Q. What is Cryptocurrency?


Ans:-
  • The word “cryptocurrency” is derived from the encryption techniques which are used to secure the network.
  • A cryptocurrency is a digital or virtual currency that is secured by cryptography.
  • A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation.
  • It works on blockchain technology.
  • A cryptocurrency is a form of digital asset based on a network that is distributed across a large number of computers.
  •  Cryptocurrencies leverage blockchain technology to gain decentralization, transparency, and immutability.
  • "Crypto" refers to the various encryption algorithms and cryptographic techniques.
  • The feature of a cryptocurrency is that it is not controlled by any central authority.
  • Cryptocurrency is can be sent directly between two parties using the public and private keys.
  • For the transition, you have to pay some minimal processing fees.

How Cryptocurrency Works?

  •  Cryptocurrency works as a Bitcoin.
  • After seeing all the centralized attempts fail, Satoshi tried to build a digital cash system without a central entity.
  • Like peer-to-peer networks for file sharing.
  • This decision became the birth of cryptocurrency.
  • To realize digital cash you need a payment network with accounts, balances, and transactions.
  • In a decentralized network, you don‘t have this server. So you need every single entity of the network to do this job.
  • Every peer in the network needs to have a list with all transactions to check if future transactions are valid or an attempt to double spend.

Important:-

  • Some of the cryptography used in cryptocurrency today was originally developed for military applications.

  • At one point, the government wanted to put controls on cryptography similar to the legal restrictions on weapons, but the right for civilians to use cryptography was secured on grounds of freedom of speech.

Cryptocurrency Properties:-

1. Secure:-

  • Cryptocurrency funds are locked in a public key cryptography system.
  • Only the owner of the private key can send cryptocurrency

2. Fast and Global:-

  • Transactions are propagated nearly instantly in the network and are confirmed in a couple of minutes.
  •  It doesn‘t matter if I send Bitcoin to my neighbor or to someone on the other side of the world.
3. Permissionless: 
  • It is just software you do not need anybody's permission.
  • Everybody can download it for free.
  • After you installed it, you can receive and send Bitcoins or other cryptocurrencies.
4. Irreversible:-
  • Once it transferred no one can return your transferred amount even the government of any country, even the founder of cryptocurrency.
  •  No one can help you, if you sent your funds to a scammer or if a hacker stole them from your computer.
5.Pseudonymous:-
  • Neither transactions nor accounts are connected to real-world identities.

Advantages of using Cryptocurrency:-

  • Cryptocurrencies hold the promise of making it easier to transfer funds directly between two parties, without the need for a trusted third party like a bank or credit card company.
  • In modern cryptocurrency systems, a user's "wallet," or account address, has a public key, while the private key is known only to the owner and is used to sign transactions. 

Disadvantages of using Cryptocurrency:-

  •  Some cryptocurrencies are more private than others.
  • The semi-anonymous nature of cryptocurrency transactions makes them well-suited for a host of illegal activities, such as money laundering tax evasion

To Know More About BitCoin Read My Article; Codeywin.com

Conclusion:
Cryptocurrency is another type of digital payment method, you can make a payment through cryptocurrency without paying any third parties without anyone's permission all over the world.