CRYPTOCURRENCY

A type of currency that is digital and decentralised. Cryptocurrency can be used to buy and sell things or as a long-term store of value. However, several countries don't allow cryptocurrency to be used to buy goods and services.

"Cryptocurrencies are basically digital assets. It is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend," Hitesh Malviya, founder of ItsBlockchain, said.

Digital currency can be bought and sold using the hundreds of online exchanges that are available to investors. Investors have made huge sums by throwing their cash behind new digital currencies, but their volatile nature means savers can just as easily lose their money. 

TYPE OF CRYPTOCURRENCY

Cryptocurrencies are intended to be used for payments, transmitting value (akin to digital money) across a decentralised network of users. Many altcoins (i.e., not Bitcoin or sometimes Ether as well) are classified in this way, and may sometimes be called value tokens. Given below is the list of popular digital currencies by the total dollar value of the coins in existence:

HOW CRYPTOCURRENCY WORK ?

Cryptocurrency works a lot like PayPal or a credit card, except you exchange digital assets for goods and services instead of US dollars. To make a transaction with cryptocurrency, you must exchange currency with a peer using a digital wallet known as a cryptocurrency wallet. 

A digital currency wallet is software that allows you to transfer funds from one account to another. To complete a transaction, you need access to a password, known as a private key. The private key is much like a bank account. You can own multiple keys and own all the funds sent to those keys. Transactions are recorded on a public ledger, which shows the transaction totals without revealing the identities of the parties involved.

Regulation

The fact that the cryptocurrency market is not regulated has both – brighter side and a darker side. For those willing to invest massively without having to deal with any obstacle whatsoever, it is an advantage. Those unwilling to take risks need to extra cautious of not investing money that they aren’t willing to lose. A nicely laid out plan as to how should cryptocurrencies be classified and a clear regulation would make it easy to predict the future.

Uses of Cryptocurrencies

Now that we have a fair idea as to what exactly are cryptocurrencies, it makes sense to talk about the uses and applications of the same.

Though cryptocurrencies can be used to make purchases, what is worth noting is that they are not yet widely accepted among retailers and other businesses.

Some look at cryptocurrencies from an investment point of view. People invest in them hoping that the future would see an increase in value. However, what needs to be understood here is that the demand cycle is just unpredictable. So, assuming that the future would give a higher return on investment might sound vague for many.