The Story of Crypto... So Far (Part-1)

A lot is going on with crypto today.?

Although it is already a decade old and has 420 million users globally, it still seems to be in its infancy.

Recent upheavals in the industry have shaken the confidence of investors, regulators, and the public at large.?

A lot of questions are starting to be asked about regulations, the safety of customers’ funds, and the business practices of the exchanges.?

These developments point towards significant changes in the industry in the near future as it scrambles to restore confidence in the industry.

We will examine the events that have so profoundly shaken the crypto industry, its causes and effects in this series.?

But first, let us start by understanding what crypto is, the technology it is based upon, and its advantages in the first part.??

What is crypto-currency?

Cryptocurrency is a type of digital currency, which means that it can be exchanged for goods and services and for other currencies. It was invented to make payments as easily, cheaply, and quickly as possible.

Bitcoin transactions are digitally signed communications, similar to email, that are broadcast to the whole Bitcoin network for verification. Transaction data is public and may be seen on the 'blockchain,' a digital ledger. Every Bitcoin transaction has a history that can be traced back to the time when that bitcoin was initially created or 'mined.'

This makes it almost impossible to tamper with the data and makes the transactions safer.

Advantages of crypto

Crypto has certain advantages over traditional currencies and payments methods, such as:

• Low or no transaction charges- Transactions done using crypto are cheaper than any other alternative, except for UPI transactions, which have been mandated by the government of India to be free.?
• Easy transactions- One can make transactions using a smartphone app, hardware wallet, or exchange wallet. Plus, one does not need a bank account to make transactions using.
• Relatively safe- Blockchain technology ensures the security of transactions.
• No deposit or withdrawal limits- Unlike other modes of payments such as cards, IMPS and Netbanking.
• Make transactions anytime, anywhere- There are no geographical or temporal restrictions on making crypto transactions.?
• Decentralized and private- All information is stored in decentralized blockchains, and crypto is the most private mode of payment.

Differences between crypto and traditional currencies:

However, there are some major differences between crypto and traditional or fiat currencies-?

1. The most obvious difference is that cryptocurrencies are not backed by any governments or central banks. Traditional currencies, on the other hand, are backed by governments and central banks.

2. Cryptocurrency is a peer-to-peer payment system that allows anybody, anywhere to send and receive money and does not rely on banks to verify and facilitate transactions.?

3. Cryptocurrency payments exist solely as digital entries to an online database identifying specific transactions, rather than as tangible money carried around and exchanged in the real world.?

4. Transactions involving crypto funds are recorded in a public ledger, while traditional digital payment records are kept in a centralized server.?

5. Cryptocurrencies are kept in crypto wallets, while traditional currencies are kept in bank accounts and payment wallets.

6. A blockchain records information on multiple computers called nodes instead of a centralized server or database. Information can be changed on a centralized server by hacking into it, but this is not possible when the information is stored on multiple nodes like in a blockchain.

In the next part, we will look at the history of crypto in detail.