Cryptocurrency | Types of Cryptocurrency | History of Cryptocurrency

-What Is a Cryptocurrency?

A Cryptocurrency is a digital asset designed to work as a medium of exchange wherein individual coin ownership records are stored in a ledger existing in a form of a computerized database using strong cryptography to secure transaction records, to control the creation of additional coins, and to verify the transfer of coin ownership. It typically does not exist in physical form (like paper money) and is typically not issued by a central authority. Cryptocurrencies typically use decentralized control as opposed to centralized digital currency and central banking systems. When a cryptocurrency is minted or created before issuance or issued by a single issuer, it is generally considered centralized. When implemented with decentralized control, each cryptocurrency works through distributed ledger technology, typically a blockchain, that serves as a public financial transaction database.

-History of cryptocurrency

In 1983, the American cryptographer David Chaum conceived an anonymous cryptographic electronic money called ecash. Later, in 1995, he implemented it through Digicash, an early form of cryptographic electronic payments that required user software to withdraw notes from a bank and designate specific encrypted keys before it can be sent to a recipient. This allowed the digital currency to be untraceable by the issuing bank, the government, or any third party.
In 1996, the National Security Agency published a paper entitled How to Make a Mint: the Cryptography of Anonymous Electronic Cash, describing a Cryptocurrency system, first publishing it in an MIT mailing list and later in 1997, in The American Law Review (Vol. 46, Issue 4).
In 1998, Wei Dai published a description of "b-money", characterized as an anonymous, distributed electronic cash system. Shortly thereafter, Nick Szabo described bit gold. Like bitcoin and other cryptocurrencies that would follow it, bit gold (not to be confused with the later gold-based exchange, BitGold) was described as an electronic currency system that required users to complete a proof of work function with solutions being cryptographically put together and published.
The first decentralized cryptocurrency, bitcoin, was created in 2009 by presumably pseudonymous developer Satoshi Nakamoto. It used SHA-256, a cryptographic hash function, as its proof-of-work scheme. In April 2011, Namecoin was created as an attempt at forming a decentralized DNS, which would make internet censorship very difficult. Soon after, in October 2011, Litecoin was released. It was the first successful cryptocurrency to use the script as its hash function instead of SHA-256. Another notable cryptocurrency, Peercoin was the first to use a proof-of-work/proof-of-stake hybrid.
On 6 August 2014, the UK announced its Treasury had been commissioned a study of cryptocurrencies, and what role, if any, they can play in the UK economy. The study was also to report on whether regulation should be considered.

How do cryptocurrencies work? 

Cryptocurrencies use decentralized technology to let users make secure payments and store money without the need to use their name or go through a bank. They run on a distributed public ledger called blockchain, which is a record of all transactions updated and held by currency holders.
Units of cryptocurrency are created through a process called mining, which involves using computer power to solve complicated maths problems that generate coins. Users can also buy the currencies from brokers, then store and spend them using cryptographic wallets.
Cryptocurrencies and applications of blockchain technology are still nascent in financial terms and more uses should be expected. Transactions including bonds, stocks, and other financial assets could eventually be traded using the technology. 

-Types of cryptocurrency

1. Ethereum (ETH)

Created in 2015, Ethereum is a type of cryptocurrency that is an open-source platform based on blockchain technology. While tracking ownership of digital currency transactions, Ethereum blockchain also focuses on running the programming code of any decentralized application, allowing it to be used by application developers to pay for transaction fees and services on the Ethereum network.

2. Ripple (XRP)

Its main goal is to move a lot of money all over the world as fast as possible, through cross-border transactions, as cheaply as possible. How cheap you ask? Well, they have a Minimal Internal Transaction Commission. The only reason why it isn't free is to prevent Distributed Denial of Service Attacks. Ripple can be exchanged to any currency or valuable, like gold, with a unified minimal commission. A lot of currencies can't be directly converted to one another, so banks have to use the US dollar as a mediator so there's a double commission during conversion. Ripple, in this case, acts as the mediator, as the US dollar, but offers the same service at a cheaper price. XRP is Ripple's token. As you may know, to get bitcoins you need miners. But with XRP, there's no need for them. 100 billion tokens were already issued to Ripple back in 2015 while the creators kept 20 billion. The rest was given to the company to develop liquidity and make improvements. Unlike Bitcoin and Ethereum, Ripple does not run on the blockchain, instead, it has its own called the XRP ledger. Transactions are validated by a list of trusted nodes authorized by Ripple so there is no need for proof-of-work. This patented technology is called the Ripple Protocol Consensus Algorithm. Quite a mouthful right? But you can just call it RPCA. But who do we have to thank for inventing such an innovative way to transfer and convert funds? In 2013, Jeb McCaleb invited world rank investors to invest in Ripple Labs and thus, Ripple was born!

3. Litecoin (LTC)

Litecoin is a cryptocurrency launched in late 2011 by former Google and Coinbase engineer Charlie Lee. To create Litecoin, Lee copied the Bitcoin codebase, increased the total supply, and changed the speed at which new blocks are added to the blockchain. Only approximately 84 million litecoins will ever be created, quadruple the total bitcoin supply. Litecoin also creates new blocks every 2.5 minutes, four times faster than Bitcoin. The Litecoin investor and developer communities view the protocol as a complementary pseudo-test net for Bitcoin and a "digital silver" to Bitcoin's "digital gold". The Litecoin foundation stewards the Litecoin project and finances Litecoin Core development.

4. BitCoin

Bitcoin (₿) is a cryptocurrency invented in 2008 by an unknown person or group of people using the name Satoshi Nakamoto and started in 2009^[ when its implementation was released as open-source software. It is a decentralized digital currency without a central bank or a single administrator that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries. Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a block-chain. Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services. Research produced by the University of Cambridge estimates that in 2017, there were 2.9 to 5.8 million unique users using a cryptocurrency wallet, most of them using bitcoin.
Bitcoin has been praised and criticized. Critics noted its use in illegal transactions, the large amount of electricity used by miners, price volatility, and thefts from exchanges. Some economists, including several Nobel laureates, have characterized it as a speculative bubble. Bitcoin has also been used as an investment, although several regulatory agencies have issued investor alerts about bitcoin.

5. Bitcoin Cash (BCH) 

Bitcoin Cash is a different story. Bitcoin Cash was started by bitcoin miners and developers equally concerned with the future of the cryptocurrency and its ability to scale effectively. However, these individuals had their reservations about the adoption of a segregated witness technology. They felt as though SegWit2x did not address the fundamental problem of scalability in a meaningful way, nor did it follow the roadmap initially outlined by Satoshi Nakamoto, the anonymous party that first proposed the blockchain technology behind cryptocurrency. Furthermore, the process of introducing SegWit2x as the road forward was anything but transparent, and there were concerns that its introduction undermined the decentralization and democratization of the currency.

6. Libra (LIBRA)

It’s Facebook’s new cryptocurrency. The point is that you can send money all over the world with lower fees than if you were to engage, say, Western Union.

It’s shady as hell, though. Do you remember Tyler and Cameron Winklevoss? The twins from whom Mark Zuckerberg ripped the initial idea for Facebook? Yeah, so they have a cryptocurrency exchange called Gemini. As any astrology buff will tell you, both Libra and Gemini are air signs, and Geminis are stereotypically scarier than Libras. Gemini is the sign of twins and is associated with two-faced-ness. Plus, it’s a mutable air sign, which makes it somewhat unstable. Libra, as a cardinal sign, is somewhat more stable. Libra sees both sides; Gemini tries to be both sides.

On the other hand, astrology is made up. On some theoretical third hand: so is money!

What I’m trying to say here is that Zuckerberg seems to love crushing the dreams of these handsome men, so who can say how this will turn out? Anyway, the name seems kind of bitchy.

7. Monero (XMR)

Monero is a secure, private, and untraceable currency. This open-source cryptocurrency was launched in April 2014 and soon spiked great interest among the cryptography community and enthusiasts. The development of this cryptocurrency is completely donation-based and community-driven. Monero has been launched with a strong focus on decentralization and scalability, and it enables complete privacy by using a special technique called "ring signatures.”
With this technique, there appears a group of cryptographic signatures including at least one real participant, but since they all appear valid, the real one cannot be isolated. Because of exceptional security mechanisms like this, Monero has developed something of an unsavory reputation: it has been linked to criminal operations around the world. Nonetheless, whether it is used for good or ill, there’s no denying that Monero has introduced important technological advances to the cryptocurrency space. As of Jan. 8, 2020, Monero had a market cap of $994.0 million and a per-token value of $57.16.

8. EOS (EOS)

Aside from Libra, one of the newest digital currencies to make our list is EOS. Launched in June of 2018, EOS was created by cryptocurrency pioneer Dan Larimer. Before his work on EOS, Larimer founded the digital currency exchange Bitshares as well as the blockchain-based social media platform Steemit. Like other cryptocurrencies on this list, EOS is designed after ethereum, so it offers a platform on which developers can build decentralized applications. EOS is notable for many other reasons, though.
First, its initial coin offering was one of the longest and most profitable in history, raking in a record $4 billion or so in investor funds through crowdsourcing efforts lasting a year. EOS offers a delegated proof-of-stake the mechanism which it hopes to be able to offer scalability beyond its competitors. EOS consists of EOS.IO, similar to the operating system of a computer and acting as the blockchain network for the digital currency, as well as EOS coins. EOS is also revolutionary because of its lack of a mining mechanism to produce coins. Instead, block producers generate blocks and are rewarded in EOS tokens based on their production rates. EOS includes a complex system of rules to govern this process, with the idea being that the network will ultimately be more democratic and decentralized than those of other cryptocurrencies. As of Jan. 8, 2020, EOS had a market cap of $2.7 billion and a per token value of $2.85.

9. Bitcoin SV (BSV)

                                                       

Bitcoin SV (BSV), with "SV" in this case standing for "Satoshi Vision," is a hard fork of Bitcoin Cash. In this sense, BSV is a fork of the original Bitcoin network. A planned network upgrade for November of 2018 resulted in a protracted debate between mining and developing factions in the BCH community, leading to a hard fork and the creation of BSV. Developers of Bitcoin SV suggest that this cryptocurrency restores Bitcoin developer Satoshi Nakamoto's original protocol, while also allowing for new developments to increase stability and to allow for scalability. Bitcoin SV developers also prioritize security and fast transaction processing times.

10. Binance Coin (BNB)

Coin (BNB) is the official badge of the Binance digital currency trade stage. Established in 2017, Binance has immediately ascended to turn into the biggest trade of its sort all around as far as the general exchanging volume. The Binance Coin token permits Binance clients to exchange many distinctive digital currencies proficiently on the Binance stage. BNB is utilized to encourage exchange charges on the trade and can likewise be utilized to pay for specific merchandise and ventures, including travel expenses and that's only the tip of the iceberg.

-How safe are cryptocurrencies?

Some of the biggest cryptocurrencies have been around for almost a decade, but it is only over the last couple of years that they have started to go mainstream. At the end of 2017, the crypto frenzy reached a fever pitch. The price of Bitcoin reached almost $20,000 in mid-December, with more people than ever buying their share. In the following months, media interest in cryptocurrencies continued to soar despite falling prices. Stories continued to emerge which called into question their legitimacy.
The evident volatility of cryptocurrencies, even over such a short period, inevitably begged questions about their reliability as an investment. Meanwhile, large-scale hacks and apparent associations with nefarious activity raised concerns about their security in a more general sense. For those interested in investing in cryptocurrencies, if even on a small scale, it can be difficult to differentiate between sensationalist media coverage and genuine commentary on the state of the industry.
Investing in cryptocurrencies inevitably involves an understanding of the market and, therefore, requires the answers to various questions about just how safe they are.

-Is it safe to invest in Cryptocurrency?

In short, there is no such thing as a safe investment. There are certainly some investments that are safer than others, but for the most part, any investment has an element of risk. The volatility with which cryptocurrencies have fluctuated over the last 12 months certainly evidences a higher risk of loss, but it is also what has made them such a lucrative investment for so many people. Buying and selling cryptocurrencies does not have to be a high-risk activity if the trader understands the marketplace and is responsible for the way that they invest. 

-Advantages and disadvantages of cryptocurrency

Advantages of Cryptocurrency :

1.   Protection from inflation –
Inflation has caused many currencies to get their value declined with time. Almost every cryptocurrency, at the time of its launch, is released with a fixed amount. The source code specifies the amount of any coin; like, there are only 21 million Bitcoins released in the world. So, as the demand increases, its value will increase which will keep up with the market and, in the long run, prevent inflation.

2.  Self-governed and managed –
Governance and maintenance of any currency is a major factor for its development. The cryptocurrency transactions are stored by developers/miners on their hardware, and they get the transaction fee as a reward for doing so. Since the miners are getting paid for it, they keep transaction records accurate and up-to-date, keeping the integrity of the cryptocurrency and the records decentralized.

3.     Secure and private –

        Privacy and security has always been a major concern for cryptocurrencies. The blockchain ledger is based on different mathematical puzzles, which are hard to decode. This makes a cryptocurrency more secure than ordinary electronic transactions. Cryptocurrencies, for better security and privacy, use pseudonyms that are unconnected to any user, account, or stored data that could be linked to a profile.

4.     Currency exchanges can be done easily –

       Cryptocurrency can be bought using many currencies like the US dollar, European euro, British pound, Indian rupee, or Japanese yen. With the help of different cryptocurrency wallets and exchanges, one currency can be converted into the other by trading in cryptocurrency, across different wallets, and with minimal transaction fees.

5.   Decentralized –
A major pro of cryptocurrency is that they are mainly decentralized. A lot of cryptocurrencies are controlled by the developers using it and the people who have a significant amount of the coin, or by an organization to develop it before it is released into the market. The decentralization helps keep the currency monopoly free and in check so that no one organization can determine the flow and the value of the coin, which, in turn, will keep it stable and secure, unlike fiat currencies which are controlled by the government.

6.     Cost-effective mode of transaction –
One of the major uses of cryptocurrencies is to send money across borders. With the help of cryptocurrency, the transaction fees paid by a user is reduced to a negligible or zero amount. It does so by eliminating the need for third parties, like VISA or PayPal, to verify a transaction. This removes the need to pay any extra transaction fees.

7.     A fast way to transfer funds –
Cryptocurrencies have always kept itself as an optimal solution for transactions. Transactions, whether international or domestic in cryptocurrencies, are lightning-fast. This is because the verification requires very little time to process as there are very few barriers to cross.

  Disadvantages of Cryptocurrency :

1.   Can be used for illegal transactions –
Since the privacy and security of cryptocurrency transactions are high, it’s hard for the government to track down any user by their wallet address or keep tabs on their data. Bitcoin has been used as a mode of exchanging money in a lot of illegal deals in the past, such as buying drugs on the dark web. Cryptocurrencies are also used by some to convert their illicitly obtained money through a clean intermediary, to hide its source.

2.   Data losses can cause financial losses –
The developers wanted to create virtually untraceable source code, strong hacking defenses, and impenetrable authentication protocols.

This would make it safer to put money in cryptocurrencies than physical cash or bank vaults. But if any user loses the private key to their wallet, there’s no getting it back. The wallet will remain locked away along with the number of coins inside it. This will result in the financial loss of the user.

3.   Decentralized but still operated by some organization –
The cryptocurrencies are known for its feature of being decentralized. But, the flow and amount of some currencies in the market are still controlled by their creators and some organizations. These holders can manipulate the coin for large swings in its price. Even hugely traded coins are susceptible to these manipulations like Bitcoin, whose value doubled several times in 2017.

4.     Some coins are not available in other fiat currencies –
Some cryptocurrencies can only be traded in one or a few fiat currencies. This forces the user to convert these currencies into one of the major currencies, like Bitcoin or Ethereum first and then through other exchanges, to their desired currency. This applies to only a few cryptocurrencies. By doing this, the extra transaction fees are added in the process, costing unnecessary money.

5.     Adverse Effects of mining on the environment –
Mining cryptocurrencies require a lot of computational power and electricity input, making it highly energy-intensive. The biggest culprit in this is Bitcoin. Mining Bitcoin requires advanced computers and a lot of energy. It cannot be done on ordinary computers. Major Bitcoin miners are in countries like China that use coal to produce electricity. This has increased China’s carbon footprint tremendously.

6.     Susceptible to hacks –
Although cryptocurrencies are very secure, exchanges are not that secure. Most exchanges store the wallet data of users to operate their user ID properly. This data can be stolen by hackers, giving them access to a lot of accounts.