What is cryptocurrency?
Cryptocurrency or crypto is a virtual currency or digital currency i.e. which exists and can be traded only through the virtual world. Hence, it has no physical form like cash, gold, diamond, etc. Since, it is a set of data, secured by cryptography (the science of encoding and decoding information) — that's why it's called "cryptocurrency." Crypto works on blockchain technology
What is Blockchain technology behind crypto?
Blockchain technology is the backbone of cryptocurrency algorithms which works in a decentralized channel which means no single participant has control over the network. Every translation via crypto is carried through blockchain technology. Let's understand how it works.
Every transaction is known as a separate block in the crypto network. For every transaction entered into the crypto, at first, the transaction is communicated to all the members i.e. all the blocks of the network and once the transaction is okayed by all the blocks only then it is approved and recorded on the network permanently. Remember that once the transaction is recorded in the network, it can neither be deleted, altered nor modified unless the approval of all the blocks is obtained.
Once a transaction is complete in the network, it becomes a separate block and remains in the network.
The process of recording and approving the transaction in the block as mentioned above is known as mining which is also one of the sources of earning the crypto
How do we get cryptocurrency?
We can have crypto by the following means:
- Purchase through cash or banks like an ordinary purchase of goods or services.
- Accept the crypto as a consideration of goods or services you have sold or rendered.
- By way of mining: Mining involves the process of solving the critical mathematical sums which require a higher level of computer processing. Once you solve the sum, you will be rewarded with crypto. Solving these sums is not easy fruit for all. You may end up with nothing against your huge electricity bill and computer processing cos
How is the crypto getting a high price in a short period?
Let’s take the example of Bitcoin: for this, few factors are contributing more,
- There is a limited number of bitcoins that can be generated i.e. 21 million and demand for bitcoin is increasingly high for no reason but people's expectation of an increase in the price of bitcoin in the future.
- It is being accepted as the payment mode like any other payment tool by countries like the USA, Canada, Australia, European Union, Finland, India, etc.
What is a cryptocurrency used for?
It can be used for a variety of transactions, including investing in startups, negotiating import-export contracts, and even paying utility bills.
In 2020, Paypal announced that it would allow users to hold multiple types of cryptocurrencies on their accounts, and is even looking to allow crypto to be used as a payment option on their many partner websites like eBay.
Who has invented cryptocurrency?
Satoshi Nakamoto, an individual is claimed to have put the first step to design and frame the concept of cryptocurrency by writing a journal named Bitcoin: A Peer-to-Peer Electronic Cash System on bitcoin.org in 2008 (https://bitcoin.org/bitcoin.pdf). However, no other information regarding him is available so far to know further or explore more about him.
Whether investing in cryptocurrency safe against theft?
Since the crypto is operated under the blockchain technology which is known as the safest mode, no threat whatsoever has come to notice till now. Still, the threat against crypto can’t be ignored in the future.
What are the top cryptocurrencies as of now?
Following cryptos is top on the list based on their market capitalization. (https://finance.yahoo.com)
|Cryptocurrency||Price as of March 29, 2021||Market Cap|
|Binance Coin||$273.38||$42.304 billion|
Is cryptocurrency banned in Nepal and why?
As of now, trading/in crypto in Nepal is illegal. The central bank of Nepal NRB has banned the cryptocurrency transaction in Nepal vide its notice dated 13 August 2017.
- Laws of Nepal: As per prevailing laws of Nepal cryptocurrency is neither recognized as goods, services, nor currency. This may be the reason
- Lack of regulations: NRB and Nepal govt are unable to have proper regulation over cryptocurrency transactions, as it’s mostly done over the internet and Nepal doesn’t yet have the technology needed to regulate it, and hence it may be banned.
- Use in illegal activities: Reports of cryptocurrency being used for money laundering or making black money into white by converting into cryptocurrency, among other cases is another reason.