Cryptocurrency is Virtual and Digital Currency. Cryptocurrency, You may have many questions about it. What is it? How does it work? What does it do? How to buy cryptocurrency? Will Cryptocurrency prices increase or decrease in the coming days? Will the Government stop Cryptocurrency in the future? You may have a variety of such questions in mind. In answering these questions, you discussed 5 concepts. Once you understand these five concepts, you will know all the details about Cryptocurrency.
1. What Is Money vs Currency?
1.1 What is Currency?
The fast concept is Money vs Currency. You think of Money or Currency in your pocket as money. For example, if you have a 2000 rupee note you will think it is money. If the Government today demonetizes the 2000 rupee note, the value of the 2000 rupees you have will become zero. Currency can be regulated and manipulated by the Government. Currency can be printed as much as you want.
1.2 What Is Money?
There is a difference in money. The value of money can never be zero. Money has its own store of value. For example, you have a gold coin at home. That gold coin has value. This gold coin you can exchange with Currency. You know it has value and the Government can’t band it. Its value is all over the world.
Currency is not accepted in all countries. Silver or Gold, which has value in it, will run across the country. For this reason, you need to understand the difference between Money and Currency. You can’t make as much Money or Gold as you want. Therefore, the Government has to do Mining. There are limited resources for this.
2. Centralized Or Decentralized?
2.1 What Is Centralised?
You assume Currencies are Centralized and Decentralized. The money you use is printed by the Government. As much as the Government can print. And as a result, comes inflation. It is in the hands of the Government. It is Centralized.
2.2 What Is Decentralized?
Decentralized means that the Government cannot control it. An example is Bitcoin. Bitcoin is not controlled by the Government. Bitcoin cannot be printed as much as you like. It has limited resources and suppliers. People say Bitcoin has a store of value inside it. Gold and Bitcoin limited.
Bitcoin has an internal store of value, and Bitcoin Limited says its value may increase in the future according to people. Because the Government does not manipulate it. There are no Government rules or regulations.
3. What Is Fiat Currency vs Not Nacked By Assets?
3.1What Is Fiat Currency?
You think Fiat means refake. The Money, Dollar, and Euro that we use are fiat Currencies. A few days ago, a country could print as much Currency as it had Assets. People think fiat Currency is fake Currency. It is Not Backed by any Gold Asset.
3.2 What Is Not Backed by Assets?
Today, a country printing note has no Assets behind it. You know about the country of Zimbabwe. This country had printed its own country’s notes and brought the economy down. Because it was in the hands of the Government. You can exchange your money for gold or Assets. Then the value of your money will not depreciate. You will be protected from Inflation. After the Corona pandemic, every country started printing notes.
4. What Is Digital vs Physical Currency?
A few years ago, people did not trust Paytm. People thought, If the transaction is done through Paytm, Paytm will deduct Rs. Because Paytm was digital. People thought that digital can only be in banks. People believed in Physical Currency.
For example, A man kept money in a cupboard for many days. One day the rat got inside the cupboard and cut off all the money. The money you kept in the cupboard was Physical Currency. Someone can steal this money or a rat can cut off it. But no one can steal digital Currency. At first, nobody believed in Digital Currency. Now people are starting to believe it. Cryptocurrency totally based on Digital Currency. You can see Cryptocurrency but can’t touch it.
5. What Is Blockchain Technology?
A Blockchain is a chain of blocks. Some people don’t trust Cryptocurrencies. But trust Blockchain Technology. When a block is connected to another block and that block is connected to another block. The whole is connected in the form of a chain, then it is called a Blockchain. A block contains several pieces of information. This Blockchain Technology was introduced in 1991 by Stuart Haber and W. Scott Stornetta. But this technology came to the fore in 2009 with Bitcoin.
For example, Bitcoin contains information about who has made transactions with whom. If any hacker wants to hack then he can’t do it. Because there is a unique hash in this block. Suppose a hacker changes the hash of two numbers of data, then number one will not match the hash of the block. Thus, they are connected to each other in a chain system.
