Cryptocurrency is something that everyone wants to talk about, but no one knows how they work. In this world currency has been an essential part of our lives, in the caveman era they used the barter system, now the barter system involves goods and services being exchanged among each other. We had a situation where a caveman is trading seven apples and getting oranges in return, and now the barter system fell out of use because it had some glaring flaws. Most of these flaws include having people’s requirements coincide. Since there’s no standard measure in terms of which value of a commodity can be expressed there’s a problem when you have to decide how many apples you are ready to trade for one orange or mango, not all modes can be divided or subdivided for example you can share a live animal into different smaller units the goods cannot be transported easily.
Cryptocurrency is a digital or virtual currency that is meant to be a medium of exchange, and it is quite similar to real-world currency just that it does not have any physical embodiment, it also uses cryptography to work the way it does. Some of the features of cryptocurrency are that there’s a limit to how many units can exist, with Bitcoin this limit exists at 21 million after this no more bitcoins will be produced you can easily verify the transfer of funds, the hashing algorithms that Bitcoin uses makes it very easy for users to determine whether a transaction is valid or not.
The future of cryptocurrency
The future of currency lies with cryptocurrency, imagine the transaction between two people in the future, one of them has the Bitcoin app, and there’s a notification asking whether they are sure they’re ready to transfer five bitcoins, if yes processing takes place here. We’re authenticating the user’s identity, checking whether they have the required balance to make that transaction and other things now after that’s done the payment is transferred. The payment is received all of this happens in a matter of minutes and is as simple as that, this, in turn, removes all the problems of modern banking. There are no limits to the funds you can transfer your accounts cannot be hacked, and there’s no central point of failure. As of 2018 there are more than 1,600 cryptocurrencies available, there are some popular ones like Bitcoin, Litecoin, a new cryptocurrency crops up every single day now considering how much growth they’re having at the moment there’s a good chance there’s plenty more to come in the upcoming years.
Cryptocurrency operates independently of a bank or a central authority, and they work in a decentralized manner. New units can be added only after certain conditions are met for example for Bitcoin only after a block has been added to the blockchain will the miner be rewarded with bitcoins and this is the only way new bitcoins can be generated so what makes cryptocurrency so unique.