Cryptocurrency is a term used for a digital asset which works as a medium of exchange and for tracking the transactions of purchase and sale of assets. It is a type of digital money which is basically designed to be secure and safe and anonymous too. However, as it is not issued by any central agency so it also doesn’t have any interference from the government or any institution.
Cryptography also plays an important part in the process of turning legible information into a code which can’t be cracked.
Now as these cryptocurrency transactions are anonymous in nature and no government identifies them as authentic, they can be used to purposes like money laundering and tax evasion.
Bitcoin is the first cryptocurrency which was launched in 2009 by someone whose pseudonym was Satoshi Nakamoto. The success of Bitcoin did bring other cryptocurrencies into market such as Namecoin, PPcoin and Litecoin.
The number of bitcoins in circulation as on Dec 5, 2017 is 16,722,625 and the maximum number of bitcoins that can be in circulation is 21,000,000.
The biggest benefit of cryptocurrency is that the transfer of funds has been made easier and people don’t need to pay exorbitant charges that are charged by the banks and non-banking financial institutions. However, as the prices are dependent on the market forces of demand and supply, there may be volatility in the rate of exchange of crypto currency with another currency.
The biggest threat to cryptocurrencies is of hacking and the back-up of the holding should be kept as in the case of computer crash the digital balance of cryptocurrency can get deleted.
Do you think that bitcoins are the future of financial trasactions, do let us know.