Cryptocurrencies are essentially decentralized network of currencies which are based on blockchain technology; a secure system of technology that is extremely secure and makes it impossible for anyone to forge into the record and also prevents hacking of the data https://bitpapa.com/. Cryptocurrency is referred as digital asset; that is dispensed over a large chain of computer systems on bitpapa. Since, the entire concept is based on decentralized network; cryptocurrencies are not governed or regulated by any government authorities, which often places it in the controversial realm of being used for criminal activities.
Types of Cryptocurrencies:
Most of the cryptocurrencies fall under two domains or rather they work on two concepts:
- Proof of Work: This concept is basically required in the mining of cryptocurrencies for the purpose of authenticating the transactions. This allows cryptocurrency transactions to happen in peer to peer manner and removes the need of a third party. The main drawback of the Proof of Work concept is that it requires massive energy in the mining of cryptocurrencies and this requirement of energy keeps on increasing as more miners join the network. This enormous amount of energy requirement makes it a non-environmental and a costly mechanism. Bitcoin and Ethereum1.0, are the cryptocurrencies that works on this concept.
- Proof of Stake: Proof of Stake is a concept which is stated to be an alternative of Proof of Work concept. Proof of Stake is a more secure system as it has structured its compensation mechanism in such a way that it is difficult to attack the network. It is a concept which allows the owners to authenticate block transactions on the basis of the number of coins a validator is staking. Unlike, proof of work; this concept does not involve the process of mining; as a result is an extremely energy efficient and environmental friendly concept. Solana, Cardano and Algorand are some of the most popular cryptocurrencies that works on this mechanism.
Like every other technological aspects or technologies; Cryptocurrency: The era of Digital Currency has its own pros and cons.
- Cryptocurrency offers a cheap and fast source of money transfer as compared to the other technologies through.
- Being decentralized, cryptocurrency does not collapse at a sole point of failure.
- Cryptocurrencies’ prices are highly volatile.
- Since, cryptocurrencies are not regulated by any government authorities; it is linked to various criminal activities.
Future of Cryptocurrency:
Although, Cryptorcurrency has been stated as the era of Digital Currency, uncertainties still loom over its fate. A lot of nations and people have shown their inclination towards cryptocurrencies; however, constant statements and discussions by various sovereigns about banning the digital asset have raised the feeling of doubt and uncertainty in the minds of the people or rather investors.
On one hand, El Salvador has accepted cryptocurrency as a legal tender; on the other hand, United States of America has been constantly engaged in the discussion of banning or regulating the cryptocurrencies; so as to bring it under the government authorities; as the government is worried that it can disrupt the valuation of U.S. Dollar.