Cryptocurrency is a digital form of currency that can be used for buying goods and services. It is a form of payment where no physical currency is used within a single country and for in-person transactions. It is a decentralized version of money as it is not controlled by one government or groups of governments. According to CoinMarketCap.com, there are more than 10,000 different cryptocurrencies are traded publicly.

How it works?

Cryptocurrency works on blockchain technology which is a decentralized technology spread across different computers that manage and records transactions. Hence, everyone on the network can see each transaction that takes place and also view others’ balances. In order to start a transaction, the user needs to open a digital wallet which is used to store and purchase cryptocurrency. In other words, in blockchain technology, each transaction consists of these elements- the sender and the receiver, wallet address or public key, and the amount of transaction.

In order for a fair transaction to take place avoiding any fraud, the sender needs to confirm a transaction with his private key, post confirmation the transaction reflects in the shared ledger or database. In the cryptocurrency network, only miners can confirm the transaction, in return, they get a transaction fee and a reward. There are some forms of cryptocurrency that one can store offline on physical hard drives but this may have their own risks.

These are few types of Cryptocurrencies:

Bitcoin: It is the most commonly accepted form of cryptocurrency and is considered as the ‘digital gold. In the Bitcoin network, only 21 million units of Bitcoin circulation can happen at any point in time. Its limited availability determines its market price.

Litecoin: It is referred to as silver, started in 2011. It offers a quicker confirmation of transactions.

DASH: It started in 2014, originally known as ‘Dark coin’, later on, renamed as DASH, digital cash. It keeps the personal information anonymous while the transaction process is online.

NEO: This is a cryptocurrency platform that doubles up digital coins by blockchain technology. The Crypto experts predict that neo coin price will go up slowly in the future and it has become a member of the NET foundation, run by Microsoft.

Ethereum: It was first described in a 2013 whitepaper by Vitalik Buterin. It provides a platform for other cryptocurrencies and the execution of decentralized smart contracts.

  Advantages:

• Fund transfer, payments become easier as there is no third party or any world government, bank etc. involved.
• It is cheaper than other transactions and easier to get it, earlier it was thought to be unreliable thing but now it is getting popular because of its simple and customer-friendly process.
• Transaction is safe and secure as the ‘wallet’ or account address can be accessed only by a private key.
• The process has a very minimal processing fee.

Disadvantages:

• After the miner has confirmed the transaction, it becomes irreversible and non-modifiable.
• Although it is getting popular, still is not accepted everywhere and may have limited value.

Sometimes, cryptocurrency transactions may be cause illegal activities, like money laundering, tax evasion, etc.