Home > Blog > Others > What Is Cryptocurrency? Explained for beginners

What Is Cryptocurrency? Explained for beginners

23 Nov 2022
3000

Related Topics

right_box_img
right_box_img

Interested in this course?
Drop your details below

Introduction

Cryptocurrencies like Bitcoin, Ethereum, Dogecoin, Ripple, etc have become the best cryptocurrencies &so popular over some years and you might have heard about them from a friend or from a source like News, Social Media, etc. As a result, there is a rise in demand for blockchain technology developers (the underlying technology of cryptocurrencies such as bitcoin). Blockchain developers are highly respected.
FingerTips Cryptocurrency Explained video will get you off to a solid start if you're interested in a job as a blockchain technology developer or you simply want to stay current with the most recent technological advances. Here we’ll get an idea about what was covered in that video too.

Complete History of Cryptocurrencies & How Public got to know about “What is Cryptocurrency?”

What do you suppose people used to do in the past, or before money existed, to buy and sell goods and services? It was done through the barter system.
What do you suppose people used to do in the past, or before money existed, to buy and sell goods and services? It was done through the barter system.
Modern Currencies vs Bitcoin Cryptocurrency
Imagine you need to buy some groceries but you've forgotten your cash. As a result, you choose to use a digital wallet to make the payment online. But because the bank servers were down, you were unable to accomplish that as well.
This occurred because banks and the government control the digital wallet. Other problems that could arise while transferring money include account hacking by outside parties and occasionally exceeding the transfer limit. Because of this bitcoin cryptocurrency has been launched to address these problems.
This is why Bitcoin cryptocurrency is known as the money of the future. Imagine a similar exchange taking place between two users of the bitcoin app. A notification asks the user if they are ready to send bitcoins. If so, processing begins: The system verifies the user's identification, determines whether they have the necessary balance to complete the transaction, and other steps. Following that, the payment is transferred, and the funds are deposited into the recipient's account. This everything takes place in a matter of minutes.

What is Cryptocurrency?

A cryptocurrency is a coded string of information that represents a unit of exchange. Blockchain technology is peer-to-peer networks that act as secure transaction ledgers while also keeping track of bitcoin cryptocurrency transactions like buying, selling, and transferring. Cryptocurrencies can function as money and an accounting system by using encryption technology.
Cryptocurrency is a type of digital or virtual money used as a means of transaction. It resembles real money quite a bit, with the exception that it uses encryption instead of having a tangible form.
Since there is no central bank or body controlling how cryptocurrencies operate, additional units can only be introduced if certain requirements have been satisfied. For instance, with bitcoin cryptocurrency, fresh bitcoins can only be created when a block is uploaded to the blockchain technology, at which point the miner is paid in bitcoins. 
Since there is no central bank or body controlling how cryptocurrencies operate, additional units can only be introduced if certain requirements have been satisfied. For instance, with Bitcoin, fresh bitcoins can only be created when a block is uploaded to the blockchain technology, at which point the miner is paid in bitcoins. After the 21 million bitcoin, none more will be made.

Advantages of Cryptocurrency 

In contrast, the fee for transferring money from a digital wallet to a bank account is high whereas the transaction cost for cryptocurrencies is minimal to non-existent. There are no time restrictions on transactions, and both purchases and withdrawals are unlimited. Additionally, anyone can use cryptocurrencies, unlike opening a bank account, which requires papers and other documentation.
Cryptocurrency international transactions are faster than wire transfers. Money is transferred between locations via wire transfers in roughly half a day. Transactions involving cryptocurrencies are completed in a couple of minutes or even seconds.

What is Cryptography?

Cryptography is a technique that uses encryption and decryption to secure communication from third parties who want to steal your data. It uses SHA-256 computational algorithm also known as hashing algorithm that the bitcoin cryptocurrency uses, a public key, the same as the digital identity of the user gets shared with everyone, and a private key which acts as a digital signature of the user kept as hidden.

How does cryptography work in bitcoin cryptocurrency transactions?

The transaction details in a typical bitcoin transaction include who you want to send the bitcoins to and how many you want to send. The data is then run through a hashing process. As already stated, the SHA-256 algorithm is used by Bitcoin. The user's private key, which is used to specifically identify the person, is then passed through a signature algorithm with the result. The output that has been digitally signed is then made available to other users on the network for validation. The sender's public key is used to accomplish this.
Miners are the users who examine a transaction to determine its validity. The transaction is then put to the blockchain along with several others, where the information is immutable.

Bitcoin vs Ethereum

These days, there is increasing interest in the debate between Bitcoin and Ethereum. The cryptocurrency known as Bitcoin has gained a lot of popularity and recognition worldwide. Among all currently accessible cryptocurrencies, it also has the greatest market cap. It is one of the best cryptocurrencies in India. Ethereum, meanwhile, is on the opposing side. Although Ethereum's founder learned from Bitcoin and created more functionalities based on Bitcoin's ideals, it did not have the same revolutionary impact as Bitcoin. It is currently the second-most expensive cryptocurrency available.

Some Similarities Between them

The most popular and valuable cryptocurrencies at the moment are bitcoin and ether. Both of them run on blockchain technology, which creates a chain of interconnected blocks where data cannot be changed by adding transactions to a unit called a block. Both use a process called proof of work to mine their respective currencies, which involves solving a mathematical challenge before a block can be added to the blockchain. And finally, there is a huge global adoption of both bitcoin and ether.

Some Differences Between them

Sending money to someone using Bitcoin is possible. It functions quite similarly to how actual currency does. The Ethereum network uses ether as its money, but it may also be used for regular transactions in the real world. Because Bitcoin transactions are manually processed, you must physically carry out these transactions whenever you want them to be completed. Because ether transactions are programmable, you can choose to make them manual or automatic.
Automatic transactions happen when specific criteria are met. A bitcoin transaction can be completed in around 10 minutes, which is how long it takes for a block to be added to the blockchain. A transaction using ether takes around 20 seconds to complete.

What is Cryptocurrency’s Future in India?

When it comes to cryptocurrencies, there is a definite difference in the world. Supporters of the idea that cryptocurrencies are superior to conventional currencies. According to the Times of India, despite facing many challenges, cryptocurrencies are already being used as money for small-scale businesses.
A popular platform like PayPal has added a cryptocurrency feature to its app where users can use currencies like bitcoin and Ethereum as a payment mode.
All of these instances show that cryptocurrency is gradually making inroads into everyday transactions.
Also there is a clash between regulation and anonymity. As Government wants to control how cryptocurrencies operate because a number of them have been associated with terrorist activities. The major goal of cryptocurrencies, on the other hand, is to guarantee user anonymity.
By 2030, according to futurists, cryptocurrencies will account for 25% of all national currencies, which means that a sizable portion of the global population will begin to trust cryptocurrencies as a means of payment. It will continue to have a volatile nature, which means prices will fluctuate as they have for the past few years, and it will be more and more accepted by businesses and customers.
So, whether it’s dollars, rupee, pound, or any kind of physical or digital money our entire world is built on currency exchange. From barter to bitcoin, the means of exchange have evolved significantly. Even though the crypto future is uncertain but it looks bright.

Conclusion

In the global financial system, cryptocurrencies are a popular subject. The exchange rates for cryptocurrencies are extremely volatile. Due to this, trading these cryptocurrencies carries significant risk. Numerous speculators have been interested in them as a result of their rise. They're light and portable. The use of cryptocurrencies will only become more widespread once there is the necessary trust in them. If cryptocurrencies are unable to win this confidence, their boom may slow. It is uncertain when they will be fully traded in international markets because they are still in their infancy. Numerous cryptocurrencies have attracted the necessary attention. Some countries have begun issuing their own cryptocurrency.

About the Author

 fingertips Fingertips

Fingertips is one of India's leading learning platforms, enabling aspirants - working professionals, and students to enhance competitive skills and thrive in their careers. We offer intensive training in areas such as Digital Marketing, Data Science, Business Intelligence, Artificial intelligence, and Machine Learning, among others.

Subscribe to our newsletter

Signup for our weekly newsletter to get the latest news, updates and amazing offers delivered directly in your inbox.