An In-depth Study on Cryptocurrency- Facts, Function, Benefits, and Types
by Arina Smith Finance 09 July 2018
We are living in an era where we can experience several incredible technological advancements. This evolution indeed has helped in redefining one’s life in all aspects. It is a process that is on-going and no wonder our life is continuously improving with each passing day. Cryptocurrencies are a recent add-on in this aspect.
Cryptocurrency Defined :
Cryptocurrency is a digital currency that offers anonymity and security to users in online monetary transactions. Here cryptographic encryption is used for generating money and verifying transactions. Making every new coin involves a process known as mining, and they record every transaction in the public ledger known as the Transaction Block Chain.
A Brief on Cryptocurrency Wallet :
Cryptocurrency wallets are available in different types to enable users in storing and accessing the digital currencies in different ways. A common question that may crop up in one’s mind is about the security of these wallets. Before considering the security aspect, you need to understand the different forms of cryptocurrency wallets which exist today.
A cryptocurrency wallet put merely is a highly secure digital wallet which is used for storing, sending and receiving digital currency. No matter the type of cryptocurrency one uses it needs to have a cryptocurrency wallet. These wallets are of 3 types namely- paper wallets, hardware wallets and software wallets.
Hardware Wallet :
It stores the user keys within the hardware device such as the USB. As the keys get stored offline, they provide an added security. The best part is it is easily compatible with most online interfaces as well and can handle different currencies.
Software Wallet :
This is sub-categorized into mobile, online and desktop wallets.
Desktop Wallet :
Users must download the desktop wallet and install it either on a laptop or a PC. It offers full security, and its accessibility is limited just to the PC or computer where you install it.
Online Wallet :
This runs exclusively on Cloud and can be accessed easily from all geographical locations and computing devices. Along with its accessibility convenience, the online wallet will help in storing every private key online.
Mobile Wallet :
This runs on smartphones with the help of an app. Mobile wallets can be used anywhere including malls and retail stores. It is a small and straightforward wallet and can accommodate in the limited space within the mobile phones.
Paper Wallets :
It is a hardcopy printout of the user’s keys both private and public. Paper wallets are user-friendly and offer top security. Using it is easy. Directly transfer the funds to a public address from the wallet.
The Functioning of a Cryptocurrency :
Cryptocurrency uses a form of technology which is decentralized that allows users in making secure payments and storing money without using any name or taking the help of a financial institution. It runs on a blockchain. Usually, the cryptocurrency unit is done through mining which includes using computer power. The user needs to buy the currency from a broker and store the same in a cryptographic wallet from which they can spend the money with great ease. Both the blockchain technology and cryptocurrencies are in an infant stage considering the financial terms. To know more read the Crypto News Magazine.
Benefits Galore :
An essential trait of using these currencies is it is secure and provides an anonymity level which you will not get elsewhere. In fact, there are no means through which the transaction can be faked or reversed. Here lies the most significant reason why one should invest in a cryptocurrency. The fees they charge are nominal thereby making it a reliable choice in comparison to conventional currencies. Being decentralized anyone can access it unlike in a bank where an account is opened solely by authorization. The cryptocurrency market is providing the latest form of cash the rewards of which at times can be significant. One may make a small investment to discover that the same has multiplied into something more prominent within a brief time. The market is likely to be volatile, and there are risks related to buying. Cryptocurrencies have anonymity level and are a challenge as illegal activities may thrive. It indicates that one requires being cautious while selecting to buy. So, you need to ensure in getting a cryptocurrency from a reliable source.
It is a smart digital alternative to use cash or credit cards for making daily payments in different situations. In fact, it continues to develop as a practical and workable alternative to the traditional payment techniques yet still requires to become more stable before ordinary people wholeheartedly welcome it. Get familiarized with some of the benefits of using cryptocurrencies.
Any form of cheating will be kept at a minimum as cryptocurrency is digital that can help in preventing a counterfeited or reversed payment. In case of any other traditional payment choices, this form of action is likely to be a problem due to charge-backs.
Versatile Use :
Cryptocurrency payments can be made quickly for complying with specific terms. One can create a digital contract for making a payment that is subject to finishing on a future date, getting third-party approval and reference external facts. This payment is efficient and fast.
Identity Theft :
While using cryptocurrency one does not require to share his/her personal information which can result in identity theft. While using a credit card the store has enough information about the user’s credit line even if the transaction is a small one. Besides, the payment made through a credit card rests on the pull transaction, and here a definite sum is requested from the account. But in case of cryptocurrency payments, the deal rests on the push basis that provides an option to the account holder to send the exact sum with no additional information.
Easy Access :
Cryptocurrency is readily available to anyone who has internet access.
Low Fees :
One can complete any cryptocurrency transaction without paying extra charges or fees. But if you use a third-party service or a digital wallet for holding the cryptocurrency, a small cost may be taken.
International Trade :
It is never subject to any exchange rates, interest rates, transaction charges or country-specific levies that make it possible in completing cross-border transfers through ease.
There are ample opportunities for using a payment method which matches the specific requirements.
Top 5 Cryptocurrencies to Invest in 2018 :
Resting on its solid foundation below is a list of the top 5 cryptocurrencies that one can invest in 2018,
This is the leader in every category. In fact, Bitcoin possesses the highest price, best security, widest assumption, topmost security, highest brand identity and active and rational development. It remains the analytical engine, and the performance of other parts is related to the performance of Bitcoin. This cryptocurrency has a couple of promising inventions in the pipeline which will soon get installed as soft forks or extra layers. Some examples here include the Schnorr signatures, the Flash system amid others.
This is a clone of the Bitcoin but with a hash algorithm that is different. Though it does not possess the anonymity technology that Bitcoin has but as per reports adopting this form of cryptocurrency is now second to Bitcoin. The best part about Litecoin is it integrates the SegWit technology of Bitcoin which means it is ready for LN. It can benefit mainly from the atomic chain exchange. Secure trading of currencies peer-to-peer without third party participation is possible. As it keeps the code synchronized with Bitcoin to a large extent, it is in a high position in benefiting from Bitcoin’s technical progress.
Being a decentralized platform the applications run precisely as programmed devoid of any chances of downtime, fraud, censorship, third party interference or fraud. Ethereum runs on a blockchain that is custom built. This app will help developers in creating a market, move funds, store debt registries or promises and other things devoid of any counterparty risk or a middleman.
This is an upgrade of the central ideologies of secrecy and decentralization of Bitcoin. Monero utilizes a public ledger for recording transactions while they are developing some new units through mining. It runs on all major OS platforms which include FreeBSD, Android, Linux, macOS, and Windows. Monero helps in alleviating privacy concerns through the concept of stealth addresses and ring signatures.
This is an effective incubation platform dedicated to investors on the lookout for a reliable and safe platform for investing in new ideas as well as future innovators who can portray their ideas and get opinions from users. Soon it will introduce its token crowd sale for funding the development of the ecosystem as a whole. This platform will offer the required tools for implementing smart contracts to handle Government functions, Regulatory and Legal processes, Finance and Accounting Services.
Owing to the generous benefits that it gives; more and more people are using cryptocurrency for various purposes such as money transactions and shopping online. Try it for yourself and experience the difference.
Read Also :