Cryptocurrency is a medium of trade that uses cryptography to insure financial transactions and to authenticate the transfer of financial assets. The main objective of cryptography is to secure communications. Information and data streams are encrypted to ensure limited access. Cryptocurrency is a variant of digital currency such as the xmr wallet which uses a decentralized system. The systems used in traditional commerce had a central control hub.
How it works
The decentralized system applies the peer-to-peer (p2p) network technology. In a p2p network, each peer has equal access to the transaction database. Each transaction made is broadcast to all the other peer computers in the network. The history of a particular transaction becomes public to all the other peers once it has been verified. The cumulative history of financial transactions in the p2p network forms a public ledger. Since the ledger can easily be accessed by each computer in the network, the financial registry is, therefore, completely public. This makes it difficult for anyone to interfere with transaction records. This is an advantage over centralized financial systems where records can be abused or manipulated by whoever is in control.
What is blockchain technology?
The continuous string of transaction records forms the all famous block chain. The block chain stores identical information across the network. It is not controlled by a single server and failure cannot arise from just a single point. A block chain network has an ingrained consensus algorithm that has the capability of auditing itself over short periods of time. Theoretically, it would take an awful lot of computing power to override the system to alter even a single record. Block chain technology provides a reliable solution to the problem of financial manipulation especially in countries battling graft; both in government and central banking systems.
Implications on world commerce
Cryptocurrency is free of bureaucracy and pledges to maintain and appreciate its value with time. However, its privacy and the anonymity of its users makes it favorable for scammers and illegal enterprise. Cryptocurrency was initially intended to be a payment service, but now it is mostly used for investment. Its use as a medium of storing wealth has overshadowed its primary function as a payment service. Some cryptocurrencies have recorded trade volumes higher than that of major Stock exchanges in Europe.Nevertheless, the value of cryptocurrency is also highly volatile. Its value may appreciate by 10% today and depreciate by 100% tomorrow.
The cryptocurrency market is robust and rapidly growing. It is also dirty and fast evolving. New crypto brands pop-upevery day. Many do not make it through the first few monthsdue to market volatility and the influence of speculators. Its only sound to predict that in the next few years, business protocol will be overtaken by emerging cryptocurrencies like Monero wallet. Business moguls will be able to move any amount of money instantly and without any fee. Other companies will adopt cryptocurrency because of its block chain technology for its seamless non-partisan audits, transparency and security.