reputedly spread out by reducing the size of blocks to be found and via an algorithm that makes finding them dynamically more difficult if they are found too quickly. It may take many years to mine them all.

Bitcoins trade on an online market and anyone can buy them at the going exchange rate with the dollar on Bitcoin broker platforms (like Coinbase), though the price has proven to be very volatile to date. Part of the reason for this is that there is no clear intrinsic value or agreed valuation method, and certainly no Bitcoin central bank prepared to intervene to make the price more stable, which would violate the fixed supply element. The digital transfer technology is very interesting.

There is an open source key cryptology(Cryptology means the art of writing or solving codes),

We have more than 7000 cryptocurrencies  some of the know Crytocurrencies  Bitcoin, Ethereum,Lite coin, Dogecoin, etc

Bitcoin transactions transfer ownership of a ‘coin’ from one  to another, but a private key is required to de-crypt (De- centralized) the Bitcoins and spend them. Public and private keys are alphanumeric strings based on sophisticated encryption: random numbers and letters are derived from public keys by the application of a “hash” function (a process that takes an arbitrary block of data and returns a fixed size bit string).

Bitcoins in the form of public keys are stored in :wallets:. on a computer hard drive and can only be accessed with the private key. Safety against hacking is increased by the use off-line" cold storage" and such services are provided by broker platform intermediaries. 

Wallets stored with an internet conncetion, or linked wiht a smarthpone application are akin to cash, and bitcoins can be moved from storgard to mobile wallets as an when it required, Tranctions are recorded in the "Block Chain" Which is key innovation in this technology- That is , a technology that removes the need for a trusted 3rd partyt and the intermediary costs associated with such institutions like Banks,credit card companies,non banking financial intermediaries , payment companies.

But however so of the demerits which will be discussed in my next article...........