Cryptocurrency (Cryptocurrency) is commonly referred to as crypto-currency or crypto. It is a digital or virtual currency, in which cryptography is used for secure transactions. Cryptocurrency is not issued by any central agency or regulating authority, rather it is based on a decentralized system, in which a record of every transaction is kept as well as new units are issued. Here we provide you detailed information about cryptocurrency.
What is Cryptocurrency
Cryptocurrency is a digital payment system in which the transaction is not verified by the bank. It is a peer-to-peer system through which users can make payments to anyone at any time. Along with this, users do not need to keep the currency with them in physical form or exchange currency in real form. Instead, payment in cryptocurrency is done through specific transactions, in which the payment is entered in an online database. Whenever someone transfers cryptocurrency funds, this transaction is recorded in a public ledger. Cryptocurrency is stored in a digital wallet.
Cryptocurrency got this name due to the use of encryption in verifying its transactions. This means that advanced level coding has been used from storing cryptocurrency in the wallet to transactions. The main purpose of encryption is to provide security and safety. Bitcoin is the most famous and first cryptocurrency which started in the year 2009.,,,,
How does cryptocurrency work?
Cryptocurrency is based on a public ledger, called blockchain. In this, transaction records of all currency holders are updated. The process of preparing cryptocurrency units is called mining, in which complicated mathematical problems are solved to generate coins, for which computers are used. Users can buy cryptocurrency with the help of agents. They can be stored and spent using cryptographic wallets.
If you have cryptocurrency, you do not have anything physically. You have a key through which you can make payments with your cryptocurrency. Although Bitcoin has been in use since 2009, the use of cryptocurrency and blockchain technology is increasing rapidly in finance. It is possible that its use may increase in the future. This technology is used in transactions of bonds, stocks and other financial assets.
How do transactions take place in cryptocurrency?
Now you must be wondering how money transactions take place in the crypto market, so let us tell you that like a bank account, digital currency transactions are done through a wallet. However, the wallet is under the control of the people. This wallet has two addresses - public address and private address.
Public address means the place where you send funds. Therefore, a public address is required to send digital currency from one wallet to another, that is, it is necessary to enter the public address of the person to whom the cryptocurrency is to be sent.
A 'password' or 'private key' is required to access the cryptocurrency inside the wallet. When you send a transaction from one wallet to another, it is secured by blockchain technology. Let us tell you that unlike government-backed currency, the value of virtual currency like crypto depends entirely on supply and demand.
Examples of Cryptocurrencies
Bitcoin: Bitcoin was established in the year 2009. It is the first and most famous cryptocurrency.
Ethereum: After Bitcoin, the most popular cryptocurrency is Ether (ETH) or Ethereum, which is based on blockchain.
Litecoin: Litecoin is also one of the popular cryptocurrencies. Litecoin is known for its innovation, fast payment and transaction process.
Ripple: Ripple is a distributed ledger system that was established in 2012. Ripple is used not only to track cryptocurrency but also to track different types of transactions. Ripple's developer company works with different banks and financial institutions.
Non-Bitcoin cryptocurrencies are commonly called "altcoins".
How can I buy cryptocurrency?
To buy cryptocurrency, you have to follow some steps…
Step 1: Choose the platform
First of all, you have to decide which platform you want to choose. You can choose either a traditional broker or a cryptocurrency exchange.
Traditional broker: Nowadays, many online brokers give the option of buying or selling cryptocurrency. These brokers also give the option of bonds, stocks and other financial assets along with cryptocurrency.
Cryptocurrency Exchange: Exchanges are also a good option for buying cryptocurrencies. These exchanges offer options for cryptocurrency, wallet storage, interest accounts.
Before choosing these platforms, you should see how much fees they are charging and what features you are getting in them.
Step 2: Fund the account
Once you choose the platform, the next step is to fund the account so that you can start trading. Most crypto exchanges allow users to buy crypto in fiat (government-issued) currencies such as US Dollar, British Pound, or Euro using their debit or credit card. Buying crypto with a credit card is considered risky, and some exchanges do not support credit cards. Cryptocurrencies are highly volatile, so it is not right to buy them by taking a loan. Some platforms also accept transfers and wire transfers.
Step 3: Placing order
After funding the account, you have to place an order for cryptocurrency on the broker or exchange's web or mobile platform. Along with this, users can also invest in cryptocurrency through fintech apps like PayPal, Cash App, and Venmo. Through these apps, users can buy or sell cryptocurrencies.
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How to store cryptocurrencies?
As soon as you buy cryptocurrency, you need to store it safely to protect it from hackers or thieves. Usually, cryptocurrency is stored in crypto wallets, which are physical devices and online stores. Along with this, some crypto exchanges also provide wallets to the users. Two types of wallets are used to store cryptocurrency – hot wallet and cold wallet.
Hot wallet storage: Online software is used to store cryptocurrency in a hot wallet. No charge is taken from the users for this.
Cold wallet storage: In this, offline electronic devices are used to store cryptocurrency. Users have to pay for this wallet.
How is IBI's digital rupee different from cryptocurrency
IBI's digital rupee or CBDC will be created using blockchain and other technologies. Digital rupee is a digital form of legal tender, which will be under the control of the central bank. This currency will be regulated by IBI.
On the other hand, cryptocurrency is a digital currency, which is not under the control of any central bank but is linked to the project created by the developer.
Cryptocurrency is not regulated by any government body and its value depends on the demand. Cryptocurrencies like bitcoin and ether also work on blockchain.
Digital currency is usually also called crypto currency or crypto. In this, cryptography is used for transactions in a secure manner. Also, it uses a decentralized system to record transactions and issue new units.
Questions and Answers (FAQs)
Why is cryptocurrency called a decentralized currency?
Cryptocurrency is a digital payment system that does not depend on banks to verify transactions. It is secured by cryptography, hence its name is cryptocurrency.
Usually when transacting with rupees (physical currency) or one person sends money to another person, the bank checks whether there is sufficient amount in the sender's bank account or not. After this that transaction is approved. In this the bank is the central authority. But this is not the case in cryptocurrency.
If someone has to send crypto, then the transaction is verified by hundreds of thousands of computers, which are running on the same algorithm. When thousands of computers are involved in this, there is no need for a central authority like a bank to ensure the success of the transaction. That is why it is called a decentralized currency.
For this, blockchain or distributed ledger technology is used. When you transfer funds in cryptocurrency, the transaction is recorded in a public ledger. Encryption is used to verify the transaction. This means that crypto transactions also involve advanced coding.
The purpose of encryption is to provide security and safety. Let us tell you that the first cryptocurrency was Bitcoin, which was introduced in 2009...........
Is Cryptocurrency safe?
Usually, cryptocurrencies are created using blockchain technology. Blockchain means that transactions are recorded in blocks. This is a fairly complex technical process. Therefore, it is also difficult for hackers to tamper with the digital ledger of cryptocurrency transactions.
Transactions require 2-factor authentication. For example, you may be asked to enter a username and password to start a transaction. You may then also have to enter an authentication code sent via text to your phone. Even after security, it cannot be said that cryptocurrencies are completely safe from hacks. In recent years, crypto hackers defrauded Coincheck of $534 million and Bitgrail of $195 million.
What is the status of cryptocurrency in India?
There are about 10.07 crore crypto owners in India, which is the highest in the world.
The US is second with 2.74 crore crypto owners and Russia is third with 1.74 crore.
India ranks fifth in terms of crypto ownership by population, at 7.30 percent, while Ukraine ranks first with 12.73 percent crypto owners.
There are 1.5-2 crore crypto investors in India.
WazirX has around 1 crore registered users, CoinSwitch Kuber has 1.1 crore and Zerodha has 70 lakh registered users.
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