Full Concept of Cryptocurrency

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Avatar for Alexander_349
2 years ago

You might have many questions in your mind regarding cryptocurrency. What is cryptocurrency? What is the need of this currency? Will prices of this currency go up or down in the coming days? Will the government ban this cryptocurrency or not? You just need to understand five concepts in order to get your answers. If you understand these five concepts then you will understand the whole game of cryptocurrency. In this article, I will give you a comprehension detail about these five concepts. Let’s start with the very first concept:

Money vs Currency:

Till now you were believing that you have money in your pocket in the form of cash. For example you have a $100 note in your pocket and this is your money. Just assume, if the government announces that a $100 note will not be acceptable from now then the value of your cash money will become zero. On the other hand, real money is completely different because its value can’t be zero. Now the question might come to your mind that why its value can’t be zero because the value of money is stored inside it. For example you have a gold coin in your house and that gold coin has its price and you can exchange it with currency. You know very well that this gold coin has a value and the government can’t ban it. And more importantly it can be exchanged with currency or other commodities in any country in the world. Currency might be not acceptable in other countries but all these commodities that have a value inside like gold, silver or copper are acceptable in the world. Currency can be manipulated and regulated by the governments. Currency can be printed as much as the government wants but on the other side money can’t be produced according to wish because it is mined and mining is an extremely difficult process. Moreover, money has limited resources.

Centralized vs Decentralized:

Currency can be centralized and decentralized. The notes you use are controlled by the government. He can print as much as he wants to print and that’s why inflation comes into the country. In decentralized, the government is not involved in it. For example bitcoin, no government controls it and we can’t produce bitcoin according to our wish because it has limited resources and supply. Currencies of all countries are interlinked with each other. If one country devalues its own currency deliberately then it will affect the other country's economy. So, decentralized currency like bitcoin, ETH and doge coins are the best solution for the world.

Fiat Currency:

People say that “fiat” means fake. Dollars, Rupees, Yen, Euro and Riyal etc. all come under fiat currency. Few years ago, one government could only print as much as he had gold or assets in reserve. Nowadays, there are no asset requirements to print currency notes. A country can print currency notes as much as he wants. We all know about Zimbabwe, he printed huge notes and eventually huge inflation came in the country. My suggestion to you is that if you have fiat currency, just convert it to assets like gold, silver or property. By doing this the value of your fiat currency will not depreciate.

Digital vs Physical Currency:

Some years ago, people did not have trust in “Paytm”. They used to think that we are investing our hard earned money in this and if Paytm runs then we will lose our money because it is digital. People had faith and interest in physical currency. Now they have more interest in digital because no one can snatch your digital currency, it can’t not be robbed. Cryptocurrency is totally digital even bitcoin is not a hard material or silicon chip based coin. It is a digital code of numbers.

Block Chain Technology:

Many people say that we don’t have enough belief in cryptocurrency but we have interest in block chain technology. You can understand this by a bank ledger as we maintain a ledger of every transaction in the bank. In block chain technology, you can’t remove a single entry. People have their own computers and every transaction is verified by each computer on every stage. No one can manipulate this block chain. If an error is found in any stage, it can’t not proceed further. In simple words, every transaction is being recorded.

In conclusion, this is a very new technology and it is an emerging market. People have doubts whether they should invest in this or not. It is a highly volatile market. Same uncertainty was there when the internet came into the market and now everyone is using it. I would recommend you, if you are interested in cryptocurrency, first research it and then invest.

Thank you

Lead Image link:

https://pixabay.com/photos/cryptocurrency-concept-altcoins-3423264/

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Avatar for Alexander_349
2 years ago

Comments

I like how you differentiate between money and currency... I think you should have explained more about decentralized currency though... Nice write up...

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2 years ago

I will try to cover decentralized currency in an other article. Thank you for liking it

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2 years ago

I really like this article and I prefer digital currency more to physical ones This is a very nice, awesome, entertaining and educative article Nice🔥

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2 years ago

Thank you for liking my article.

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2 years ago

Wow This is a very nice, awesome, entertaining and educative article Nice🔥

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2 years ago

Thank you

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2 years ago