8 months ago
There is a lot of noise about cryptocurrency in the world. Along with all the industries, the currency market is also moving fast towards the digital platform. Experts are predicting that this will be the future and the coming generations will exchange cryptocurrencies only. Even in the Union budget 2022 Honorable Finance Minister has announced that RBI is going to introduce Digital Rupee in near future.
With the announcement of a 30% tax on the transfer of cryptocurrency, it is clear that, in India, crypto may get a status of a currency. Therefore, this is the right time for you to know about cryptocurrency in detail. This article will take you through the definition of cryptocurrency, the types, a deep discussion on the famous cryptocurrencies, what is crypto exchanges, and what are the popular crypto exchanges. Stay connected till the end.
What is cryptocurrency?
If we describe cryptocurrency in simple language, it is a digital or virtual currency that is secured by cryptography, a special technique of programming. This process makes it almost impossible to counterfeit this digital currency. Many cryptocurrencies are based on blockchain technology and operate by a distributed ledger implemented by a separate network of computers. It is stored in a computerized database and the transactions of these decentralized digital currencies are recorded through digital ledgers and issued all over the world.
At present, this currency is decentralized which means there are no certain governing authorities that regulate the crypto. The network participants, known as nodes, can share information with other counterpart through a software networking system. This is called a peer-to-peer system.
You are now surely interested to know the reason behind the nomenclature. The networking system and mining need encryption to verify the transactions and make it secured. Developers use a cryptographic process to ensure the security of this asset. And therefore, it is named as cryptocurrency.
These digital coins or tokens, which are nothing but a name of a unit of cryptocurrency, serve the same purpose as the current currencies to buy different products and services. Looking into the future prospects and increasing popularity, people are even investing in cryptocurrencies as they do in the stock market and precious metals.
Different types of Cryptocurrencies:
As per the Forbes report, there are more than 5,000 different cryptocurrencies circulating in the world. But there are very few ones which have received massive popularity. Some of them are Bitcoin, Ethereum, Litecoin, Ripple, Dogecoin, Cardano, Polkadot. As Bitcoin and Ethereum are the two most famous cryptocurrencies which are steering the world, we will do a detailed discussion on them below.
Bitcoin is not only the oldest cryptocurrency in the world but also the most famous one in the ocean of 5,000 different available. Every media nowadays captures the ups and downs of bitcoin and debates are continuing on the future of bitcoin. Presently, many companies and online payment wallets are accepting bitcoin. It can also be converted into cash.
You can transfer bitcoins through e-wallets, they can be stored in any cloud medium, and you can use them at the time of online purchases.
Bitcoin is the most profitable form of investment for investors these days. Bitcoin would have converted your 10 rupees to 6 lakhs in just seven years and experts believe that it will give more returns in the coming days.
The name Bitcoin came from the two segments of this word – Bit and Coin. We all know that in computer science, bit is the smallest unit of measurement of information. And the coin is a unit of digital currency. The domain name of bitcoin was registered on 8th August 2008. And on October 31 of the same year, a person named Satoshi Nakamoto mentioned the name bitcoin in one of his articles. He also said that this is a peer-to-peer electronic cash system and bitcoin came into existence on 3rd January 2009.
In the beginning, the value of bitcoin was negligible and was sold under $150 (INR 11,196/-). Then as it gradually started making its mark in the market, its value also started increasing. Even in April 2021, its value had gone up to $60,000, which is priced in Indian currency 44 lakh. Now from this, you have understood that what is the market value of bitcoin.
How it is created and how does bitcoin work:
The process of creating bitcoins is called mining. In this process, developers use high efficient computers capable to process difficult equations and programming. As per sources, there are approximately 19 million bitcoins available in the market, and only 2 million bitcoins are left to be mined. Another interesting statistic is that only 900 new bitcoins can be mined in a single day.
Blockchain is the building block of bitcoin. This is a high-end technology that is capable of developing critical algorithms. As the name suggests, this is a link of data that is made of blocks and stores information about every single transaction, date, time value, buyer and seller, and everything.
Everyone with a link to this currency can access it and see it, but the complex structure gives solid security. It is said that nobody owns it but everyone with access can contribute to the community.
If there is any other cryptocurrency after bitcoin, it is Ethereum. In today's world, it has become so famous that it is snatching everyone's attention away from bitcoin. In the month of May 2021, it touched the $4000 volume and in this short span of time since the starting of 2021, it has crossed the growth volume of more than 450%.
If it is compared with bitcoin, then it can be said that bitcoin is a payment network that can exchange value between two authorities sitting anywhere in the world. And mainly it is used for investment only. But Ethereum on the other hand becomes an infrastructure and infrastructure which does not belong to anyone's authority.
Ethereum was created in 2015 by a Russian-Canadian programmer named Vitalik Buterin. However, many other people who were previously associated with bitcoin were also working with him. Like bitcoin, it is also based on blockchain technology.
Put another way, the creators of Ethereum have said that Bitcoin is like a pocket calculator that allows you to do only one thing over and over again. But Ethereum is like a smartphone where you can create, develop new applications. The current value of Ethereum is 2 lakhs in Indian currency.
Being a young platform, it has still a long way to grow. The Ethereum infrastructure has developed in the past few years to ensure better security and scalability and has a huge potential to grab a large market share.
What is Cryptocurrency Exchange:
Now when we are aware of cryptocurrencies, the obvious question that is hovering in your mind is how to trade cryptocurrencies. There are several platforms that give you the opportunities to buy and sell cryptocurrencies and those are known as cryptocurrency exchanges.
Cryptocurrency exchanges are digital marketplaces where you can buy and sell digital assets. Cryptocurrency exchange is not that simple, and you cannot get it through the banks. As a Demat account is needed to trade or invest in shares, you need to open an account in the cryptocurrency exchanges to deal with the crypto assets. Through these exchanges, you can buy crypto assets using your country's currencies. Even you can buy or sell other cryptocurrencies through these crypto exchanges.
Famous cryptocurrency exchanges:
There are several crypto exchanges are available in the market. Some of the famous exchanges are FTX, BINANCE, Crypto.com, Kraken, CoinEgg, Gemini. Coinbase is one of such exchanges that started operating since the advent of bitcoin when there was very little awareness about crypto. Recently some other digital payment platforms like PayPal, Robinhood have started offering their services on this platform. Let’s discuss some popular cryptocurrency exchanges.
It is one of the famous cryptocurrency exchanges that operate from the Bahamas. This exchange provides services in derivatives products and spot trading. Recently, the valuation of FTX has swelled to $32 billion as new funding was announced.
It was founded in May 2019 by two MIT graduates, Sam Bankman-Fried and Gary Wang. But within such a short span of time, this exchange has revived as one of the major players in the crypto exchange market and giving tight competition to its major rivals, Coinbase and Binance.
How it operates:
This Bahama-based cryptocurrency exchange works as a centralized exchange. It has its own web platform and mobile application through which you can buy, sell, and trade crypto.
Basically, the company has divided its work structure into two different segments, one is outside the US and the other is in the US market. The major vertical operated outside the US and offers all kinds of coins, trading of crypto derivatives, and a lot more other feature.
As a first step, you need to sign up to create an FTX account after verifying your identity. Later you can transfer money through ACH bank transfer or wire transfer and use that money to buy and sell your desired cryptocurrency.
There are several offers that FTX is offering to its customers. Such as
Another one of the world’s largest cryptocurrency exchanges in Binance. Like FTX, it also offers a lot of features to experienced crypto traders. However, if you are from the US, you can use Binance.US which has lesser features as compared to the standard version which operates outside the US and have more facilities.
It started its operation in 2017 and registered in the Cayman Islands. Its founder, Changpeng Zhao, was a developer who create high-frequency trading software. Earlier Binance has its headquarter in China but later, as China increased the regulations, it shifted its headquarter out of China.
It has two different cryptocurrencies which they have developed by themselves, Binance Coin (BNB) in June 2017 and Binance Smart Chain (BSC) in September 2020.
How it operates:
Same as FTX if you need to operate through Binance, you need to open an account and register. Then transfer funds to this account and use it for exchanging crypto assets. But since its inception, Binance is facing a number of legal issues from different governments around the world.
There are a lot of features interesting facilities of Binance. Like
This is another great all-in-one crypto exchange platform that is affordable and loaded with advanced features. It offers more than 70 cryptocurrencies to deal with and some unique facilities like crypto rewards, debit cards, and more.
If you have a high balance in this exchange, you can be benefitted from discounts on the trading free cashback as well. This platform also offers limited margin trading to its customers. This is among the top-rated platforms in the field of security.
How it operates: Initially it started as a crypto payment product but later, aimed to speed up the crypto transition. With the exponential growth and popularity of this exchange, Crypto.com has now become the hub of cryptocurrency deals.
It has its own web platform and mobile application which provides ample ease in crypto trading. Set up an account, transfer funds, and you are all set to start your crypto journey in this exchange. There are two modes of trading through this platform, Through its exchange, and through the DeFi wallet.
Some amazing features of Cypto.com are
Some key points to look into the crypto exchanges:
As cryptocurrencies are not yet regulated by any governing authority, there is no such exchange that is perfect. You need to select the best exchange that suits your goal. But there are surely some aspects that you should keep in your mind before opting for a crypto exchange.
We all are aware of the fact that the way the cryptocurrency market is growing, will mark a significant change in the world’s financial market. And with this flow, many countries have already legalized cryptocurrencies. But there are many grey areas which make it risky and attract legal issues. Over time, definitely, we can see illuminated paths that will make cryptocurrency dealing easier, convenient, and more secure. Are you planning to invest in cryptocurrencies? Please share your comment below.
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