Owing to its high investment return and volatility, cryptocurrency has been creating a stir in the news ever since its inception. It has earned popularity amongst the youth because of the high investment rate and higher inclination for the young generation towards high-risk investments. Many people stay away from cryptocurrency under the assumption that it is very complex and hard to comprehend. Let us tell you that reality is far away from the truth. Anyone with basic crypto knowledge can understand and do trading in cryptocurrency. We are going to answer your questions related to cryptocurrency in this article:
What is cryptocurrency?
It is the virtual currency secured by cryptography used to make payments. It can be traded online in exchange for goods and services. To understand, let us assume there are two friends A and B, where A owes B rupees 20. Here A strikes a settlement with B by giving him a chocolate worth rupees 20. Cryptocurrency is the virtual chocolate used to make transactions.
- Who founded cryptocurrency?
Cryptocurrencies’ technical foundation was developed by a group or individual called Santoshi Nakamoto in 2009.
- If the currencies are digital, how are they controlled and managed?
When you trade, an alt is added to the ledger. You may wonder about the person that maintains the records. Also, what if the entries are changed or someone tampers with them? The solution to this issue is revolutionary. There are thousands of people and computers maintaining the ledger through blockchain technology. These blockchains are available with absolute transparency. So any discrepancies are alerted immediately across all systems. It makes cryptocurrency extremely secure. When A gives one Altcoin to B, all the systems check whether A has enough virtual currency, the number of crypto coins paid, if B has received the exact number of coins. All this is done with total accuracy by the technology called Blockchain.
- What is mining, and who are these miners?
The process of maintaining this digital ledger is known as mining, and the people who perform the tasks are known as miners. They are rewards according to the current demand with bitcoins or another form of currency.
- How is privacy ensured if the transactions are available on the ledger?
That is where cryptography comes to play. It can also be considered the pillar of cryptocurrency. It keeps your data encrypted with the help of complicated coding that can not be accessed by just anyone.
- What is the main reason behind the inception of cryptocurrency?
The main reason is the demand for a currency like Bitcoin, Dogecoin, Etherium that can be out of the control of the government and the financial institution that has been manipulating the value with inflation and other strategies. It led to the increase in demand for decentralized currency.
- How is the value of cryptocurrency estimated?
The total number of coins for every crypto is pre-defined. So, when the source is limited, the value depends upon the demand. Hence, the supply and demand are inversely proportional to each other.
Hence, cryptocurrency is very secure, and you can start investing quickly by downloading a Crypto Buying App.