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What is Cryptocurrency?

Sep 064:00 pm

Introduction

The emergence of virtual currency has become to be a trend from the last decade. Cryptocurrency is emerging as a financial software system. Cryptocurrency is a digital peer-to-peer legal tender where individual’s coins (bitcoins) ownership records are stored in ledgers existing in computerized databases using cryptography to secure transaction records. A bitcoin is digital cash that is not backed up by any country's central bank. The cryptocurrency works with a distributed ledger technology known as a blockchain. This is, according to Anthony S. (2016). A blockchain is a digital ledger book where transactions are copied and supplied through computers' entire system. Each time a transaction is made, all the participants get the information. This article will tackle the history of cryptocurrency, its benefits, and where it has been applied successfully.


The history of cryptocurrency

As a form of cryptocurrency, Bitcoin came to be popularly known in 2008, although it had existed in the previous years. A group of people introduced Bitcoin called the Nakamoto, whose existence is still a mystery to date.

This, according to Robert S.(2017). The cryptocurrency was made official to the public in the year 2009, and mining began. Mining is the process by which new bitcoins are made and transactions made in the blockchain. In 2010, the currency was tied to be attached to the bitcoin as someone purchased two pizzas for 10000 bitcoins. Figure 1 shows the monuments of bitcoins.



In 2011 there was an emergence of many rival digital virtual currencies. In the year 2012, the cryptocurrency had been accepted by most people. Japan passed a law in 2017 to accept bitcoin as a standard payment method, and Norway integrates bitcoin accounts and recognizes bitcoin as an investment asset and payment system, which leads to the erecting of Automated Teller Machines (ATM). Figure 2 shows bitcoin as a legal means of payment.

Samsung confirmed that it is developing chips to mine coins in 2018. Various European governments join forces to cooperate on cryptocurrency regulation, and many continued to launch innovative partnerships. These partnerships have led to better business co-operations between the nations. Cryptocurrencies can be accessed by trading grounds of tech-insiders, offering better investment possibilities to real people.
Benefits of cryptocurrency.

Elimination of intermediaries.

Because cryptocurrency is a peer-to-peer transaction, intermediaries such as the banks are being eliminated. The absence of go-betweens leads to greater clarity in the development and management of the ledger accounts, less confusion, and greater accountability, in that the two parties involved in a transaction have a better knowledge of one another. This is, according to Miteva (2017). Unlike traditional business methods, the agents, brokers, and the banks would add significant complications and expenses that would have been straightforward transactions. The difference is shown in figure 3 below. Cryptocurrency reduces these expenses and complications, which may be brought as a result of much paperwork.


Another one of the great advantages of cryptocurrency is confidence in transactions. Each transaction made is a unique exchange between two parties, the terms of which may be negotiated and agreed upon in each case. What's more, the exchange of information is done on a one-on-one basis, whereby you can transmit exactly what you wish to send to the recipient and nothing besides that. This is according to Miteva K. (2017 ). This type of transaction as opposed to cash or banking systems where your whole transaction record is kept as a reference. The cryptocurrencies guard the privacy and financial history, and this protects one from account theft. Figure 4 below summarizes the benefits of cryptocurrency.


Applications of cryptocurrency

Cryptocurrency is applied in wealth management. Companies can create their tokens for investment solutions, which give investors to manage their wealth without restrictions.

Cryptocurrency also helps promote ethical business practices as the blockchain used tracks every transaction made with complete transparency. The technology of cryptocurrency is also applied in elections to avoid fraud. The fraud is prevented since the blockchain is incorruptible in that an external party cannot access it. Figure 5 below summarizes other applications of cryptocurrency.

Conclusion

Cryptocurrency is a digital peer-to-peer legal tender where individual's coins (bitcoins) ownership records are stored in ledgers existing in computerized databases using cryptography to secure transaction records. Some groups of people developed the idea of the cryptocurrency called the Nakamoto in the year 2009. The cryptocurrency developed from that year to complex computer software. The advantages range from the elimination of intermediaries, which makes transactions simpler and accountable. It also creates confidence in transactions. Cryptocurrency is applied in wealth management and to avoid election fraud. Cryptocurrency should be introduced to developing countries to help curb election frauds.


Credits:
https://acceptingcrypto.net/

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