What is Cryptocurrency: Types, Benefits, History and More

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Imagine visiting Venezuela while you are on vacation. You purchased two large pizzas from pizza hut. Only then you realized that your wallet is empty and your online transactions failed. How will you make the payment? Just relax. In Venezuela, you can make a payment using Bitcoin, the most popular cryptocurrency. But, “What is Cryptocurrency”.This blog will cover every aspect of cryptocurrency.

What is Cryptocurrency

It is an alternate payment method developed with the aid of encryption techniques. Moreover, it is a type of virtual money used as a means of transaction similar to actual money. On the contrary, it doesn’t have a physical form and is decentralised digital money. The explanation above give you an idea of “What is Cryptocurrency”. Furthermore, let’s learn about the past of Cryptocurrency.

History of Cryptocurrency

In a conference presentation in 1983, American cryptographer David Chaum demonstrated an early form of anonymous digital cash. Of course, at that time, the concept of cryptocurrency first emerged. The idea was to create a kind of money that could be transferred anonymously and without the aid of centralised organisations (such as banks).

1995-Digicash

In 1995, Chaum developed the proto-cryptocurrency Digicash based on his original ideas. Before money could be delivered to a destination, it needed certain encryption keys and user software for withdrawing cash from a bank.

1998-Bit Gold

Although Bitcoin was the very first cryptocurrency that was extensively used, prior attempts to create virtual cash using encrypted ledgers were developed. B-Money and Bit Gold originally conceptualised but never completely implemented, are two instances of this.

2008-” Who is Satoshi Nakamoto”

Satoshi Nakamoto, the one who created Bitcoin released a white paper on October 31, 2008. It described the operation of the Bitcoin blockchain network. On August 18, 2008, Satoshi, the pseudonymous person bought Bitcoin.org. Evidently, blockchain technology, which at its most basic level entails building immutable data structures, is vital for Bitcoin (and all other cryptocurrencies).

2009-The Beginning Era of Bitcoin

On January 2009, Satoshi mined the first block of Bitcoin, the procedure of generating new Bitcoins. Further, the Bitcoin software was made publicly accessible for the first time.

2010-”10,000 Bitcoin for two pizzas?”

The Genesis Block is the current name for the initial block, from which 50 bitcoins were mined. At this point, and for the initial few months, Bitcoin was essentially worthless. The value of one bitcoin was a little under 14 cents in April 2010, six months after it started being tradable. Early November saw a “surge” in price to 36 cents before levelling at about 29 cents.

2011- In the event of the Forbes article the value of Cryptocurrencies hiked

The first rival cryptocurrencies emerge as Bitcoin’s popularity grows and the concept of decentralised, encrypted money gained traction. These, also referred to as “altcoins,” aim to enhance the primary Bitcoin design by providing faster processing, greater privacy, or some other benefit. Two of the first currencies to exist were Namecoin and Litecoin. Over 1,000 cryptocurrencies are in use right now, and further are being developed all the time.

2013-Bitcoin’s value plummets

One Bitcoin costs $1,000 for the first time, and then the price immediately starts to fall. Since many investors lost money at this point when the price fell to about $300, it would take more than two years for it to rise to $1,000 once more.

 

2014 to 2016-Scams 

Due to anonymity and lack of centralised supervision, the digital currency was very alluring to criminals. The largest bitcoin exchange in the world at the time, Mt.Gox, failed and filed for bankruptcy in January 2014 after losing 850,000 bitcoin.

2016 to 2018-Ethereum

At this time, Ethereum, a brand-new blockchain initiative, was creating waves in the cryptocurrency community. Since its inception in July 2015, Ethereum has quickly risen to the position of second-largest cryptocurrency by market cap.

2018 to present

Bitcoin saw something of a revival beginning in late 2020, starting with the statement in August by the “business intelligence company” MicroStrategy that it had purchased Bitcoin for $250 million. Moreover, Blockchain, the technology that underpins Bitcoin, has ignited a revolution in the financial sector (and beyond) that is only now beginning.

Types of Cryptocurrency

The following are the four major types of Cryptocurrency

Payment cryptocurrency

It serves as both a peer-to-peer electronic cash system and a means of exchange, as its name suggests, to make payments easier.

Examples:

Utility Tokens

A unique subgroup of cryptocurrencies is utility tokens. Utility tokens offer customers a wide range of characteristics on blockchains and in dApps (decentralised applications), in contrast to coins and security tokens. Hence, more blockchain developers are creating distinctive utility tokens for their Web3 projects as smart contract blockchains like Ethereum continue to grow in popularity. 

Examples

Stablecoins

They are intended to act as a store of value since many digital assets are prone to volatility. Because this kind of cryptocurrency may be exchanged for one or more fiat currencies, although being based on a blockchain, they preserve their worth. Thus, stablecoins are truly anchored to a fiat currency, most frequently the US dollar or the Euro. 

Example

Central Bank Digital Currencies

It is a type of cryptocurrency that has been released by numerous national central banks. Additionally, CBDCs get issued by central banks in the form of tokens or electronic records linked to the currency and pegged to the national currency of the region or nation issuing the CBDC.

Example

The Reserve Bank of India’s launch of the Digital Rupee and the Bank of Russia’s launch of the Digital Ruble.

Benefits of Cryptocurrency

The following can be listed as the benefits of Cryptocurrency.

Transaction speed

Unless a wire transfer takes almost a day or a stock trade, transactions made with Bitcoin, however, be completed swiftly.

Transaction costs

Unlike, for instance, the price for transferring money from a digital wallet to a bank account, the transaction cost with cryptocurrencies is little to nonexistent.

Accessibility 

Undoubtedly the process of creating an account at a conventional financial institution is incredibly quick to that of setting up a Bitcoin wallet. There is no ID checking. Also, Credit and background checks are not performed.

Security

Due to the design of the blockchain system and the distributed computer network that verifies transfers, transactions are secure. 

Transparency

On the widely used blockchain ledger, all cryptocurrency transactions occur. Anyone can use tools to search for transaction information, including the where, when, and quantity of cryptocurrency sent from a wallet address. Anyone may easily access the total number of coins a wallet holds. This level of transparency can reduce dishonest business activity.

Privacy

Pseudonymous transactions mean that while your wallet address serves as a unique identifier on the blockchain, it doesn’t contain any personal data about you.

The term “blockchain” is frequently used in the blog “What is Cryptocurrency”. Indeed, the foundation of cryptocurrency is the blockchain. Consequently, it would be helpful to know “What is blockchain” besides” What is Cryptocurrency”.

“What is Blockchain Technology”

The most popular cryptocurrencies Bitcoin and Ethereum are supported by blockchain technology.  blockchain is essentially a publicly viewable catalogue of transactions that can be verified. As an illustration, the Bitcoin blockchain records each time a person gives or gets Bitcoin. Online value transfers are made feasible by cryptocurrencies and the blockchain technology that supports them, eliminating the need for intermediaries like banks or credit card companies.

The ultimate goal of every reader who reads this article “What is Cryptocurrency” is to understand the prospects of cryptocurrencies. Let’s discuss it.

“What could be the future of Cryptocurrency”

• The internet’s speed has propelled the digital world to new heights. Financial transactions are now carried out digitally, and the use of digital currency is increasing. Massive and large transactions can be completed in a secure yet transparent manner in a matter of seconds or minutes.
• With the development of blockchain technology and cryptocurrencies, a wide range of industries, including cross-border finance, the arts, logistics, secured documents, and much more, are moving towards a digital format.
• Due to businesses accepting cryptocurrency payments, the market is expanding much faster than necessary.
• Future consumers will have easy access to credit, which will encourage microfinancing.
• Some countries trade crypto weaponry.

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I hope I have given some ideas regarding “What is Cryptocurrency”.Go through the following articles to learn more about Cryptocurrency and Bitcoin.

Recommended Reads:

1. 15+ Best Bitcoin Specialist Courses Online in 2023 [Updated]
2. What is Bitcoin: The Digital Definition in 2023 [Updated]
3. Top 14 Types Of Cryptocurrency To Watch In 2023 [Updated]

Conclusion

The use of Bitcoin is permitted in several developed nations, including the U.S. and Canada. Experts predict that by 2030, cryptocurrency will account for 25% of all national currencies. Therefore, governments would seek to control how cryptocurrencies operate.

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