Nearly 3000 cryptocurrencies; Bitcoin reigns supreme
The Supreme Court canceled the two-year-old circular of the Reserve Bank, allowing trading in cryptocurrencies. The trend of cryptocurrency has increased in the last few years in the era of internet and smartphones. Let us know what cryptocurrency is and how it works.
What is Cryptocurrency?
It is a digital currency and is not linked to any government or any bank. If one user sends cryptocurrency to another, then its record is through encryption i.e it is hashed. Cryptocurrencies work on distributed public ledgers which require massive energy (both computational and electrical). It is this concept that make crptos virtually impossible to hack.
Bitcoin mining is done by computer CPU
The power of a computer’s CPU is used to maintain the data of bitcoin transactions. Bitcoin has software installed in the CPU. This software performs complex mathematical calculations to create encryption for bitcoin. This maintains the credibility of the cryptocurrency. All transactions are recorded in public ledger where any one look up the amount of bitcoin transferred and the addresses of those involved without reveal the true identities of the people or organization.
People who perform these calculations on their computers through software are know as ‘miners’ and are rewarded in Bitcoins for verifying transactions. Anybody can do mining through high end CPUs although high end GPU’s (graphic card units) and dedicated machines have rendered CPU mining useless.
Bitcoin is currently at the forefront
Bitcoin is currently the largest cryptocurrency. The record of bitcoin is maintained in the public ledger. Since 2009, all transactions have been saved in the public ledger. All the records of the transaction are kept in multiple blocks. Hence they are also called blockchains. It was invented by an unknown person or persons known as Satoshi Nagamoto. It is believed that one of the reasons for creating Bitcoin was to make a decentralized digital currency i.e no bank or country has control over it.
Bitcoin up by 50% this year
Bitcoin has gained 50% this year. For the first time since October 2019, Bitcoin hit $ 10,000 in the previous days. The current value is $ 8,771 (Rs 6.40 lakh). The second cryptocurrency also continues to boom this year. The value of Ethereum has doubled.
Why did bitcoin become so value
Japan legalized bitcoin. Since then, its value has increased by more than 60%. It is considered to be quite safe for transactions. Also, there is no risk of hyper inflation due to lack of control over it. Transaction costs are low due to lack of regulation.
High volatility
Cryptocurrencies are highly volatile. Bitcoin currently has a limit. According to the current structure, the number cannot be more than 21 million bitcoins.
Disclaimer: This site does not endorse Bitcoin or cryptocurrencies. Please use them at your own risk
