A cryptocurrency is a digital asset aimed to work as a standard of exchange. The complete record of transactions and new coins is maintained in form of a computerized database. In reality, there is no physical existence of cryptocurrency. They use a distributed control as opposed to a central bank’s digital cash. It means these currencies work in a blockchain to serve the whole public.
This record is maintained in a public Ledger through a peer-to-peer network, which reduces fraud. Example:
When a shopkeeper gives you a toffee in the place of change you take it very happily. In the same format, this cryptocurrency is a digital toffee exchange by the public.
This concept involves two major terms, which need to be understood by everyone.
These are the persons who take responsibility for maintaining the ledger. They are the one who records the transactions in Different blocks to form a chain.
What is Cryptocurrency Mining?
The process of maintaining these records is called mining. It is done using special software and algorithms. The time and money involved in this process produce earnings to miners in the related currency.
Few Notable Points:
Every transaction is recorded by cryptocurrency.
All the currencies fix priorly that how many coins they have.
Due to this (The demand law applies here)Which results in the price fluctuation of a currency.
Cryptocurrency necessitates a computational algorithm like SHA256, A public key (user shares with everyone), and A secretive key (acts like the user’s digital signature).
There are more than 1600 cryptocurrencies today and new coins are added every day. One of the most popular coins is Bitcoin today we should talk about it to enhance our currencies and trading knowledge.
This cryptocurrency was created in 2008 by an unknown individual or group of individuals using the name Satoshi Nakamoto. It was used in 2009 first popularly it is known by BTC, XBT. The total units of Bitcoin in the market cannot exceed 21 million. This currency uses Hash functions[SHA256].
Many economists and commentators call it a speculative bubble at various times from the last few market trends it’s shown that Bitcoin and other cryptos fluctuate by 30% every day, so you can understand how risky is that.
》Warren Buffet (CEO of Walmart) Said in 2014 that Bitcoin can be a big fraud. He said, “the idea that it has some Huge Intrinsic Value is just a joke in my view”. Adding to this he also said, “People are buying it only because of hype. no one knows how it works. Insert you cannot even make your parents understand how Bitcoin works”.
》 Berkshire Hathaways’ Charlie Munger says “Avoid Bitcoin Like the plague”
》Rakesh Jhunjhurwala Say what is the best behind its growth and slump. Is it a virtual scam in the bull phase?
》Father of value investing Benjamin Graham says there is no long-term value proposition.
Bitcoin was started as a medium of exchange but people made it an investment with no calculation and predictability. It is used in illegal activities which also makes it more like gambling. Today Terrorists, Money laundering, the Black market are using Bitcoin for safe transactions.
☆ But today reality is that people are getting rich over the night but at the same time many are becoming poorer.
Today, Elon Musk (CEO of Tesla and SpaceX) owns maximum bitcoins.
How you can buy any cryptocurrency?
You can buy any cryptocurrency through different platforms on the Internet. Below are some of them.