What is a Cryptocurrency? How does one use a Cryptocurrency?
The two questions that derives in this twenty first Century has proved the World of its growth in technology deliberately.
Cryptocurrency came before the birth of Bitcoin. It is a digital asset/ a digital currency used in exchange for goods. It works globally using powerful networks. Though it precede Bitcoin, it was Bitcoin that gave way for cryptocurrency to function by being the first cryptocurrency in 2009.
When Cypherpunks movement create an alert for the need of a secure and private system in the 90s, cryptography was their main focus. Like the word Crypto “concealed” suggest, cryptocurrency is safe, secret, and secured by codes created by developers/ cryptographers.
Ken Griffith, in a website Bitcoin Magazine, had written about the history of Cryptocurrency. Griffith takes us back to the 1980s when the first known electronic cash was used in a Petrol pump due to raids that destroy safety. Later in 1982 David Chump had invented the digital cash called “Digi cash”. This is an electronic payment system. Bitcoin, under the pseudonym of Satoshi Nakamoto, which use cryptography, is the most common digital cash invented in the year 2009, it gain popularity from 2011 till date. At present there are about 800 cryptocurrencies.
Going back to what is cryptocurrency briefly, it is a digital currency(but there are countries that do not believe it to be a currency at all) which does not have any physical structure, its powerful system allow untraceable payment, it is decentralize, hence, it is self governed, permission less, and controlled by none. The users are the one controlling the system. Thus, if one desire to be anonymous, using cryptocurrency gave them permission to be private, undisturbed and more keen on security.
The former paragraph talks about the characteristic of cryptocurrency in a positive manner. Moving on to the most important part, Cryptocurrency does not allow reversing of transaction, once transaction is done it can never be turned back. The currencies must be placed in a backed up Wallet for safety.
For the most important part of this article, talking about why cryptocurrency as a risk taking is worth analyzing about. Though it can gain momentum in the years to come, it is all about talking about the future which is yet to come. Therefore, the level of risk can not be left out.
Investing a whole lot of cryptocurrencies worth a Million, and loosing them with no possible return is possible. MT GOX, a company which deal with an electronic cash was believed to invest at least 90% of Bitcoin had been hacked, leaving the company to be bankrupt. This terrific incident haunt the users, thus, create an awareness to backed up their wallet and not to keep their coins in an exchange, which may call upon the attackers.
Most cryptocurrencies, like Bitcoin, is an open space, hence, ‘trust’ is what every users must be aware of. As it is not governed by any single authority, where no personal information are required, users have to trust one another in making transaction, keeping in mind the available fraud that could happen. Unlike, the physical financial institution, Cryptocurrency does not have any service center even if they are hacked.
Investing in cryptocurrency may bring an opportunity for the future, as the monetary system fluctuate over time, there may come a time when cryptocurrency is given the same value as fiat money globally. In fact its vulnerabilities should also be aware of as it is a new market that is often volatile, and at the same time unstable. A risk is taken in investing a number of coins with no center, but with the control of a powerful blocks of chain.