Cryptocurrency, or Crypto-currency, or Crypto
It is a digital currency which has value but it cannot be seen or touched like paper money. It is only in digital form so that transactions can be done online only.
Ownership of Crypto Currency
The record of ownership of these coins is stored in a ledger present in the form of a computerized database. We can understand this like this, crypto currency is kept in a digital wallet which is similar to an online bank account.
Charges of Keeping Crypto
In most wallets, no fees are charged for deposit and storage of crypto currency, but there is a fee for withdrawing or sending it.
Proof-of-Stake Model In Crypto Currency
Here the owners keep their tokens as collateral. In return, they receive rights to the tokens in proportion to the amount they stake. This is called the proof-of-stake model. Two other words are used in this topic – Distributed ledger and Block Chain. We will discuss about them later.
Decentralisation of Control
Usually it is not issued by any government. Cryptocurrencies are generally not controlled like a central bank digital currency (CBDC). On the contrary, its control is completely decentralized.
The First Cryptocurrency & Subsequent Cryptos / Currently prevailing Cryptocurrency
Bitcoin, first released as open-source software in 2009, is the first decentralized cryptocurrency.
Since the release of bitcoin, many other cryptocurrencies have been created. Some of the popular names in this area are as follows-
- Bitcoin (BTC)
- Litecoin (LTC)
- Ethereum (ETH)
- Bitcoin Cash (BCH)
- Ethereum Classic (ETC)
- Zcash (ZEC)
- Stellar Lumen (XLM)
- Bitcoin Satoshi’s Vision (BSV)
- Chainlink (LINK)
A Cryptocurrency is Not a Virtual Currency
There is a difference between cryptocurrency and virtual currency. A cryptocurrency is not a Virtual Currency
A cryptocurrency is a digital currency that uses cryptography to secure transactions and control the creation of new currency units. Since not all virtual currencies use cryptography, not all virtual currencies are cryptocurrencies.
CRYPTOGRAPHY
Cryptography is a method of protecting code information and communications, so that only those for whom the information is intended can read and process it. The prefix “crypt-” means “hidden” or “vault” – and the suffix “-graphi” means “writing”.
Here, the data is encrypted using a secret key, and then both the encoded message and the secret key are sent to the recipient for decryption.
What is Virtual Currency
Virtual currency, or virtual money, is a type of unregulated digital currency, issued and usually controlled by its developers and used and accepted among members of a specific virtual community.
Central Bank Digital Currency
A digital currency that is issued by a central bank is defined as a “central bank digital currency”.
History of Cryptocurrency
In 1983, American cryptographer David Chaum conceived an anonymous cryptographic electronic money called Ex. Later, in 1995, they implemented it through Digicash.
The first decentralized cryptocurrency, bitcoin, was created in 2009 by possibly pseudonymous developer Satoshi Nakamoto. It used SHA-256, a cryptographic hash function, in its proof-of-work scheme. In April 2011, Namecoin was created as an attempt to create decentralized DNS, which would make Internet censorship very difficult.
Shortly thereafter, in October 2011, Litecoin was released. It used SHA-256 instead as its hash function. Another notable cryptocurrency, Peercoin used a proof-of-work/proof-of-stake hybrid.
Validity of Cryptocurrency
The legal status of cryptocurrencies varies greatly from country to country and is still undefined or changing in many of them. While some countries explicitly allow their use and trade, others have restricted or restricted it.
In the year 2018, the Central Bank of India also banned trading on cryptocurrencies, and in the year 2019 a draft was prepared to completely ban the cryptocurrency in India. But in March 2020, the Supreme Court of India completely lifted the ban on cryptocurrency.
Crypto IRA
Those working in this field have now started motivating people to plan their retirement through crypto. The amount invested for the purpose of creating a corpus for retirement is kept in this account. IRA stands for Individual Retirement Account and Crypto-IRA stands for Opening and Operating Individual Retirement Accounts through Investing in Crypto / Cryptocurrencies.
But only those who are able to take the risk should invest money in it.