WHAT IS CRYPTO ?
`A crypto currency is a digital virtual currency that is secured by mining from computers by process of cryptography,. Many crypto currencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a wide different network of computers. A defining feature of cryptocurrencies is that they are generally not issued by any government authority, rendering them theoretically immune to government interference or manipulation.
What is crypto and Bitcoin: How it make money ?
This is an attempt to explain the principles behind crypto currency in simple terms without getting into particular details.
Currently every nation has its own currency regulated by its top federal bank. They’re traded and exchanged in the international currency markets like stocks. Owing to the popularity of US in the last century and the stability of its economy, dollar $ has become the most popular and trusted currency. All countries keep large reserves of it and most international trade is carried out with dollar. It’s literally the ‘global currency’. But a true global currency must be regulated by some institute that represents the world like UNO. But, on the contrary the ‘global currency’ dollar $ is regulated by US top bank….. and this can lead to certain manipulative advantages for US. In order to offset this some countries have begun to keep a basket of currency reserves including the likes of Euro € etc. If the popularity of dollar$ wanes in future for whatever reason, other currencies may try to fill up that place.
Now the advent of internet has has generated a new breed of global currencies, cryptocurrencies, regulated not by any country but by some companies!
Let me try to explain in more dramatic terms.
Say I start a company called ABC Pvt Ltd which develops a digital platform and float a new digital cryptocurrency called ChitCoin (C). I simply link the value of C1 to $1 and make them equal and link it (C1) to other currencies via the international currency market. You see my digital platform is accessible accross all countries on the internet. A company in US can buy C1000 by depositing $1000 in the bank a/c linked to my company ABC Ltd. Another company in India can buy C1000 by depositing ₹70,000 (1$ = ₹70). If the Indian and US companies want to transact some business like import/export they can easily do it with ChitCoins as a mutually agreed common currency. Here their trust in my company is essential. If I’m a fly by night operator I can easily rip them off. But as a serious entrepreneur I can grow my business well.
Thus you have Bitcoins, etc with some variations. Of course cryptocurrencies need not be pegged to dollar$ as I have done above for simplicity.
Another important feature of the cryptocurrencies is the security they provide from hacking. They use a technology called Blockchain technology where a new transaction is linked to the series of old transactions and hacking is not easy like you can hack an isolated transaction. In fact federal banks around the world are looking at ways they can also adopt this Blockchain technology for extra safety for their own currencies.
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