Deciphering some of the keywords of the cryptocurrency market.
The cryptocurrency market seems to be too unusual for some people, and they try to decipher a range of keywords related to the cryptocurrency market, which have possessed raging popularity on a number of news portals. While some of them have the notion that cryptocurrencies are the future of the globalized currency, some of them consider it to be a goldmine for money laundering and criminal activities. Nevertheless, the cryptocurrency market is growing at a very rapid pace and is expected to reach almost 1 – 1.5 trillion dollars by end of 2018. Let us try to decode various terminologies commonly used in the cryptocurrency market.
The whole cryptocurrency market revolves around the Cryptocurrencies. A Cryptocurrency is nothing but a digital currency which incorporates Cryptographic principles to maintain the sanity of the currency. The cryptocurrencies are even known to provide higher amounts of anonymity in the transactions, where the centralized authority is completely eliminated. Thereby the transactions are processed by the nodes of the network itself in a distributed manner. It is worth mentioning that the cryptocurrencies are not controlled by the government but governed by a consensus mechanism which is entailed in the currency itself. The cryptography and the consensus mechanism are incorporated to enhance security in the cryptocurrency market.
Why did we need one?
The cryptocurrencies were developed predominantly to solve the double spent problem. With its distributed Ledger Technology they make sure that the coins are not double spent. It’s another main intention was to globalize the whole financial economy by reducing the transactional costs, which was in turn reduced by eliminating all the Centralised authorities. Also, transferring the ownership of our funds to another Centralised authority was not a viable option, as it became self-evident during the financial crisis of 2008. Hence the decentralized nature of cryptocurrencies gave the users a complete ownership of their funds.
The Blockchain Technology is the backbone of the cryptocurrencies, without which they are like any other digital currency. In a Blockchain technology, all the transactions that occur with respect to a particular cryptocurrency are recorded on a ledger whose copy is distributed to each and every individual using that cryptocurrency. Also, the ledger is immutable that means once the data is entered, it cannot be removed at any cost. This collection of transactional record forms a block. The transactions on the network are processed and a collection of records in the form of a block is added on to the Blockchain which is secured which is in turn secured through Time Stamping and Hashing.
Initial Coin Offering
Another major domain of the cryptocurrency market is the ICO. An Initial Coin Offering is nothing but a digital version of Initial Public Offering. In its case, as it is an online way of raising investments from various people for the creation and development of a certain project. Since the process is completely online and real-time, the investments can be availed from the investors all over the globe. Hence enabling the entrepreneurs to a wide range of possibilities. They are one of the major sectors in the cryptocurrency market and have managed to raise unimaginable amounts of funds in the recent years.
The cryptocurrency market is highly vulnerable to attacks and thefts and therefore one needs their crypto finds to be stored in a safe place. Cryptocurrency wallets are nothing but which provides security to it. They are of two types, software or website wallets and hardware wallets. The software wallet is nothing but a place where the funds are stored on a Centralised server in a secure manner. On the contrary, the hardware wallets store the funds on a specific hardware device similar to that of a Pendrive. The hardware wallets are highly recommended over the other one, due to its incredible security.
The cryptocurrencies are considered as the future of a globalized financial economy, as they effectively have proven to reduce the costs of the transaction between different countries. Its online and real-time nature has also rendered it to have faster transaction confirmations than the traditional money transfer processes. Therefore it is no surprise that the cryptocurrency market is booming more than ever.