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Introduction to Cryptocurrency

Cryptocurrency is decentralized digital money that is based on blockchain technology and secured by cryptography. To understand crypto currency, one needs to first under- stand three terminologies – blockchain, decentralization, and cryptography. In simple words, blockchain in the context of crypto currency is a digital ledger whose access is distributed among authorized users. This ledger records transactions related to a range of assets, like money, house, or even intellectual property. The access is shared between its users and any information shared is transparent, immediate, and “immutable”. Immutable means anything that blockchain records is there for good and cannot be modified or tampered with – even by an administrator. Centralized money refers to the regular money that we use, which is governed by authorities like the Reserve Bank of India. Decentralization in crypto currency means there is no similar authority that can be held responsible for supervising the rise and fall of a particular crypto currency. This has many benefits over centralized money.

Some of these benefits include the following:

There is no need for currency owners to “trust” a single governing entity, as everyone in the network has access to the same information that cannot be altered.

Data remains accessible only to the users of the network and it is heavily secured. Shared ownership also means all users sign off on how accurate the data is, which means there is very little scope for data mismanagement or miscommunication. Think of it as a democracy.

Security, which is a fundamental part of a blockchain.

Cryptography is the method that secures data from unauthorized access by the use of encryption techniques. Most of the claims that blockchain makes, like privacy and immutability, are enabled through cryptography. The roots of crypto currency technology can be traced back to the 1980s with the invention of what is called a “blinding algorithm”. The algorithm is all about secure and immutable digital transactions. It remains fundamental to the modern-day digital currency. In 2008, a group of people (currently known under the pseudonym Satoshi Nakamoto) created the guiding principles of the first and leading crypto currency in the market today, Bitcoin. In 2009, Bitcoin was launched to the world. But it would be years before it was formally recognized as a means of payment among leading merchants, starting with Word Press in 2012. The underlying blockchain technology is today used in banking, insurance, and other business sectors. Growing at a compounded annual growth rate of 12.8% since 2021, the crypto currency market is estimated to reach $4.94 billion by 2030.