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Deep Dive into Fintech: What is Cryptocurrency

Deep Dive into Fintech: What is Cryptocurrency

Welcome to our second part article on a deep dive into Fintech. Today, our topic is Cryptocurrencies and if you go on the web, it seems like everyone knows what it is and everyone seems in on it. But do they really? Keep reading to learn more about what is Cryptocurrency!

Cryptocurrency is short for Cryptographic currency

Cryptography means the art of writing codes. Codes are cryptic because they need to be understood and cryptographic currencies refer to a currency made through writing codes! The first cryptocurrency to go viral was Bitcoin made by Satoshi Nakamoto. It is currency without a physical form, so it doesn’t have any bills or coins, but it can be accessed through the internet and spent like liquid money.

How many types of Cryptocurrencies are there?

There are thousands of cryptocurrencies nowadays, but the few popular ones are Bitcoin, Ethereum, Litecoin, and Z-cash

How do they work differently from normal online payments?

In a normal payment structure, when you make an online payment it goes to a bank which keeps a record of all the transactions happening between these two parties and makes sure that a transaction doesn’t happen twice, is legal, and the party sending the money has enough funds to send. So, in this process, you need a middle party like the bank to keep record and make sure nothing suspicious happens. 

In cryptocurrencies, however, no intermediaries are required. If you remember our previous article about Blockchains, they use a peer-to-peer method where each party has to confirm that the new block of information made is correct and verifies with everyone else. This system is used by cryptocurrencies as well. Rather than a bank confirming and verifying information, blockchains do it by sending information into the network and confirming with everything when a new blockchain is made. This is why they are called deregulated currencies, because they do not need a regulatory body.

Other benefits of Cryptocurrencies?

Little to no transaction costs

You must know that it takes a certain fee for you to do an online transaction or fund transfer whether you do it through a bank or an online wallet. However, it takes zero or close to zero fees for you to do transactions in cryptocurrencies. This makes a more economical option for people to use

Greater access for people

You can’t go to your bank at 2am, can you? But you can do your transactions with cryptocurrencies at any time of the day. Plus, there is no limit to how many transactions you can do or withdrawals. There is an unlimited number of things you can do with crypto, which also opens it up to anyone for use. You don’t have to fill out any paper forms and wait for weeks for your account to exist; all is done is a matter of minutes.

Economical international transfers

In this day and age, there are many people working for companies far away from where they live. It is the age of remote work and that means people need to be compensated for their work through digital transactions, but when these are international, they tend to incur higher fees. Cryptocurrency solves this problem with little to no fees for such transactions and allows for companies like to pay and get paid easily.