All about Crypto-currency

Shreya Srivastava|Symbiosis Law School, Hyderabad| 12th June 2020

Introduction

A cryptocurrency is a virtual or a digital currency that is secured by cryptography, which makes it impossible to double-spend or to counterfeit. Based on the technology of blockchain, a distributed ledger that is enforced by a network of computers that is disparate, many cryptocurrencies are decentralized networks. one of the features of cryptocurrencies is that they are not issued by the central authority, which renders them theoretically immune to manipulation or interference by the government.

Understanding Cryptocurrencies

System of cryptocurrency allows an online payment that is secure and is dominated by the virtual term which is ‘tokens’, and later on which is represented in the ledger entries to the internal system. Various encryption of cryptographic techniques and algorithms which safeguards the entries like public-private key pairs, elliptical curve encryption, and hashing functions refers to ‘Crypto’. 

Types of Cryptocurrency

1. Bitcoin- the first cryptocurrency and the most famous one. In the whole industry of cryptocurrency Bitcoin, it serves as digital gold. It is used as a means of payment globally and for cyber-crime, it is a de-facto currency like ransomware or darknet markets. From zero to more than Dollar 250 the price of Bitcoin has increased, after seven years.
2. Ethereum- The brainchild of youthful crypto-virtuoso Vitalik Buterin has risen to the second spot in the pecking order of digital forms of money. Other than Bitcoin its blockchain doesn’t just approve a lot of records and parities however of alleged states. This implies ethereum can process exchanges as well as mind-boggling agreements and projects.
   This adaptability makes Ethereum the ideal instrument for blockchain – application. In any case, it includes some significant pitfalls. After the Hack of the DAO – and Ethereum based savvy contract – the engineers chose to do a hard fork without an agreement, which came about in the development of Ethereum Classic. Other than this, there are a few clones of Ethereum, and Ethereum itself is a large group of a few Tokens like DigixDAO and Augur. This makes ethereum more a group of cryptographic forms of money than solitary cash.
3. Ripple- While Ripple has local cryptographic money – XRP – it is more about a system to process IOUs than the digital currency itself. XRP, the cash, doesn’t fill in as a medium to store and trade esteem, however more as a token to ensure the system against spam.
   Ripple, dissimilar to Bitcoin and ethereum, has no mining since all the coins are now pre-mined. Wave has discovered massive incentives in the budgetary space as plenty of banks have joined the Ripple organize.
4. Litecoin- was one of the primary cryptographic forms of money after Bitcoin and labeled as the silver to the advanced gold bitcoin. Quicker than bitcoin, with a bigger measure of token and another mining calculation, Litecoin was a genuine development, totally custom-fitted to be the little sibling of bitcoin. “It encouraged the rise of a few different digital forms of money which utilized its codebase yet made it, much increasingly, lighter”. Models are Dogecoin or Feathercoin.
   While Litecoin neglected to locate a genuine use case and lost its second spot after bitcoin, it is still effectively created and exchanged and is stored as a reinforcement if Bitcoin comes up short.
5. Monero- Monero is the most conspicuous case of the CryptoNight calculation. This calculation was designed to include the protection highlights Bitcoin is missing. If you use Bitcoin, each exchange is archived in the blockchain and the path of exchanges can be followed. With the presentation of an idea called ring-marks, the CryptoNight calculation had the option to slice through that trail. The primary execution of CryptoNight, Bytecoin, was intensely pre-mined and consequently dismissed by the network. Monero was the first non-pre mined clone of bitcoin and raised a great deal of mindfulness. There are a few different manifestations of cryptonote with their little upgrades, however, none of it did ever accomplish similar fame as Monero.
   Monero’s ubiquity topped in summer 2016 when some darknet markets chose to acknowledge it as cash. This brought about a consistent increment in the cost, while the genuine utilization of Monero appears to remain disappointingly little. Other than those, there are many digital currencies of a few families. The greater part of them are just endeavoring to arrive at financial specialists and rapidly bring in cash, yet a ton of them guarantee play areas to test developments in digital money innovation.

Advantages of Cryptocurrency

The promise hold by cryptocurrencies is to make the process of transfer of funds easier between the two parties without involving any trusted third party like a credit card company or a bank. These transfers are secured by the use of private keys and public keys and other forms of incentives like Proof of Stake or Proof of work.

The user’s account address or wallet has a public key in the system of modern cryptocurrency, and the sign transaction of the owner only has the private key. The transfer of funds is completed by using minimal processing fees while allowing users to avoid the steep fees which are charged by the financial institutions and banks for wire transfers.

Disadvantages of Cryptocurrency

The nature of cryptocurrency which is semi-anonymous makes it a very well-suited host for illegal activities like tax evasion and money laundering. However, its anonymity is highly valued, the benefits of privacy like protection for activists living under the government, or for whistleblowers. Some of the cryptocurrencies are private than the others.

The Bitcoin blockchain has been really helpful for the authorities to arrest the criminals and prosecute them, which makes Bitcoin a bad choice for conducting illegal business online. Other privacy-oriented coins like Monero, Dash, or ZCash are difficult to trace.

Conclusion

The cryptocurrency market is wild and fast. Cryptocurrencies emerge every day, old currencies die, whereby making early adopters rich and making investors lose money. All the cryptocurrencies come with a promise, which most of the time turns the world around by its stories. In the first few months, everyone survives but later on, they are dumped by the speculators.

It is considered that cryptocurrencies are here to change the world and to stay. To protect themselves against currency devaluation, all over the world people are buying Bitcoins. A vivid market has emerged in Asia for Bitcoin remittance, the darknets of cyber crime are flourishing by the usage of the Bitcoin. Institutional investors have started to buy cryptocurrencies. Governments and banks have realized that cryptocurrency has the potential to draw their control away.