Cryptocurrencies are digital money work as a medium of exchange just like normal currency.
Bitcoin is the first cryptocurrency.
As its name suggests, it’s created, maintained, and stored using cryptography. A cryptocurrency is secure and does not involve any central authority to perform a transaction.
American cryptographer David Chaum developed anonymous cryptographic money and after that, considerable efforts made in that direction.
The technical architecture of cryptocurrencies was created by Satoshi Nakamoto, a pseudonymous person or group of persons.
- Decentralized nature
- Eliminate central authority like governments and banks
- Transactions can be performed directly via public/private keys
- Can’t be removed or altered
- All transactions are cryptographically secured (hash functions)
It has been making headlines worldwide since its launch and people are still skeptical about its use in day-to-day transactions.
Some challenges in adoption:
- Use for illegal activities
- Vulnerabilities of the underlying platform
- Exchange rate instability
- Lack of knowledge
- High infrastructure and transaction cost
There are a number of cryptocurrencies in the market in either evolving or dying phase.
All transactions are represented by ledger entries into the system and are managed by a community of miners.