An Introduction to Cryptocurrency
A Cryptocurrency, or Cryptocurrency, is any digital currency designed to function as a medium of exchange where only unchangeable private key codes are needed. This public key cryptography is achieved via an algorithm-based process where keys are generated on demand by users and stored on a distributed database. A number of Cryptocurrencies are available and include Dash, LTC, Doge, Monero, Zcash, and PIVX. These cryptosystems are not governed by any governing body; however, most rely on user mined parameters.
A number of applications currently exist for the Cryptocurrency industry, including Distributed Ledger Technology (DLT), which is an application that allows for the execution of currency transactions over a peer-to-peer network without requiring the involvement of a centralised administrator. The other most popular Cryptocurrency used in the industry is the bitcoin ledger software, also known as the bitcoin protocol. This is achieved through a system of decentralised servers called nodes. This type of Cryptocurrency utilises peer-to-peer technology, with each participating user ensuring that their computer is continuously online and is connected to the rest of the network through a secure Ethernet cable or wireline. This method protects users’ privacy, as there is no system within which any information can be stored, or else it would have to be copied onto every computer on the system. In addition, the use of cryptography allows for a degree of privacy protection through the use of the bitcoin wallet.
A major concern that some people have about Cryptocurrency is that someone could take control of the supply of coins leading to hyperinflation. This is a valid concern because if the supply increases more than the supply needs to balance out, the economy will crumble. However, even though there is no physical supply, Cryptocurrency is still subject to the laws of economics. Any increase in value created by Cryptocurrency will impact market prices, and this is known as an inflationary effect. With that being said, most experts within the industry maintain that as long as proper precautions are taken, an increase in value is highly unlikely, thus Cryptocurrencies can be used as an economic hedging mechanism.