We have heard about the term “Cryptocurrency”, which is blooming in the investment market today. The digital currency is taking the world to a new direction. According to a market research company, around 13,000 different cryptocurrencies exist in the market. Different countries have their different opinions on crypto-currency.
Short and Long Paragraphs on Cryptocurrency in English
Here, I’m presenting short and long paragraphs on Cryptocurrency so that you can understand all aspects of this topic. I have tried to keep language very simple so that kids can also grasp this important topic easily.
Paragraph 1 - 100 Words (What is Cryptocurrency?)
Cryptocurrency is a virtual currency, which means it does not exist physically like an Indian currency. It can be used as a medium of online exchange. The word “Cryptocurrency” is derived from the technique which is used to encrypt the network. There are two ways to gain crypto-currency. First by online investing, secondly, by mining crypto currency.
Various countries have accepted crypto-currency as legal tender whereas some countries had banned and considered crypto as illegal.However, the rules for cryptocurrency are not very clear in India, hence investing could be risky. Although crypto is legal but is not accepted as a legal tender in India.
Paragraph 2 - 120 Words (History of Cryptocurrency)
This word “Cryptocurrency” was added in the Merriam-Webster Dictionary in March 2018. Although, the roots of Crypto-currency is not new in the world.
In 1983, an electronic cash system by the name “ecash” was developed by David Chaum. B-money and Bit Gold are the two examples of online currencies which were attempted to be built before Bitcoin. Although it was never fully developed.
Wei Dai in 1998, published the description of the electronic cash system “B-money”. Soon after, Bit Gold was developed by Nick Szabo. It introduced the concept of Proof-of-Work on which various cryptocurrencies are currently working.
The first cryptocurrency, Bitcoin was developed in 2009, by Satoshi Nakamoto (anonymous identity). By 2011, various altcoins started to grow. Namecoin and Litecoin were developed this year.
Paragraph 3 - 150 Words (Some Famous Cryptocurrencies)
The demand and supply are responsible for the fluctuating prices of crypto in the market. Since the prices are quite high for the ordinary people, the crypto investors can buy stakes in fractions. Unlike share market, they can even buy very small amount of crypto at a time. Some famous Cryptocurrencies are given below:
- Bitcoin (BTC): Bitcoin is the first crypto-currency developed in 2009.It is one of the famous cryptocurrencies.It also makes use of Blockchain technology.
- Ethereum (ETC): Vitalik Buterin created Ethereum in 2013. In terms of market capitalization, Ethereum or simply Ether stood second after Bitcoin. Ethereum 2.0, an upgraded series of Ethereum is also implemented.
- Dogecoin (DOGE): Billy Marcus and Jackson Palmer developed Dogecoin. It came in the market in6 December 2013, soon reaching high market capitalization.
- Litecoin (LTC): Charlie Lee, an engineer, created Litecoin in 2011. It provides much faster transactions thus making it a desirable choice for the investors.
Paragraph 4 - 200 Words (Advantages/Disadvantages of Cryptocurrency)
Nowadays, many companies have started taking crypto as a legal means of payments. The investor should have proper knowledge of crypto before making any investments. The crypto-currency is considered as the future currency of the world. It possesses several merits as well as demerits. Therefore, investing in cryptos could be risky if one has incomplete proficiency in this field.
Advantages of Cryptocurrencies
- Fast: The transaction through Crypto-currency is very fast. As no third party is involved in the transaction.
- Saves money: The crypto transactions are much cheaper than the traditional way of transaction.
- Highly Secured: It uses Blockchain technology to store transactional records. Hacking the blockchain data will take more time and power such that gaining details will become useless.
- Decentralized: Crypto-currency is a decentralized system, it does not allow any central body to govern the entire system.
- Ease to International Trade: Since Crypto-currency is not highly recognized, it is free from different charges and interests imposed by some countries.
Disadvantages of Cryptocurrencies
- Irreversible Transaction: There is no option to cancel any transaction. It means the transaction through crypto is irreversible.
- Data Loss: Data loss is a major issue. If someone lost their private key then it would be almost impossible for them to retrieve data.
- Illegal Transaction: Since there is no central authority, it can be used for illegal transactions.
Read Also : 10 Lines on Blockchain
Paragraph 5 - 250 Words (Terms Associated with Cryptocurrency)
The process of crypto-currency generation and maintenance is not a simple job. To provide high security with customer ease is their priority. Since, there is not any centralized community to manipulate the entire functionality, Crypto uses an effective way to check the proper functioning of their system.
The process of extracting new crypto coins using various cryptographic processes and then storing records on the blockchain is termed as crypto mining.
Whenever any investment is done in crypto, the records are needed to be stored in the ledger which is known as Blockchain. However, the transaction is verified by the miners. After verifying, the data is stored in the blockchain with various encryption techniques and the transaction is complete.
The verification requires a competition between various data miners. The crypto miners solve complex mathematical equations in high functioning computers. The miner who completes the task first is rewarded with some fraction of crypto. However, crypto mining is very costly. It requires high functioning computers with high electricity consumption.
Proof-of-Work is a mechanism to safeguard the transactional records of many cryptocurrencies.
However, the results generated by a data miner are needed to be verified by other data miners. The process of data mining is time consuming but the process of validating the results is quite simple. This process of verifying the results is termed as PoW, after which the data miner is given some part of crypto as a reward.
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FAQs: Frequently Asked Questions on Cryptocurrency
Ans. El-Salvador (a country in Central America) is the first country to accept Cryptocurrency as legal tender.
Ans. It depends on whether you are using legal means to extract it and your location. Because crypto mining is not allowed in some countries like China, Egypt, Nepal, Pakistan, etc.
Ans. Some famous applications which would be helpful for investors in crypto trading in India include, WazirX, Coinbase, CoinSwitch Kuber, Unocoin, etc.
Ans. Dogecoin, Uniswap, IOTA, Polygon, Tron etc. are some cheaper cryptocurrencies.