What is Crypto? History, Benefits & Predic future

A cryptocurrency is a type of digital or virtual currency designed to be used as a means of trade. It is remarkably similar to conventional cash, except that it lacks a physical form and operates via encryption.

1. A Brief History of Cryptocurrency

In the early human era, people used the barter system, which is when two or more people trade goods and services for each other. If someone wants to trade apples for oranges, they could do so. The barter system didn’t become popular because it had some big flaws:

– If you have something to trade, someone else has to want it, and you have to want what the other person is giving you.

– There isn’t a standard way to measure value. You have to figure out how many of your things you’re willing to trade for other things, and not all items can be split. It’s not possible to break down an animal into smaller parts while it’s still alive.

The goods can’t be easily moved, unlike our modern money, which fits in a wallet or is stored on a cell phone.

After people found out that the barter system didn’t work very well, the currency went through a few changes: In 110 B.C., an official currency was made; in A.D. 1250, gold-plated florins were made and used across Europe; and from 1600 to 1900, paper money became very popular and was used all over the world. This is how modern money as we know it came into being.

Paper currency, coins, credit cards, and digital wallets like Apple Pay, Amazon Pay, Paytm, PayPal, and so on are all part of modern currency. This means that all of it is controlled by banks and governments, which means that there is a single regulatory authority that controls how paper money and credit cards work.

2. Traditional Currencies vs. Cryptocurrencies

Consider the following scenario: you wish to compensate a buddy who purchased lunch for you by depositing money online to his or her account. There are various ways for things to go wrong, including the following:

– The financial institution may be experiencing technical difficulty, such as its systems being down or its devices malfunctioning.

– Your or a friend’s account might have been compromised—for example, a denial-of-service attack or identity theft could have occurred.

– Your or a friend’s account’s transfer limitations may have been exceeded.

There is a single point of failure in the financial system: the bank.

This is why bitcoin is the currency of the future. Consider a comparable transaction between two individuals who are using the bitcoin app. A notification comes, inquiring whether the individual is certain he or she is prepared to send bitcoins. If yes, processing begins: the system verifies the user’s identification, determines whether the user possesses the necessary balance to complete the transaction, and so on. After that, the payment is processed and the funds are deposited in the receiver’s account. This occurs in a couple of minutes.

Thus, cryptocurrency eliminates all of the difficulties associated with mainstream banking: There are no restrictions on the amount of money you may move, your accounts are unhackable, and there is no single point of failure. As indicated previously, there are over 1,600 cryptocurrencies accessible as of 2018; some of the most prominent include Bitcoin, Ethereum, Litecoin, and Zcash. And a new cryptocurrency is launched every day. Given their current rate of growth, there’s a high probability that there will be lots more to come!

Let us begin by discussing what cryptocurrency is.

3. What is Cryptocurrency?

Due to the decentralized nature of cryptocurrencies, which function independently of a bank or central authority, new units can be introduced only when specific requirements are satisfied. For example, with Bitcoin, the miner gets rewarded with bitcoins only once a block is uploaded to the blockchain, and this is the only way new bitcoins may be created. Bitcoins have a limited supply of 21 million; beyond that, no further bitcoins will be created.

4. Benefits of Cryptocurrency

Transaction fees for using cryptocurrency are low or even free. This is not the case when you move money from a digital wallet to a bank account, for example. You can do business at any time of the day or night, and there are no limits on how much money you can buy or take out. There is no need to fill out a lot of paperwork to open a bank account, like there is when you open one with a credit card company.

International cryptocurrency transactions are also faster than wire transfers, but this isn’t the only thing. wire transfers move money from one place to another in about half a day, but it can take longer. When you use cryptocurrencies, you can make transactions in just a few minutes or even seconds.

5. What is Cryptography?

Cryptography is a way to use encryption and decryption to keep communication safe when there are people who want to steal your data or listen in on your conversation. A computational algorithm like SHA-256, which is used by Bitcoin, is one of the things that cryptography does. A public key, which is a digital ID for the user that everyone can see, and a private key, which is a digital signature for the user that is kept private.

5.1. Cryptography in Bitcoin Transactions

In a typical bitcoin transaction, the transaction information are first: who you want to transfer the bitcoins to and how many bitcoins you want to send. The data is then hashed using a hashing technique. As previously stated, Bitcoin employs the SHA-256 algorithm. The output is subsequently signed using the user’s private key, which is used to uniquely identify the person. The digitally signed output is subsequently sent throughout the network for verification by other users. This is accomplished by use the sender’s public key.

Miners are users who check the transaction to determine if it is genuine or not. After then, the transaction, along with many others, is put to the blockchain, where the data cannot be modified. The SHA-256 algorithm is seen in the graphic below.

6. The Future of Cryptocurrency

When it comes to cryptocurrencies, the world is clearly split down the middle. Some people, like Bill Gates and Al Gore, say that cryptocurrencies are better than regular money. On the other side are people like Warren Buffet, Paul Krugman, and Robert Shiller, who don’t like the idea of it at all. There are two Nobel Prize winners in the field of economics, Krugman and Shiller, who say it is a Ponzi scheme and a way for people to do bad things.

As time goes on, regulation and anonymity are going to be at odds with each other. Many cryptocurrencies have been linked to terrorist attacks, which makes it more likely that governments will want to control how cryptocurrencies work. On the other hand, the main goal of cryptocurrencies is to keep people from being found out.

Futurists say that by 2030, cryptocurrencies will make up 25% of national currencies, which means that a lot of people will start using them to pay for things. Increasingly, merchants and customers will accept it, and it will keep being volatile, which means prices will keep going up and down, as they have for the last few years.