Unless you’ve been living under a rock, you should have seen a certain ‘cryptocurrency’
making headlines. But, do you really know how this new form of fund transfer operates?
Cryptocurrency is an intangible, digital or virtual currency that is controlled by cryptography,
away from the influence of any financial infrastructure. Cryptocurrency is protected from any
kind of miscalculations or fraudulent activities as it is based digitally on decentralised
networks operated by blockchains, or in other words, a vast network of computers that hold
the system together. Cryptocurrency came into light from 2008 when Satoshi Nakamoto
introduced Bitcoin to the world.

This form of digitalized currency was created to facilitate monetary exchange and establish a
secure technology to allow transactions independent of banks or other financial institutions.
“Crypto” refers to the various encryption algorithms and cryptographic techniques that
safeguard online payments, such as the elliptical curve, public-private key pairs and others.
A blockchain is a network of blocks that contain transactions, verified by members of the
network. These blockchains or ledgers protect and verify the transactions.

Different types of cryptocurrencies exist in the market, with each having different functions
and specifications. Bitcoin is the most popular and valuable cryptocurrency. As of November
2021, there were over 18.8 million bitcoins out of a total market value of $1.2 trillion. Bitcoin’s
purpose is to send money over the internet. Other famous cryptocurrencies include
Ethereum, which provides protection in installing contracts and applications without
interference of a third party, Litecoin, Ripple etc.

In cryptocurrency, there are coins or tokens that act as value for exchange. These coins can
be exchanged for real money. Through exchanges and crypto apps, money can be
transferred to buy cryptocurrency. Cryptocurrencies can be exchanged for goods and
services, or again converted to money through the exchange or a broker.
Bitcoin, one of the most popular cryptocurrencies

It is important to note that although there are blockchains and algorithms, cryptocurrency is
not protected by official government or monetary authorities. Thus, they are deemed illegal
in many countries, but some put their legality upto debate, allowing some forms of
cryptocurrency officially. The United States of America, European Union countries allow
some form of cryptocurrency as financial instruments, with El Salvador being the only
country to legalise Bitcoin for money transactions. However, many countries like China,
India, Bangladesh and other developing countries have banned cryptocurrency usage.
Cryptocurrency is generated by a complex software process called mining. Bitcoin is
generated by bitcoin mining. It’s to be noted that mining is done digitally, on a computer
screen but does acquire high-tech resources and is done by experts. Computer mining has
also been performed illicitly by hackers, where they hack and generate cryptocurrencies by
using up resources from other computers. It is perhaps cryptocurrency’s greatest
shortcoming, that its anonymity and lack of official involvement have made it a pioneer for
dark websites, hacking and ransomware activities.

Cryptocurrency, as a decentralised digital platform, promises to allow easier fund transfer
without the involvement of third parties. These transfers also have additional security of
public, private keys and incentive systems such as proof of work or proof of stake. Such fast,
efficient transfer will make it noteworthy for the future, experts say. In international fund
transfers, Bitcoin can serve as intermediate currencies, where currency can be converted to
cryptocurrency and transferred. Nevertheless, it will have its legal boundaries for doing so at
the moment.

Cryptocurrencies are volatile and fluctuate rapidly.
Although cryptocurrency transactions are anonymous, they can still be tracked by
investigating agencies like the Federal Bureau of Investigation (FBI). Investments in
cryptocurrency can generate both high profits and losses, as it fluctuates constantly. In
December 2017, Bitcoin’s value skyrocketed to $17,000 but surged to below $7,000 in the
following months. As stated before, cryptocurrencies are often misused by hackers.
In conclusion, Cryptocurrencies are digital assets and decentralised systems that allow for
secure online payments. Although cryptocurrency is still under development and is not
deemed legal by most governments, it should prove to be the new paradigm and medium for
money in future times.

Written by – Khandaker Tahsib Faiyaz
Edited by – Faiza nooren