CRYPTOCURRENCY – What exactly is it?

Simply speaking “ a form of digital money that uses codes is cryptocurrency”. In recent past , the digital cash like credit cards, debit cards, master cards took a hike in economic sector ever since it ever evolved at late 2000. Banks, shopping malls, money exchange counters were the proprietary body that specifically transacted through the use of digital cash. However though the governing body were the banks even they found that customers could double spend the same amount twice and this exposed to risk of fraud and breach of financial security. Crypto currency allows money to transfer faster and costs much cheaper compared to other conventional methods. One of them is decentralized method that deploys blockchain technology. The history of transaction of a single user is stored in a block. These blocks share the records of financial transactions of every user and are mounted on a chain of other blocks.

A blockchain is universal digital book or an online ledger. The information inside the blockchain database is truly public and shared all over the internet. To hold access to the database, a user must realize some specific conditions called a private and a public key. Your bank account, money, and your transactions is a spreadsheet of a database on the internet. This data is stored in a ledger that has a network of servers called nodes, to keep track of your money. The block chain preserves every transaction in the ledger and shares the details with several other users. It renders the Bitcoin users a form of proof-of-work or simply they trust their counterpart.

Usually, a decentralized network does not have a central authority. Therefore, a cryptocurrency needs some mechanism to prevent anyone from using it. Though the status of digital currencies and commodities are the future of the financial world, they are still in an experimental phase. Nepal Rastra Bank has already made it clear in its notice dated August 13, 2017 that all transactions related to or regarding Bitcoins are illegal. However the fact remains that there is no foreign central authority to regulate them.

Bitcoin is a decentralized digital currency that is traded from one individual to the other, not through banks. It has no issuing or regulating country, and these bitcoins are converted into US dollars simply because dollars are used as an international exchange rate. Our economy is volatile by nature, so we are not able to handle the flow of crypto currencies yet. But then why not try to regulate it? Our existing money related laws constrict the outward flow of money from the country. Besides bitcoins there are other huge possibilities in the world of digital currency. Litecoin, Dogecoin, Ethereum, Basic Attention tokens(BAT), NEO, Ripple XRP(USED JUST LIKE SWIFT for money transfers by banks),Stellar, Cardano are other form of cryptocurrencies that have had global recognition.

Let us not look towards dim side just because we don’t have the regulations in the world of financial market there are plethora of options to be part of digital world. Nepal could be one of them … it is a possibility that needs considerations in the scenario of rapid changes in markets of global economy.

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Colleges Nepal is an educational and entertainment portal. It also publishes a monthly English magazine.

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