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Amid Bitcoin mania, Business Standard explains everything that you need to know about cryptocurrencies, Bitcoin mining, cryptocurrency exchanges, how cryptocurrencies came into being, the blockchain technology, among other things:
What is a crpytocurrency?
Cryptocurrencies like Bitcoin, essentially, are digital currencies. But, they are like gold in more ways than one. Like gold, cryptocurrencies have to be mined. They do not have a central issuing authority, so they are deregulated currencies. Simply put, there is no central bank that decides when and how many more cryptocurrencies should be produced.
How did cryptocurrencies originate?
Cryptocurrencies came into existence somewhere around 2009, leveraging the blockchain technology. Blockchain is a decentralised global ledger account that keeps a record of every cryptocurrency transaction. It has a number of replicated databases visible to all people within the network. Blockchain is to cryptocurrency what the internet is to e-mail, according to a Financial Times technology report by Sally Davies. The Institute for Development and Research in Banking Technology, an arm of the Reserve Bank of India, has also recommended adopting blockchain for the banking system.
What about Bitcoin?
Bitcoin is one of the most popular among over 1,300 digital cryptocurrencies currencies in existence today. In 2008, Satoshi Nakamoto, a pseudonym used by a person or a group of persons, published a white paper titled ‘Bitcoin: A Peer-to-Peer Electronic Cash System’. It was meant to enable online payments to be sent directly from one person to another without going through a financial institution.
What are cryptocurrency exchanges?
Cryptocurrency exchanges are a platform for facilitating the exchange of cryptocurrencies in return for another currency, including fiat currencies like the rupee or dollar. After creating an account, a unique digital wallet is given to investors to store cryptocurrencies. In India, the major exchanges are Coinsecure, Zebpay, Unocoin, Koinex, Coindelta, BuyUcoin, Bitxoxo, among others.