The term cryptocurrency has been doing the rounds for the past few years now, with Bitcoin being the first of its kind since the year 2009. However, for this of you who are still in the dark, cryptocurrency is nothing about a kind of digital or virtual currency, unlike cash or coins, that functions based on the encryption of data and other high profile plain text for safety and security reasons and to prevent counterfeiting.
The main highlights of the application of the working of digital currency include:
- Anonymous transactions
- Untraceable transactions
- Instant transactions
- Secure transactions
The secrecy behind such financial transactions is like a line of attack for human empowerment as against the empowerment of financial institutions such as banks, loan providers, and others.
What made the cryptocurrencies so popular?
Two features have empowered the concept of digital currencies in such as way that today there are about 700 different digital currencies in the world. The features include:
- The decentralized control over financial transactions
- A complete public log that maintains all the financial transactions
Although there are over 700 different cryptocurrencies, only eight of these digital currencies have strong market capitalizations as of today. This article provides a source of information to the main properties of cryptocurrencies and the interesting aspects revolving around this.
- Decentralization – As mentioned previously, this is one of the most important and the only factor that has made cryptocurrencies so popular. Decentralisation means that there is no centralized point of control, management or influence on the transactions dealing with cryptocurrencies. No government or any legal firm has the power to exercise control over cryptocurrency transactions, although attempts are being made by the government to regularise the usage of cryptocurrencies.
- Transparency – Unlike traditional currencies such as liquid cash, coins or bars, cryptocurrencies are completely transparent as every entry is publicly recorded in a secure database. This database is often called the Blockchain, which lists out the complete details of all financial transactions performed on cryptocurrency network. Thus, no one can manipulate any data across this network and this is what has earned the trust of millions.
- Anonymity – All financial transactions are carried out on the Blockchain network that carried only a series of digital signatures of every transaction. No other details such as username or location are revealed. Digital verification of users is possible, however, user identification is not possible.
- No Refusal Policy – What has been done on the Blockchain cannot be undone. For example, any payment carried out cannot be canceled or withdrawn. The advantage of this is that it prevents any additional costs in the form of bank fines for returns.
- Inflation-able – To put it simply, cryptocurrencies are not affected by inflations rather they resist it and have a deflationary effect.