Cryptocurrency is a type of currency that does not exist physically, it is digital or virtual currency using cryptography to make transactions securely. A cryptocurrency is a kind of digital asset which does not need a bank, rather it is distributed across a network of computers, using a decentralised system to issue new units of cryptocurrency and also record the transaction. Thus, this system is not controlled by the central government and other authorities.
Cryptocurrency enables anyone to receive and transfer payments, these payments are purely digital entries, recorded in a public ledger. Unlike cash we carry in our wallets; these currencies are stored in digital wallets. There are thousands of cryptocurrencies, some known commonly are:
Bitcoin: The first cryptocurrency founded in the year 2009 and still widely used.
Ethereum: A blockchain platform having its own currency known as Ether or Ethereum. The second most commonly known cryptocurrency.
Litecoin: Mostly similar to bitcoin, but the innovative development has taken place at a rapid speed.
Ripple: This system was founded in the year 2012. It is a ledger used to track different kinds of currencies, not only cryptocurrency.
So, now the question is, how do we get cryptocurrency?
• Cryptocurrency exchanges: They provide different types of cryptocurrencies, digital wallet storage, accounts that bare interest and more. The fees charged for the services is based on the asset.
• Brokers: They are like the traditional brokers, who provide various ways to buy and sell cryptocurrency and other assets.
Is cryptocurrency safe?
• Is it essential to understand that unlike the traditional method of transaction, there is no option to reserve or cancel a cryptocurrency transaction after initiation.
• A third party is involved or used by many investors and merchants to store cryptocurrency, if the third party is not reliable one could lose all their investments.
• The regulatory status is still unclear of some cryptocurrencies. Hence there is very less protection against unethical practices.
• One of the major risk is market manipulation by big organisations, exchanges and also influential people.
There are advantages and disadvantages in every aspect of life and cryptocurrency is no different. We should understand the process before investing. As famously said in many advertuisemnets pertaining to investment “read the terms and conditions, as the investments are subject to market risks.”