What is Cryptocurrency? Is It Accepted Globally?
Money is an ancient technology and is almost as old as language itself. Back in the day, before the introduction of money, all transactions were done with the barter system as products and services were not quite complex. For instance, a farmer who grew vegetables could exchange a reasonable quantity of it with wool from a Shepard. With the introduction of precious metal coins as currency, the barter system eventually faded out, and so did precious metal coins with the adoption of paper currency notes. With the advent of new technology, the older systems phase out giving way for new ones.
Cryptocurrency is a digital asset that is based on a network that uses strong cryptographic encryption techniques for carrying out secure financial transactions and is distributed across a large number of computers. Most cryptocurrencies employ decentralized networks based on blockchain technology which means every new block generated must be verified by each node before being confirmed. Simply put, a cryptocurrency is a virtual currency that is secured by nearly impossible to counterfeit cryptography.
Besides being the most secure way to conduct a transaction, it also happens to attract the lowest transaction costs, the prime reason for which is its decentralized system. Unlike conventional centralized systems used by banks, cryptocurrencies make use of each of the nodes to confirm the transaction. The conventional system can also be referred to as master-slave architecture in which the bank is the center of power, hence the master and all users are slaves whereas, in decentralized cryptocurrencies, each node is equipped with equal access to all financial services.
We humans are not exactly fond of change though. Despite the benefits of using a newer system, mass adoption takes a while. Did you know that until 1933, each dollar could be redeemed in gold? Did you know all Americans were required to turn in their gold on or before May 1, 1933, to the Federal Reserve in return for $20.67 of paper money per troy ounce? Yes, it was made illegal to own and trade gold by Executive Order 6102 by President Franklin D. Roosevelt whereas the gold standard was suspended in Britain on September 21, 1931. Many speculate that a similar blow from the government could happen anytime in the future since fiat currencies that are controlled by the government. Cryptocurrencies are global and will not be affected by decisions made by the government of one country or the other.
Currently, there are several thousand cryptocurrencies, Bitcoin, Litecoin, and Ethereum are the most popular ones. Check out this infographic by Total Processing to learn more about other advantages of cryptocurrencies.
This infographic originally appeared on TotalProcessing.com. Republished with permission.
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