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Cryptocurrencies – A Brief Tutorial

Cryptocurrencies have become a rage among the investors over the years. However, there is extreme volatility witnessed with this new kind of currency. Many say that it’s the new way of existence in the new global economy. Crypto currencies are nothing but agreement between willing parties that calculate crypto of each participant. The experts dealing with this currency type say that people can create their own crypto currency till the participants do it among any group of people in a logical as well as consistent manner. However, there are also sceptics who compare these online currencies with that of the Dutch Tulips market bubble the market witnessed during 1600s. These are the reasons why it has become important to have a closer look at cryptocurrencies and have a clear idea about them before investing or owning them.

The Most Popular Currency till Date – Bitcoin

Bitcoin is definitely the first and most popular decentralized digital currency. The entire system works in such a manner where there is no central bank or any specific administrator. It’s a peer-to-peer network where transactions happen directly between two users. Mind it there is no intermediary in such a transaction. However, there are network nodes for verifying each transaction, which is again done with the help of cryptography. In fact, a blockchain is maintained for recording every transaction made. Blockchain is nothing but a publicly distributed ledger, maintained digitally throughout the network. Per available information, Bitcoin was invented by Satoshi Nakamoto. However, it’s still not known whether it’s a single person or a group of people. After creating this technology those anonymous persons released Bitcoin in 2009 in the form of a open-source software. Bitcoin process starts with the mining process. This currency is a reward for the effort of mining. These cryptocurrencies can be exchanged for other products, currencies, and services.

What are the other Crypto Currencies Available?

Though Bitcoin is the most popular crypto currency available, there are other popular ones too. Some of them include Ethereum, Ripple, and Light Coin blockchains. While Ethereum is backed by Ether, Ripple blockchain is backed by Ripple.

Another popular crypto is Light Coin that is nothing but classical Bitcoin’s modern variation. There are many others and loads more are being added to the list on a regular basis. So, there are many cryptocurrencies available at present.

Is there a Trend Emerging that is Preferring Other Cryptos than Bitcoins?

Bitcoin is definitely ahead of others in terms of popularity. However, experts point out that. Inspite of the fact that Bitcoin has started a sort of digital currency revolution of sorts, experts believe they are inadequate in meeting the stated objectives as well as requirements. Hence, it can be said that Bitcoin is not at all decentralized as the objective states. In fact, it also comes with a transaction cost. In fact, the volatility of Bitcoin’s price is extreme and that’s why many sceptics have started showing concerns about it. Some have also started predicting that Bitcoin will have the same fate as it was the case in the 1600s with Dutch Tulips and the associated market bubble. Many have started saying that Bitcoins are not suitable for transactional purposes, especially from the perspective of the true sense electronic currency. When we say digital currency then the first thing that comes to mind is the feature of facilitating legitimate commerce online.

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To fill in the gap and move towards the stated decentralized objective of digital currencies, many more currencies are being developed. One such effort is in the form of utility settlement coin. This effort is channelized by a London based company called Clear Matics. In this case, the currency is has a direct linkage with that of Fiat currency. There are other instances too. One such effort is being carried out by a MIT faculty along with other experts in the field where they are trying to conceptualize a currency backed by assets. They say this currency will meet the needs of the general perception of people, which is nothing but storage of value by each account. Many experts are of the opinion that cryptocurrencies are still in the evolving stage and more exciting things are yet to come and surface.

Can Cryptos be part of Real World Finance?

That’s definitely a million dollar question. However, there are ominous signs that indicate that crypto currencies can definitely become real world finances and drive the world finance in the days to come.

There are multiple obstacles that are there and they are required to be overcome. The first most vulnerable aspect of Bitcoin or other cryptos is that it has become more volatile with many more participants getting involved in the process and transaction. A person who bought Bitcoin at $1000 would definitely be happy when the value reaches $20,000. However, the same will not be the case where a person bought the same at $20,000 because the value has now come down to $11,000.

Once these issues are sorted out, cryptocurrencies will become the norm of world finance and will definitely drive them.

In a nutshell, you can opt for Bitcoin mining and other cryptocurrency mining to earn great ROI and become a part of crypto community.

About Harpreet Kaur (29 Posts)

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