Cryptocurrency!_Blog 1_ A brief introduction.

 

In this world of Globalisation and a world where artificial intelligence is coming up so much into play, Have you ever wondered what as big as internet revolution of 1990 is can happen next? What after the internet can be as big and as impactful as the world wide web? There are great assumptions coming into picture about a Decentralized era, Digital currency, Artificial Intelligence and Globalisation and that brings into play 'Cryptocurrency' a term which almost dazzed headlines in daily newspapers and other media, but still most of us are none or very little aware of.

   "Cryptocurrency is a medium of exchange such as rupees or US dollar but is digital in format and uses encryption inscription techniques to both the control creation of monetary units and to verify the exchange of money", this is how a standard definition of cryptocurrency goes like, but in simple words cryptocurrency is nothing but just a digital medium of exchange, which is decentralization and follows no borders. Take for example, when you play any adventurous video game, it has its own currency or coins which you keep on collecting, investing and spending at different stages of games. It works as a medium of exchange there. That's just as how cryptocurrency works.

  When we just put light on the evolution of the medium of exchange how it evolved from double want goods to Barter to metal coins to paper notes bagged by gold or silver reserves. Then later on the currency we use is no longer bagged by gold or silver or kinds. Then why or how does it have value? Say in India the rupees 500 note has its value because the government, more specifically the RBI guarantees it to have the value. That is between any two people involved in any transaction a middleman here the RBI guarantees or intermediates. And the middleman or the government has an absolute control over the currency of the country. The demonetisation of rupees 500 and rupees 1000 notes in India in November 2016 perfectly explains the control the government has on People's money.

  But in case of cryptocurrency, it decentralized, there is no third party or middle man involved, it is a peer-to-peer systems that can enable anyone anywhere to send and receive payment globally. Cryptocurrency exists purely as digital entries around and exchanged in the real world.

  Let's understand how do cryptocurrencies actually work, Cryptocurrency actually works on a technology name 'Blockchains'. Blockchains are nothing but a long chain or connection of blocks or information that are linked together in such a way that they have a definite sequence and each separate block is linked with its former and latter block and it is a continuously growing list.

  Let's look into an example suppose a group of 5 friends are given an amount of money say rupees 500 and they have transactions between themselves and keep record, but instead of maintaining a common record each of the friends maintain separate notebook where eachone records each and every transaction and verifies. A blockchain works in a similar way where every computer connected to that particular blockchain keeps sequential record of every block transaction and verifies it, but in addition this is done without disclosing the Identity or information about the users involved in the transaction and it is all without a third party.

  Another point to wonder is what is then the difference between currency we are currently using and the cryptocurrency?! Let's understand it using a factual example: say a person A from India is buying and 'n'  number of goods from a person B from USA. Then transaction involved look like the person A pays money in Rupees which goes through certain levels of banks with charges taxes and verify the transactions, then convert into dollars and are verified and taxed by certain American banks and then reaches person B.

 Now only the transaction is done using a cryptocurrency the person A from India transfers the amount in cryptocurrencies to person B in USA's digital wallet and the process is completed without any verification, without conversions, without leaving taxes. Moreover all the members connected to the blockchain can view that X amount of money transferred at certain point of time without disclosing details, which makes the system much more transparent, in some sense the money and cryptocurrency shows the same relationships as letters and emails.

   The system was introduced by Santoshi Nakamoto in 2009, who is also the founder of the largest and the most invested in cryptocurrency today namely_Bitcoin.

Bitcoin: Now there are about 10,000+ different cryptocurrencies introduced all over the world, but not all of them are equally reliable and trusted.Bitcoin is the first and the most commonly trading cryptocurrency worldwide which accounts about 66% of total market cap of all cryptocurrencies India alone has 10 + crore investors in Bitcoins. Bitcoins are followed by Ethereum, Litecoin and Ripple.

  The blockchains and the circulation of Bitcoins is maintained and not controlled by people called miners, with the help of extremely high level technology and processes. 

  But are cryptocurrencies all useful or should be taken into consideration? or are they risky and should be completely avoided? let's look at some advantages and the demerits of cryptocurrencies.

   The most important advantage of cryptocurrency is that it is decentralized and not under the control of any third party, moreover it offerstransparency and tracks and maintenance records, it is time effective and involves cost-effective transactions. If a Technology like this is brought into play, it can create mass employment opportunities. It can be an immense contributor to globalisation and boost trade. Even this is system offers high cybersecurity as information and each unique code of currency is next to impossible to be hacked as information is stored across a very high area that is on every device connected to the chain which also means the more the users involved in a particular blockchain the more safe and secure it becomes.

  But at the same time the system being decentralized, transactions are Irreversible no one is responsible or can be held to be in case of any grievances. Moreover the process of mining of Bitcoins or maintaining blockchains consume very high level of energy which negatively affects the environment. There are also chances of money laundering, market volatility and cases like losing the password to digital wallet., etc. Also certain governments fear about losing over monetary policies and financial stability.

  Cryptocurrency are much point of debate, with various approaches across the globe. While country like El Salvador makes cryptocurrency complete legal in country, on the other hand a large country like China puts a complete ban on anything related to cryptocurrencies.

  In India cryptocurrency is much a point of controversies where a bill 'to put ban on cryptocurrency and regulation of official digital currency would be taken up in Parliament in the winter session. Indian Prime Minister also States "Cryptocurrency should not end up in the wrong hands and may spoil youth." at the same time adding up that, "it is important that all democratic nations work together on it."

  Many countries take different stands about cryptocurrencies, what are these? what or where would India be in this regards? what is the way forward? how should we as common people of future citizens look at this matter? are all equally important stones to be turned up which I would be turning up in the next block namely Cryptocurrency Blog_2.