In this article “Cryptocurrency- Explained in simple terms ” ,we are going to delve into the basics of cryptocurrency.
Cryptocurrency is a form of digital currency or virtual currency, that functions with the help of cryptography.It is a decentralized currency, which means that Cryptocurrency cannot be manipulated by any government.
The main advantages of cryptocurrency are :
1. Nearly impossible to counterfeit or double spend because of blockchain technology.
2. Since it is based on decentralized network, government cannot interfere or manipulate with it.
3. Removes third party and their fees.
Some of the disadvantages of cryptocurrency are:
1. Money laundering and other criminal activities
2. Cryptocurrency are pseudonymous ,which means authorities can actually track financial transactions by following digital trails.
3. Becoming highly centralised,in the sense that big companies are holding majority of cryptocurrency in hopes of future price appreciation.
4. Even though cryptocurrency blockchain technology is highly secure,but off chain crypto related repositories like exchanges and wallets can be hacked.
Types of cryptocurrency
Cryptocurrency can be classified into different types based on its purpose. Lets discuss some of the different types of cryptocurrency :
1. Utility:XRP and ETH are examples of utility tokens.They serve specific functions on their respective blockchain.
2. Transactional:Bitcoin is an example of transactional tokens.They serve as payment methods.
3. Governance:Uniswap is an example of Governance tokens.They represent voting rights etc on a blockchain.
Let us answer some common questions regarding cryptocurrency.
1. Is Cryptocurrency legal?
The legality of cryptocurrency depends upon the jurisdiction. For example,in China the cryptocurrencies are illegal. In India,cryptocurrency is neither regulated nor banned.Hence making cryptocurrency legal in India.In El Salvador, Bitcoin was made legal tender. In USA,cryptocurrency is legal and regulated.
2. What is the difference between fiat currency and cryptocurrency?
Fiat currency is issued by the government or any monetary authority, hence making it centralised legal tender. While cryptocurrency is not issued by any government or monetary authority, it is based on a decentralized network.
3. Is Cryptocurrency a legal tender?
It depends on the jurisdiction whether cryptocurrency is a legal tender or not.The only country where cryptocurrency(Bitcoin)is legal tender is El Salvador. In most other countries cryptocurrency is seen as property or assets.
If you want to learn about IPR laws ,then visit https://lawtract.com/google-books-copyright-case/
Want to learn more about cryptocurrency, then visit https://en.m.wikipedia.org/wiki/Cryptocurrency
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