Basics & Definition
Crypto 101: It is a computer-generated or digital currency with security provided by cryptography, and it is the pivot on computers, blockchain technology, and decentralized systems. Blockchain technology consents to the fast and safe transaction of crypto assets without requiring centralized authority. Blockchain technology is a scattered digital ledger in blocks where a unique hash stores the asset’s records.
Preface
In 2009, a Japanese scientist, Mr. Satoshi Nakamoto, created the first cryptocurrency, Bitcoin, using blockchain technology. Other famous cryptocurrencies, such as Ethereum, Litecoin, and Ripple, were also created by other developers. Understanding Crypt 101 could be tricky, as it is a comparatively innovative and intricate technology. However, we have seven basic cryptocurrency terms to understand how it works.
1. Cryptography
Cryptography is the process of preserving the particulars of the data by converting it into an indecipherable format, called ciphertext, which could only be decipherable by someone with a suitable password and key to decode messages; the objective of cryptography is to ensure confidentiality, integrity, and originality of the data.
2. P2P
P2P, called Peer-to-peer, is a type of computer network architecture where each connected system can perform the dual function as a central server and a client, authorizing the sharing of data particulars between nodes without a central authority; instead of going via a central server, each node on a P2P network may require interoperability directly with other nodes.
3. Decentralization
Decentralization distributes the decision-making power so that it is never prepotency by any one director (CEO), board of directors, group of stockholders, and government or state. Blockchain technology is roaring the decentralized models, which is why it influences other projects based on this model other than cryptocurrencies.
4. Blockchain technology
Cryptocurrencies are mined digitally using blockchain technology, with blocks of information and a unique hash. Blockchain technology is a digital ledger that preserves all the data on the network. This technology makes confident the virtue, reliability, and traceability of the cryptocurrency by composition; it is practically impossible to change or tamper the records.
5. Exchanges
Cryptocurrency exchanges are the crypto banks that authorize your crypto assets to send, received, and withdrawn. Exchanges bring forth the facility to exchange your regular (fiat) currency into Cryptocurrency (USDT: This is a stablecoin). The value of stablecoins always remains equal to US Dollar; that’s why crypto users use USDT to trade on cryptocurrency exchanges.
6. Wallet
Similar to bank wallets, a have wallets that are called digital wallets, and they are used to sell, buy, and transfer cryptocurrency. It remarkably comprises public and private keys, which verify the user’s identity and are used to operate crypto assets in the wallet.
7. Mining
Mining is a process in which cryptocurrencies are generated digitally through graphic cards (GPU). The mining procedure relates to solving complicated mathematical problems using momentous software. New cryptocurrencies are mined by solving complex mathematical problems and are also used to verify transactions on the respective blockchain.
5 Top Blockchain | Crypto 101
Bitcoin Blockchain
Bitcoin was originated in 2009 by a Japanese man “Satoshi Nakamoto.” He used blockchain technology to create a BTC in which the user’s particulars are enumerated in a block or digital ledger, which authorizes glassy and safe transactions without a central authority. The decentralization model epitomizes creating BTC with an encryption technique to send, receive and transfer the funds.
Ethereum Blockchain
Ethereum Blockchain was created by Vitalik Buterin and his team in 2015; it is a decentralized platform that has to capacitate the creation of smart contracts and decentralized applications (Dapps). The market capital of Ethereum is the second largest capital in the crypto market, and of course, BTC is still the king of crypto market capitalization. The Ethereum blockchain includes its coinage, Ether (ETH), used to complete transactions and encourage application developers to create and maintain them.
Polkadot Blockchain
Polkadot blockchain is initiated to accelerate the communication between different blockchains. It is the next-generation protocol, and Gavin Wood created it in 2020; he was one of the co-founders of Ethereum. Creating multiple parallel blockchains is empowered by the Polkadot blockchain, which can interrelate with each other through a shared network. Scalability, certainty, security, flexibility, and adaptability are the main features of Polkadot blockchain other than traditional blockchains.
Solana Blockchain
Solana is a far-up execution blockchain platform that supports fast, efficient, systematic decentralized smart contracts and applications (Dapps). Solana was created in 2017 by Anatoly Yakovenko and executed in 2020. Proof of History is a unique consensus mechanism maneuver by the Solana blockchain, which allows the network to proceed with the transactions rapidly. PoH verifies each transaction and generates a timestamp, authorizing miners to process transactions in parallel.
Ripple Blockchain
Ripple is based on a payment protocol, and it was created to accelerate digital currency payments across borders. Ripple was created in 2012 by Chris Larsen and Jed McCaleb and is used by financial institutions to sort out transactions in a specified duration. Ripple uses a consensus algorithm named “XRP Ledger Consensus Protocol” to validate transactions and maintain the integrity of the network.
What is stablecoin
A stablecoin is also a crypto coin, and it was initiated to perpetuate a fixed value relative to a US dollar. The goal of stablecoins is to secure your transaction (profit and loss) after trading because, primarily, the volatility in crypto rapidly goes flash, particularly related to famed cryptocurrencies like Bitcoin or Ethereum. USDT is the most notable stablecoin in the crypto market, and the value of USDT always remains equal to US Dollar.
Medieval’s Financial System
Examine the early medieval financial system to comprehend modern finance. The barter system was the foundation for early trade, followed by coins and currency notes, and today’s finance is attempting to transition to cryptocurrency. We are explaining the early financial system to understand the exact science of crypto 101.
Barter System
The barter system was an old mechanism of business in which exchanging goods with each other by an individual or group of individuals, or it was the rapid judgment to decide on the spot among the buyer and seller. At that time, there were no coins or currency notes for trading. In certain parts of the world, the barter system is still in use with shared accord to exchange products or services, exceptionally where hard cash is scanty.
Coinage
Ancient civilizations such as the Greeks and Romans used coins as a medium of exchange. The coins in the early ages were created of valuable metals such as gold and silver and were used to accelerate the trading process among humans. In the 7th century BC, Lydia Civilization invented the first-ever coin.
The admiration of trading with coins escalated to other civilizations like the Roman Empire; coins were popular throughout the Mediterranean. The creation of coinage was a meaningful evolution in human history, and this assembled people for trading more efficiently and expedited the thriving of civilizations.
Modern age’s financial system
Currency Notes
In the 7th century AD, China started printing on paper called currency notes. The government owned and controlled the printing of paper notes, and these currency notes replaced coinage. In the 12th century, currency on paper ultimately escalated to the other countries of Asia, Africa, and Europe. Banks were established to control, systematize, and catalog the currency notes for trading.
In 1660, Stockholms Banco was Sweden’s first European bank to circulate paper money. However, paper money did not predominantly until the 18th and 19th centuries. The other European bank, The Bank of England, started their transaction with currency notes in 1694, and the other European countries adopted the changing circumstance.
Using currency notes significantly smoothed the way for trading, as it was more appropriate and handy than coins. The extensive use of currency notes gives rise to a significant development in the history of financial transactions. It is a triumphant epoch because currency notes have dominated the financial world for approximately four centuries. From 2009 to date, cryptocurrency is endeavoring to replace the existing financial system of the world.
Cryptocurrency
Satoshi Nakamoto was the inventor of the first cryptocurrency, known as Bitcoin. He published a whitepaper in 2008, which explains the whole science of Bitcoin creation; If you want to read it, please follow the link. It is acquainted with a new form of digital currency that maneuvers independently of governments and business financial institutions. They are elementally used for peer-to-peer trading and are frequently associated with decentralization by blockchain chain technology.
Bitcoin rapidly got traction and inspired many other digital currencies created called Altcoins. Examples of other popular cryptocurrencies are Ethereum, Litecoin, and Ripple. The emergence of cryptocurrency marked a momentous evolution in digital marketing, trading, the stock market, financial institutions, and technology (Metaverse).
Future of cryptocurrency
The future of cryptocurrency is a topic of much argument and hypothesizing because the financial world needs to be coherent and comprehensible about the existing financial circumstances. Some financial gurus believe cryptocurrencies can become an extensively accepted form of currency and even replace conventional fiat currencies. Financial experts debate whether blockchain technology’s reliability, security, and traceability, on which most cryptocurrencies are created, could create a more systematic, stable, and productive financial system.
However, other financial experts have reservations regarding digital currency’s ability to survive effectively worldwide over time. However, there is uncertainty regarding the future of cryptocurrency. Still, it is a great technology that could substantially impact how we manage financial business transactions.
Risk & Hazard
The primary concern is the high volatility in prices of most cryptocurrencies, including the king of the market, Bitcoin; another problem is that they make use of crypto assets for unlawful activities, particularly on the dark web, such as money laundering, child abuse pornography, and trading of the drug, that why it not yet extensively adopted as a method of payments.
It is also essential to be acquainted with cryptocurrency’s volatility and risk and be attentive when investing or trading in them. It would be a great idea to do your analysis and take counsel from a crypto expert before investing in any crypto coins.
Conclusion
Crypto 101 is still in its infancy, and it will be captivating to see how it evolves in the future. Central banks from different countries admire the perspective of (CBDCs) Central Bank Digital Currencies, which could bring more solidity, permanence, and surveillance to cryptocurrency. Some financial gurus have confidence that the future of cryptocurrency is very bright because of the blockchain technology behind it, and the blockchain is a vivid future.
Using blockchain technology, we could develop applications in many industries, like real estate, hospital management, education, and social issues, not just finance. It is nevertheless essential to keep an eye on this fantastic technology since it has the potential to alter how we conduct financial transactions in the future significantly. Cryptocurrency is an enormous subject you should research before investing or trading.
FAQs:
1. What are the four types of cryptocurrency?
The most famous types of cryptocurrency are as follows and extensively used are;
i. Bitcoin (BTC): It is the first invention and most famous cryptocurrency now. BTC has an enormous market capital and leading the cryptocurrency world.
ii. Ethereum (ETH): It is the second highest well-known and has the second largest market capitalization. Ethereum is familiar with its intelligent contracts abilities.
iii. Ripple (XRP): This cryptocurrency was created to facilitate financial institutions, and its prime feature is to enhance payments worldwide.
iv. Stable Coins (USDT): The price of stablecoins remains the same as fiat currency (US Dollar). It is widely used for staking and converting after trading with cryptocurrencies like BTC, ETH, XRP, etc.
2. What are cryptocurrency and its importance?
Cryptocurrency is a modern-age financial system that deals independently and virtually. Cryptocurrencies use distributed ledger blockchain technology to maintain and verify transactions. According to financial experts, the world has shifted to online or virtual transactions. However, paper currency is restricted to bank lockers, so virtual currency can perform transactions swiftly without state-border restrictions.
3. How do I start learning about cryptocurrency?
To learn efficiently about cryptocurrency, here are some essential keynotes to start.
i. First, read articles on cryptocurrency, particularly these important four topics: decentralization, blockchain technology, mining, and exchanges. And videos are also an essential tool for learning cryptocurrency.
ii. Join and visit these websites, CoinMarketCap, CoinMarketCal, and CoinDesk. There are thousands of cryptocurrencies in the markets, and after analyzing, you can choose one, two, or three in which you are interested.
iii. And also join cryptocurrency communities on social bookmarking sites like Facebook, Instagram, Twitter, Reddit, etc.,
4. What is blockchain Crypto?
Blockchain Crypto is described as the merger of blockchain technology and virtual currency. Blockchain is a distributed digital ledger in which transactions are preserved in a respective block and then connected to a blockchain, creating an unshakable, irremovable, and immutable ledger of all transactions listed on the network. This technology makes it virtually impracticable to temper transactions. It ensures the transparency, security, and validity of the crypto technology.