An Introduction to the Virtual Currency (Cryptocurrency)

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Have you ever heard of the term ‘Bitcoins’ or ‘Cryptocurrency’? It surely is gaining a lot of popularity and also has created a tremendous amount of upheaval these days, especially in news channels, economic platforms, and even during various political discussion forums. In this virtual world, when almost everything is being controlled by algorithms and data science, why should the medium of exchange remain restricted to the tangible space?

The billing system has passed through different stages since time immemorial. From primeval days, the society has enjoyed barter system, coinage, cash-based system, credit-based system, and eventually to a virtual currency (cryptocurrency) exchange.

What is Cryptocurrency?

A cryptocurrency is literally a digital currency and makes use of cryptography to ensure the security of the currency. It is not controlled by any government body and thus is organic in nature.

Similarly, a Bitcoin is the encrypted version of the cryptocurrency but without a physical characterization. It is delineated by several units, and each unit is divisible up to 100 million ‘Satoshis’ (named after the creator of the Bitcoin technology- Nakamoto Satoshi).

So, how to create a cryptocurrency? Investing in cryptocurrencies can be enthralling especially for those investors who have done their share of research in this segment. It is imperative to have a good rapport with people (or community) who can invariably underwrite your cryptocurrency.

Creating a Cryptocurrency

Before creating a cryptocurrency, you should be able to decipher the meaning of blockchain technology. As we now know that government or central authorities are prevented from intervening and controlling cryptocurrency technology, it is operated as a public ledger (also known as Blockchain) enabling a transparent platform to work on. Digital programmers have introduced open source codes in blockchain technology allowing the trusted communities to view, share updates, and fix bugs for your cryptocurrencies as and when required.

Points to remember while creating a cryptocurrency

  • Creating your own blockchain or ‘Coins’ can amount to extortionate expenses in the form of money and time. Professional blockchain developers need to be hired as well.
  • Creating a cryptocurrency on an existing blockchain or ‘Tokens’ can be riveting and rewarding at the same time. One can create a ‘token’ by building an app like NEO or Ethereum.
  • If you have a thorough team of developers, a trusted community of founders and a good idea for a project, you can raise funds for your ICO. This, in turn, can help you create a new cryptocurrency.
  • Ethereum can help launch your token system via source codes (like Bitcoin or Litecoin respectively). The token value is mainly decided by the market. Coding the cryptocurrency is a time-efficient task.
  • Once the cryptocurrency (Coin or Token) has been created, one should engage in identifying the miners as well as users to enable people to quote a value to your cryptocurrency.

Future Prediction of Cryptocurrencies

Economists around the world have been giving out contrasting opinions towards one question – “What future does the Cryptocurrency hold?” The comprehensive analysis albeit refers to the immense growth of some of the prominent cryptocurrencies (such as Bitcoins, Litecoins, TRON, etc.) accumulating paramount market share and hence, is subjected to offer a very high ROI (Return on Investment).

The onset of the trend where big players in the marketplace have embarked upon accepting Bitcoins and other forms of digital currency has, in turn, paved the way for the cryptocurrency market to be legitimized. The Big Players being referred to here are McDonald’s, eBay, Expedia, Shopify, Microsoft, Subway, etc.

One of the most promising aspects of the Blockchain Technology is its ‘Transparency.’ Not being controlled or managed by any central authority like MNCs, banks or even government authorities makes this technology quite transparent in nature. Its capacity to store data from a network of PCs in perpetuity crowns it as the global online bibliography.

Blockchain technology is responsible for conforming to the validity and ownership of the cryptocurrency by an individual miner.

The ultimate vision of Blockchain Technology (offering Public Ledger accounts) is to create an environment of ‘sharing economies’ guarded against inflation in the economy. This creates a sanctum sanctorum for investors to protect their wealth. When other forms of currencies and its denomination gets affected by factors like socio-political circumstances, economic policy introductions, market crash, etc., cryptocurrency remains undeterred.

In one of the most striking revelations quite recently by Starbucks in association with Bakkt (Another Cryptocurrency company) (as on the 6th of August, 2018), it has been confirmed by Starbucks will assist in synchronizing digital consumer applications in the retail outlets to help interchange a cryptocurrency (or digital currency) into the permissible forms of currency denominations.

Cryptocurrency Achilles’ Heel: A Study

  • Since the transaction module of a cryptocurrency opens up the entire ledger or miner’s information to the public forum, it creates a risk quotient to the entire concept of Cryptocurrency.
  • The complete Bitcoin module undermines the potentiality of its own design making it susceptible to injuries from a higher load of transaction rates.
  • The Blockchain Technology leaves the option of anonymity open. This also raises eyebrows on the kind of miners transacting via this route.
  • Under the scarcity of adequate security measures, cryptocurrencies form quite a disreputable image. One of the popular cryptocurrencies – Etherium has recently suffered a major setback in lieu of a security attack crashing the value of this currency by 50 million USD.
  • To give accuracy to the digital currency value, the web programmers implementing cryptocurrencies have been working towards taking the difficulty quotient for bitcoin miners to the next level.  This process called ‘Halving Event’ creates a plunge in the ROI.
  • The irony in the fact that cryptocurrencies are considered to be a ‘Commodity’ diminishes the actual value of a commodity in the long run. All the speculations about the tremendous returns a cryptocurrency can manage to produce is yet to see the light of the day.

Nurturing your cryptocurrency helps strengthen its value in the marketplace. This value also corresponds to the team of miners, developers and the overall community members you have been able to create a trust in and vice-versa.

The author of this article is Vlad Pshenychka, a freelance blogger working now for a software development company that specializes in startups launch including mobile and web development. Our goal is to turn clients’ ideas only for excellent results!