Cryptocurrency is a buzzword nowadays. People are eager to know about the cryptocurrencies because of their limited availability to everyone. Bitcoin has been rocking the news around the world since last few years. The rise of Bitcoin has drawn the attention of people towards cryptocurrencies. In this post, we will discuss the cryptocurrencies with their current performance and future scope.
What is cryptocurrency?
It is a virtual currency which is available in the digital form as a medium of exchange. One can not keep this currency in the pocket like a coin to buy a small stuff from a local shop. It is used through digital mediums over the internet. It uses the concept of cryptography, a security method from computer science, to secure the currency transactions. Due to this security, it is very much difficult to breach this system. It uses a decentralized approach and hence there is no any central control in this currency system. In this way, it opposes the central banking systems like Reserve Bank of India or Federal Reserve. Bitcoin is the most popular example of cryptocurrency.
How Does a Cryptocurrency Work?
The cryptocurrency system is based on the blockchain technique. Each cryptocurrency is validated by a blockchain. A blockchain is a list of records which grows continuously. These records are termed as blocks which are connected and secured using cryptography. It maintains a distributed ledger system which is distributed over several computing systems across the world and connected through a network.
Read: Blockchain Technique: The Root of Cryptocurrencies
Mining in Cryptocurrency System
In a cryptocurrency system, mining is used to validate the transactions. After a successful mining, the miner gets a reward as low fees for the transaction. It may also result in a new cryptocurrency system.
Cryptocurrency Wallet
A wallet in the cryptocurrency system comprises the public and private keys. These keys are the addresses used for sending or receiving the cryptocurrency.
Current Status of Cryptocurrencies
However, there are various legal observations on the cryptocurrencies like Bitcoin in many countries around the world, it is also true that the general purpose use and trade of cryptocurrency are going on in a full swing. In countries like the US, there are several merchants who accept the Bitcoin as a payment. The small local shops, bars, and restaurants also accept bitcoins as a form of payment. There are ATMs installed in the US and Canada where a person can exchange Bitcoin and cash. Although Bitcoin has a wide presence everywhere in the world, the other cryptocurrencies like Ripple, Ethereum, Litecoin etc are not being accepted as widely as Bitcoin.
Regulations of Cryptocurrencies
There are many cryptocurrency exchanges working after obtaining the license around the world. In the United States and Europe, there are various cryptocurrency exchanges working followed by regulations from those countries. Due to the anonymity in this system, there are many misuses possible. There are severe chances of black money transactions using the cryptocurrencies. To avoid this, the Reserve Bank of India (RBI) has banned the Bitcoin and other virtual currencies in India. According to RBI no one can buy or sell Bitcoin in India. It has asked the banks to stop providing services to those companies and individuals who deal in Bitcoin.
Future of Cryptocurrency
Cryptocurrencies are based on the blockchain technique and there are many bright opportunities of use of this technique. It has a shining future in the banking system, financial institutions, retail, and e-commerce etc. Thanks to its security feature and speed of transaction, there is a possibility of widespread use of this system in the economy around the world. If the possible threats associated with cryptocurrencies, like anonymity, are addressed properly, then it can be used very well. Till now, Bitcoin has been dominating the world of cryptocurrency, other currencies like Ripple, Ethereum, Litecoin etc are still left to prove their dominance. There are further studies going on for the new blockchain techniques and the development of new and secure cryptocurrencies. If the possibility of misuse is addressed then it is sure that it will reach everyone in the coming future.
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