What is Cryptocurrency! Let us develop our insights!

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8 November 2016 is when our Prime Minister, Shri Narendra Damodar Das Modi declared demonetization where the old 500 and 1000 rupee notes were no more valid for transacting. Now, let us imagine a situation, where we did not abide by the declaration and continued using the notes among ourselves. What would have been the situation? In this case, we would have been running a parallel economy where there was no or rare involvement of the banks. This means despite being an invalid note if we transacted among us and agreed to work upon it as a decision among the citizens, nothing would stop us from using it.

 

Assume out of the 100 crores, we have 50 crore population agreeing to use and work for the old notes. The situation would have n=been running a parallel economy in itself because the probability of finding a doctor farmer nurse teacher is high in this half of the population. So the transaction would have m=been between or among us. The whole topic says the currency is the thing which our usage gives value to.

 

Moving ahead towards cryptocurrency, back in 2008 US had an economic crisis where due to the default failure in loan returns the US banks were bankrupted and thus the value of US dollar fell down to value. So, the citizens faced the problem and were resentful about the loss they have incurred without their fault. So this led to cryptocurrency which constitutes cryptography and currency. This technique is completely digitalized and online or internet based. This involved encryption and decryption technique. The system of cryptocurrency then was called as bitcoins.

 

This system of bitcoins is gained by having the consensus of huge demography. The theme upon which it is based is called cryptocurrency and the technology it uses is blockchain technology. The cryptocurrency also provides major freedom in case of transfer.

 

This is a system where there exists no centralized authority; blockchain technology is the one where it ensures that the data of the database is distributed over a wide range of network so that mishandling at one place can be cross verified at other systems. This help is avoiding mistrust among the agreed population and thereby providing a strong base for this form of parallel economy. Normally if a bank's database is lost to a situation from where it cannot be recovered, then people investing in the bank and having their money in their saving accounts can get nullified thus causing a huge problem to the population. Cryptocurrency does not have any such central authority and thus, provides transparency. so to summarise the whole thing, this theme is digitally challenged, cryptographically secured, easy peer to peer transfer and mutual trusts, decentralized and also provides anonymously form of parallel economy.

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