What is Cryptocurrency ? | How does Cryptocurrency work ?


Cryptocurrency : Cryptocurrency is a digital currency or virtual currency in which all the transaction takes place in digital way , there is no any physical existence of cryptocurrency . All the transactions in crypto maintain in online ledger in encrypted form . This is so secure that hacking is next to impossible . The technology use in cryptocurrency is known as blockchain technology . There are no any central agency regulate Crypto . If you want to transfer crypto , no conversion is required and no middle man is involved in this , it eliminates the middle man like banks , credit card companies etc , but as in case of physical currency bank is involved as a middle man . Therefore if want to send 100 usd to anyone you can do it directly without involving any agency . The purpose of development cryptocurrency was to create alternative to physical currency in which no central agency is to be involved .

What is Blockchain Technology ?

Blockchain is a digital ledger in which every transaction is being stored in blocks . This is the network of thousand of computers placed at different places in a decentralised way . As data is stored in a block , every block has a hash number which also stores the hash number of previous block . When one block become full it is linked with previous block . Thus all the previous blocks are linked with their next block .  Due to decentralized system , no one can edit or manipulate the data , If anyone want to do this , the transaction will be cancelled . So it is secure and safe .

There is no any central agency involve in cryptocurrency . If we talk about physical currency of any country , a central agency is involved , e.g. Indian currency is regulated by Reserve Bank of India ,  in USA ,   Federal Reserve controls the US dollars .

Some Popular Cryptocurrencies :

#1. BitCoin (BTC) :

This is the most popular Cryptocurrency in this time . It was created by Japanese Engineer Satoshi Nakamoto in 2009 . This is the topmost Crypto of this time in valuation . In 2010 , the price of 1 Bitcoin was less than 1 USD but in 2022 one Bitcoin has value more than 42000 USD . According to data , the market capitalization of Bitcoin is 665 billion USD . There is a huge jump in its prices and market capitalization .

#2. Ethereum (Ether) :

After Bitcoin , Ethereum is the second most popular Cryptocurrency in this time . This was developed by Vitalik Buterin in 2015 . Ethereum is a blockchain platform having its own Crypto named Ethereum . As Ethereum provides a blockchain platform , if you have an idea/project in your mind , there is no need to develop your own blockchain , you can start building your project on Ethereum blockchain . This is more than a digital currency due to their blockchain platform . In 2016 the price of Ethereum Ether was less than 3 USD but in 2022 one Ether’s price is more than 3000 USD .

#3. Litecoin (LTC) :

Litecoin was created by MIT graduate and former Google Engineer Charlie Lee in 2011 . Litecoin has much faster blockchain generation that’s why it provide faster transaction & confirmation . Day by day Litecoin has been growing by number of merchants due to faster  transaction & confirmation . Litecoin transaction completed in 2.5 minutes whereas Bitcoin transaction takes 10 minutes to complete . In march 2017 , Litecoin price was 3 USD  but in January 2022 , LTC price was more than 120 USD .

#4. Binance Coin (BNB) :

Binance coin was created in 2017 & initially Binance coin was operated on Ethereum blockchain platform but ultimately it had launched its own platform i.e. the Binance Chain . Binance coin is for those who use token as a way of payment for exchange .  If we talked about trading volume , the Binance coin is the most widely used exchange in the world . Binance coin can also be exchanged for other Crypto such as Bitcoin , Ethereum , Litecoin etc . It is more flexible in payments methods . One can also book hotels , flights , pay for virtual gifts , lottery etc on some websites . Several platforms also allow to invest in stocks , ETFs , used as collateral for loans etc . The current market capital of BNB has more than 70 billion USD .

#5. Cardano (ADA) :

Cardano is created in 2017 by Charles Hoskinson . Like Ethereum , Cardano has also a blockchain platform but difference is that it has many improvements in technology over Ethereum . That’s why Cardano is being considered as most advanced blockchain Technology till now . Cardano is one of the top 10 Cryptocurrencies of 2022 . Cardano is more scalable than Ethereum having capability of 257 transactions per second .

#6. Ripple (XRP ):

Ripple was launched by Ryan Fugger and Mc Caleb in 2012 . It is very popular due to its fast international transaction that is completed in seconds , as similar transaction in banks takes long time . Ripple was developed in such a way that it enable quick & cheaper international transaction . Ripple processes more than 1500 transactions per second . Due to this it has gained so much popularity . The main focus of Ripple is on one industry , that is related to International money transfer . As transfer is completed within few seconds and also charge is very few as compared to banks and any other financial institutions . This is the main advantage of Ripple . Ripple also has tie up with multiple financial institutions to its payment network .

How to Buy ?

You may buy cryptocurrency in following way :

  • Traditional Brokers : There are some brokers who deal with bond , stocks , etc . they also deal with crypto . Therefore you can buy crypto from them online .
  • Crypto exchange : You can also buy Cryptocurrency from Crypto Exchange .

How to Store Crypto ?

As we put our physical currency in leather wallet , similarly after purchasing Cryptocurrency we can store its key in a Cryptocurrency Wallet . As crypto do not exist in physical form , so we can not put in physical wallet . Therefore in Crypto wallet , private keys and public keys  is to be stored . We can understand private key & public key with an example . Public key is like your Account number and private key is like PIN . As you may share your Account Number with anyone , with your company to pay salary etc .  Hence there is no problem on sharing your public key , but private key is like your secret password it can’t be shared. Your wallet address look like this :


This is the combination of letters , numbers having both upper case & lower case .

There are different types of wallet available having different features .

(i)Desktop Wallet

(ii) Mobile Wallet

(iii)Web Wallet

(iv)Hardware Wallet

Things you can buy :

As popularity and adoption of Cryptocurrency increases day by day , therefore you can buy several things using Crypto . As adoption level increases in future , you can buy more & more things by using crypto .

  • Several Tech companies accepts crypto to sell their products e.g. Microsoft , AT&T etc. Some e-commerce companies such as Shopify , Rakuten also accepts Crypto .
  • Some Luxury goods retailer also accepts Cryptocurrency to sell their products e.g. Rolex .
  • Some car dealer also accepts crypto as a payment .

In this time most of the person accepts it as an Investment Asset . But as the time passes and adoption of crypto increases you can buy many more things .