Essay on Cryptocurrency - What is Cryptocurrency and It's Benefits

Essay on Cryptocurrency - What is Cryptocurrency and It's Benefits

Essay on Cryptocurrency

What is Cryptocurrency?

Cryptocurrency refers to a special type of digital currency. The word cryptocurrency is derived from the combination of two Latin words, crypto and currency. The word crypto is derived from cryptography which means hidden and currency is derived from the latin word "currentia", which means money. Thus the literal meaning of the word cryptocurrency is hidden money or digital money. Cryptocurrency is a type of digital currency that a person cannot touch with his hands. The first cryptocurrency appeared in 2008 in the form of bitcoin.

Benefits of Cryptocurrency

  • Transactions of cryptocurrencies do not require any other person/entity, so it can be bought and sold at very low cost.
  • Its biggest advantage is its confidentiality, in which all the information is kept confidential until it is necessary.
  • No identity card is required to join it.
  • It can be used from any corner of the world without any extra charge.

Importance of Cryptocurrency

  • Being based on the blockchain system, corruption can be reduced by tracking the details of the flow of money and transactions etc.
  • This process is completely based on the Internet and is also powered by it, due to which it takes a nominal time to complete.
  • About 3% of the $100 trillion global economy goes into the pockets of intermediaries such as payment gateways, credit cards and banks, with the use of blockchain in this sector that could save hundreds of billions of dollars.

Side effects of Cryptocurrency

  • No country or central bank has yet recognized cryptocurrencies due to which there is always the fear of price volatility in it.
  • Its secrecy may promote terrorism or other illegal activities.
  • It can adversely affect the economy of any country, as the monetary policies of the government have no effect on it.
  • Due to the use of millions of computers, it requires a lot of energy and so on.

Security of Cryptocurrency

  • Cryptocurrency is built on blockchain technology, in which data is entered in blocks and stamped on it.
  • It is extremely difficult for hackers to tamper with this network.
  • However, there are some instances of this where not only these accounts were tampered with, but they were also hacked.

Cryptocurrency Investment Process

The process of investing in cryptocurrencies is exactly the same as investing in stocks, which is as follows-

  1. The first is to open a brokerage account with a firm that allows you to invest in cryptocurrencies.
  2. After this you have to deposit the money from your bank account in the brokerage account.
  3. Now you can buy cryptocurrencies using the funds in your brokerage account.
  4. After buying cryptocurrency you can sell it at profit or loss any day.

You can use the following websites to invest in cryptocurrencies-

Cryptocurrency App

Investing in cryptocurrencies is not as easy as online transactions of banks. Nevertheless, you can invest money in cryptocurrencies very easily, as there are many apps available for this process at the present time. Some of which are as follows-

Strategies for Investing in Cryptocurrency

If you want to invest in cryptocurrencies then you can invest in cryptocurrencies by following any one of the following strategies-

  • Average Cost of Rupees
  • Unbalanced Portfolio
  • Balanced Portfolio
  • Profit Reinvestment

Cryptocurrency Investment Fee

There are mainly three types of transaction fees involved in investing in cryptocurrencies, which are as follows-

  1. Exchange Fee
  2. Network Fee
  3. Wallet Fee

Some Popular Cryptocurrencies

As mentioned in the above statements, there are more than 13000 cryptocurrencies in circulation at present, some of them main are as follows-
  • Bitcoin
  • Cradano
  • Lightcoin
  • Ethereum
  • Ripple
  • Dogecoin, etc.

Difference Between Digital Currency and Cryptocurrency

Digital Currency

CBDC is a digital currency and its biggest thing is that this currency is legally recognized, it is also recognized by the government of the country in which it is issued by the central bank. Contactless payment is done through this.

Cryptocurrency

Whereas, on the contrary, no government recognizes cryptocurrencies nor can the government of any country interfere in it. This currency is kept in a type of digital wallet.

Conclusion (What is Cryptocurrency)

Although it is true that the arrival of cryptocurrencies may see more changes than expected in the future, trading may be faster and less expensive, but given some of the problems associated with it (such as secrecy, price volatility, etc.) Too much dependency would not be good because allowing a private currency to trade among such a huge population without any such controls could be a big challenge for the government. Therefore, the government should take steps based on the advice of experts, keeping in mind both the opportunities and future available in the field of cryptocurrency, so that the general public can benefit from it.

FAQs

Q.1 Who is the father of cryptocurrency?

Ans. Satoshi Nakamoto is considered to be the father of cryptocurrency.

Q.2 Which is the first cryptocurrency?

Ans. The first cryptocurrency is bitcoin.

Q.3 How many cryptocurrencies are there in total at present?

Ans. According to the data of 'CoinMarketCap' (a price tracking website), there are currently more than 13000 cryptocurrencies.

Q.4 Which country was the first to legalize cryptocurrency?

Ans. The first country to legalize cryptocurrency is El-Salvador (a country in Central America).

Q.5 Is Bitcoin legal in Nepal?

Ans. No, Bitcoin is not legal in Nepal according to notice issued by Nepal Rastra Bank.

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