What is Cryptocurrency?

Cryptocurrency is a currency powered by Blockchain and protected by the power of advanced ‘Cryptography’ which ensures that you don’t need a central authority to protect the value and authenticity of a payment system.

Unlike traditional payments like Dollar, rupee , pound or naira which need banks to transfer payments, cryptocurrencies rely on “blockchain and internet” to power them.

Even though Cryptocurrencies do not need banks to run them , the payments on crypto are in fact more secure than traditional payment systems like banks (which suffer from glitches occasionally) owing to the power of blockchain.

The main super power of Cryptocurrency is its ability to work seamlessly across different borders just like the internet with almost no regulation possible by governments,

This means for the first time in the history of mankind , Money can be transmitted for very long distances for near zero cost without any hassles.

Bitcoin started over 10 years back and has risen to over 200 billion in value , experts predict in next 10 years crypto will reach a value of over 2 trillion which arguably will be the ‘Crypto gold rush’ you don’t want to miss.

Cryptocurrency is a kind of digital money that is designed to be secure and, in many cases, anonymous.

It is a currency associated with the internet that uses cryptography, the process of converting legible information into an almost uncrackable code, to track purchases and transfers.

Cryptography was born out of the need for secure communication, but it has evolved in the digital era with elements of mathematical theory and computer science to become a way to secure communications, information and money online.

The first cryptocurrency was Bitcoin, which was created in 2009 and is still the best known. There has been a proliferation of cryptocurrencies in the past decade and there are now thousands available on the internet, but Bitcoin remains the most well known. It has soared this year to more than $40,000 - roughly £29,000 - per digital coin, although remains highly volatile.

How do cryptocurrencies work?

Cryptocurrencies use decentralised technology to let users make secure payments and store money without the need to use their name or go through a bank. They run on a distributed public ledger called blockchain, which is a record of all transactions updated and held by currency holders.

Units of cryptocurrency are created through a process called mining, which involves using computer power to solve complicated maths problems that generate coins. Users can also buy the currencies from brokers, then store and spend them using cryptographic wallets.

Cryptocurrencies and applications of blockchain technology are still nascent in financial terms and more uses should be expected. Transactions including bonds, stocks and other financial assets could eventually be traded using the technology.

What are the most common cryptocurrencies?

Bitcoin: Bitcoin was the first and is the most commonly traded cryptocurrency to date. The currency was developed by Satoshi Nakamoto in 2009, a mysterious figure who developed its blockchain. The digital coin has surged in value over the past year, reaching a high of $42,000 in January 2021. Proponents say this is because institutional investors are buying into the coin as a store of value, similar to gold, however critics say the coin is in a bubble and fundamentally worthless.
Ethereum: Developed in 2015, ether is the currency token used in the ethereum blockchain, the second most popular and valuable cryptocurrency. Ether has had a turbulent journey. After a major hack in 2016 it split into two currencies. It has proved hugely popular as a launch pad for other cryptocurrencies, with other digital coins using Ethereum's blockchain to build apps and payments services.
Ripple: Ripple is another distributed ledger system that was founded in 2012. Ripple can be used to track more kinds of transactions, not just of the cryptocurrency. The company behind it has worked with banks and financial institutions, including Santander. However, the company behind the digital coin, Ripple Labs, has been hit by a complaint by the US Securities and Exchange Regulator over claims it raised $1.3bn in unregistered securities. Ripple is contesting the claims.
Litecoin: This currency is most similar in form to bitcoin, but has moved more quickly to develop new innovations, including faster payments and processes to allow many more transactions.