What are Cryptocurrencies?

What are Cryptocurrencies?
Cryptocurrency is a digital or virtual currency that aims at decentralized, transparent, and secure
transactions. Cryptocurrencies run on cryptographic systems and use blockchain technology.
Blockchain technology assembles the data in a ledger, which is distributed within the network to
make the data unalterable and protected.
This ledger makes all your payments traceable. It enables peer-to-peer transactions with third-
party involvement, from anywhere to anyone.
Types of Cryptocurrencies
There are many cryptocurrencies available in the market with different functions and
specifications. Bitcoin is the first cryptocurrency. The fame and success of Bitcoin inspired
researchers and developers to discover additional cryptocurrencies.
The new ones came as Altcoins. Some Altcoins were created by forking Bitcoins, while others
evolved from scratches, such as Ethereum, Solana, Cardona, etc.

Some of the famous and most commonly known cryptocurrencies are listed
below:-
1. Bitcoin
The oldest and the most popular cryptocurrency is Bitcoin. Bitcoin was created by an individual
or a group of individuals, Satoshi Nakamoto, in the year 2008.
2. Ethereum
It is the second most popular cryptocurrency. It was brought in the year 2015. Ethereum was
constructed on its own blockchain and its cryptocurrency was named Ether (ETH).
3. Litecoin
This is similar to Bitcoin, including faster payments and processes to allow more than just
cryptocurrency transactions.
Advantages and Disadvantages
Cryptocurrencies can revolutionize the financial sector. It can capably withdraw the chaos of
banks and ATMs.
Cryptocurrency can deal with the issues faced due to physical cash in a revolutionized manner. It
can reduce counterfeits and illegal money hoardings.
ADVANTAGES
1. Security
Cryptocurrency works on blockchain technology which provides unalterable and secure data. The
distributed ledger saved in multiple systems in the form of encrypted codes ensures the security
and privacy of the users.
Cryptocurrency is stored in digital wallets, which are secured by strong cryptographic keys.
2. Economic
Cryptocurrency will reduce the cost of national and cross-border transactions. This can be a boon
for citizens and migrants, as there is no limit to the number of transactions, and you have 24*7
access to it.

3. Fast transactions
The blockchain technology used in cryptocurrency can enable lightning-fast transactions.
International transactions also take place at a very high speed.
4. Transparency-
As cryptocurrencies are decentralized, the system will become more transparent and democratic.
Cryptocurrencies can also reduce counterfeit and illegal money hoardings.
DISADVANTAGES
As cryptocurrency is a growing industry, volatility becomes an inseparable element. Proper
research and knowledge are essential before investing in them. With a diligent understanding of
the market, one can gain good profit.
Storage
Cryptocurrencies are stored in two kinds of wallets:
1. Hot wallet-
Hot wallets are also called software wallets. They are online wallets that are connected to the
internet. As it is connected to the internet, it becomes vulnerable to hacking. The main element
of digital storage is the private key. The private key is something like a password, only accessible
to the owner.
2. Cold wallet-
These are offline wallets or also known as hardware wallets. They are not on the internet. Thus,
cold wallets are more secure.
Conclusion
With the wider acceptance of cryptocurrencies, banks launched CBDCs to reform the financial
sectors. Many countries have fully launched their CBDCs, for instance, China, The Bahamas, and
many more. Inspired by these countries, RBI has also decided to launch CBDC.
JNC.X is discussing every digital asset in detail, you can visit our social media handles and
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Futurists believe that by the year 2030, cryptocurrencies will occupy 25 percent of national
currencies. This signifies that crypto will be a substantial chunk of the world would have faith in
cryptocurrency and will accept it as a mode of transaction.
Cryptocurrency can replace physical currencies soon. Thus cryptocurrencies can be seen as a
modernized form of money.
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