How Cryptocurrency Works? Know About Bitcoin, Mining, Law, Types & Exchanges
Updated: Nov 6, 2021
The first economic transaction in Bitcoin took place on 22nd May 2010, when a Florida man bought two Papa John’s pizzas, valued at $25, by paying 10,000 bitcoins.
Today, the same transaction “would have a value of over $625 million.”
It indicates in which direction cryptos are heading and how they play a significant role in the future.
Bitcoin made a new record high above $66,999 on 20th Oct 2021 after many companies started accepting bitcoin.
A few months back, Elon Musk's Tesla Inc declared a $1.5 billion investment in the world's largest Cryptocurrency. Tesla also said that it would start accepting payments in digital coins for its electric cars.
Table of Contents
List of Cryptocurrencies (by market capitalization)
Whether Cryptocurrency is a Good Investment?
Whether Crypto Trading is Legal?
Important Resources related to Cryptocurrency
Risks associated with Cryptocurrency
What is Cryptocurrency?
Cryptocurrency is a digital currency with no physical presence like a coin or note. Satoshi Nakamoto has developed the first cryptocurrency' bitcoin' in 2009, and many such currencies were born in the last few years.
One can transfer Cryptocurrency to another person without involving an authorized third party like a bank or financial institution. Cryptos are similar to tokens or casino chips, which can be used online to make payments to get goods or services.
These currencies are stored in a digital wallet and backed by Blockchain technology. Blockchain is a method of storing information so that it cannot be changed or hacked from any system.
History of Cryptocurrency
The footprints of Cryptocurrency started in 2008 when a paper titled "Bitcoin: A Peer to Peer Electronic Cash System" was published by Satoshi Nakamoto.
Bitcoin was created during the 2008 economic crisis, where some of the big American banks were bailed out by the government for their reckless financial planning/spending.
Hence a team of developers led by Satoshi created a digital currency that is decentralized (decentralized means there is no single admin, but rather the system maintains a public ledger of transactions that anyone can store on their computer) without the involvement of any banks.
Later many such currencies start to emerge, such as Litecoin, Namecoin, etc. Simultaneously, these currencies also received a lot of criticism as some people used them for illegal transactions and didn't come under any sovereign authority.
Many cryptocurrency exchanges have been formed across the world to facilitate the transaction of these cryptocurrencies.
Bitcoin value started increasing against US Dollar (BTCUSD) in Dec 2017. Its values increased tremendously (from 11K to 41K) when the pandemic situation started impacting the world and currently it is trading above 65K.
List of Cryptocurrencies (by market capitalization)
There are many cryptocurrencies present for trading, and the area of Cryptocurrency is always exploding. There is no wonder if someone releases new digital token tomorrow, and it can become one of the top Cryptocurrency.
As of today (9-Feb-2021), below is the list of top-10 cryptocurrencies in the world.
BTC is the game changer and owns 72% of the market share (market cap is $868 Billion). It also leads the pack in terms of popularity and user base.
ETH is the second largest Cryptocurrency and owns 16.4% of the market share (market cap is $198 Billion). The primary purpose of creating Ethereum is to provide decentralized financial instruments to the entire world.
USDT is the third-largest Cryptocurrency and owns 2.5% of the market share (market cap is $30 Billion). It was launched in 2014, and Tether describes itself as "a blockchain-enabled platform designed to facilitate the use of fiat currencies in a digital manner."
Tether is the first stablecoins, and its price is directly tied to the US dollar. This coin has been built to avoid significant fluctuations in cryptocurrencies.
ADA is the fourth largest Cryptocurrency and owns 1.7% of the market share (market cap is $21 Billion).
ADA is recognized as "Ethereum Killer" as people believe its blockchain technology is more advanced as compared to Ethereum and also co-founded by Charles Hoskinson, who is one of the founding members of Etherum.
DOT is the fourth largest Cryptocurrency and owns 1.7% of the market share (market cap is $21 Billion).
It was created by Gavin Wood, who is also another founding member of Ethereum, and it was famous for its shared security. It allows developers to create new blockchains along with their own security measures.
XRP is the Fifth largest Cryptocurrency and owns 1.6% of the market share (market cap is $19 Billion).
As per Ripple's definition, 'XRP is a native digital asset on the ledger, an open-source, permissionless, decentralized blockchain technology that can settle transactions in 3-5 seconds'.
BNB, LTC, DOGE, LINK
All these cryptocurrencies own a market share between 0.86-1% of the crypto market.
BNB is the payment method for fees in Binance Exchange, which is one of the famous exchanges in Crypto.