Intern Id: 170002 Intern Name: Sumit Kumar

Cryptocurrencies

Abstract:
Cryptocurrencies have emerged as the most successful digital asset in history. It
has been a hot topic over the last few years, with hundreds of alternative coins in
existence attracting attention from investors.
Currently, digital currency schemes are not widely used or accepted, and they
face series of challenges that could limit their future growth. In this we are going
to describe these challenges and benefits.

Introduction:
A cryptocurrency is a digital asset designed to work as a medium of exchange that
uses cryptography to secure its transaction, to control the creation of additional
units and to verify the transfer of assets. Cryptocurrencies use decentralized
control as opposed to centralized electronic money and central banking system.
The decentralized control of each cryptocurrency works through a blockchain,
which is a public transaction database, functioning as a distributed ledger.

Evolution:
While Bitcoin was first created by Satoshi Nakamoto in 2009, there are numerous
types of competing cryptocurrencies like PPCoin, Litecoin, Ethereum, Zcash, Dash,
Ripple, and Monero.
These digital currencies are assets with their value determined by supply and
demand, similar in concept to commodities such as gold. However, in contrast to
commodities, they have zero intrinsic value. Unlike traditional e-money, they are
not liability of any individual or institution, nor are they backed by any authority.
As a result, their value relies only on the belief that they might be exchanged for
other goods or services, or a certain amount of sovereign currency, at a later
point in time.
Intern Id: 170002 Intern Name: Sumit Kumar

The validity of each cryptocurrency’s coin is provided by blockchain. A blockchain

is a continuously growing list of records, called blocks, which are linked and
secured using cryptography. Each block typically contains a hash pointer as a link
to previous block, a timestamp and transaction data.
The state of the world in cryptocurrency like Bitcoin is represented by a series of
messages called transactions. Among other possibilities, transaction are foremost
published to transfer currency from one user to another.
Right now, Cryptocurrencies mainly the Bitcoins are attracting a lot of younger
people away from traditional investments. A recent survey in the USA revealed
that 30% of the investors between the age of 18 and 34 would prefer Bitcoin over
company stocks or government bonds.

Risks of investing in Cryptocurrency:

1. Unlike other currencies, there is no precious metal like gold to back up
cryptocurrency, it comes down to math and computers. And there are no
actual physical notes or coins and no central repository. Consequently, since
it is a virtual currency, a backup copy is necessary of all holdings in the event
of a computer crash. Without one, a balance could be irrevocably wiped
out.
2. Wild market fluctuations do occur with cryptocurrencies. So just like any
other volatile market, money can be gained or lost. For example, between
July 1, 2017 and July 27, 2017 Bitcoin has traded (rounded to the nearest
dollar) at a high of $2,832 and a low of $1,868.
3. Theft can occur through hacking. There is a constant battle being waged
between cybersecurity experts and hackers, some call them “White Hats”
and “Black Hats.”
Intern Id: 170002 Intern Name: Sumit Kumar

Benefits of accepting Cryptocurrencies:

1. It is easy and secure to transfer funds between two people or businesses in
a transaction. Public and private keys are used to keep the transaction
secure. Fund transference fees are kept to a bare minimum.
2. The blockchain is an online ledger that can be transferred to all computers
and keeps everyone honest. The ability to verify transactions this way
provides a fairly good level of transparency.

Cryptocurrency Mining:

Mining plays an important in cryptocurrency as that’s the only way to generate

cryptocurrency. Principally everybody can be a miner. Since a decentralized
network has no authority to delegate this task, a cryptocurrency needs some kind
of mechanism to prevent one ruling party from abusing it. Imagine someone
creates thousands of peers and spreads forged transactions. The system would
break immediately.

So, Satoshi set the rule that the miners need to invest some work of their
computers to qualify for this task. In fact, they have to find a hash – a product of a
cryptographic function – that connects the new block with its predecessor. This is
called the Proof-of-Work.

Cryptocurrencies can only be created if miners solve a cryptographic puzzle. Since

the difficulty of this puzzle increases the amount of computer power the whole
miner’s invest, there is only a specific amount of cryptocurrency token that can be
created in a given amount of time. This is part of the consensus no peer in the
network can break.
Intern Id: 170002 Intern Name: Sumit Kumar

Cryptocurrencies: Dawn of a new economy

Mostly due to its revolutionary properties, cryptocurrencies have become a
success their inventor, Satoshi Nakamoto, did not dare to dream of it. While every
other attempt to create a digital cash, system did not attract a critical mass of
users, Bitcoin had something that provoked enthusiasm and fascination.
Sometimes it feels more like religion than technology.

Cryptocurrencies are digital gold. Sound money that is secure from political
influence. Money that promises to preserve and increase its value over time.
Cryptocurrencies are also a fast and comfortable means of payment with a
worldwide scope, and they are private and anonymous enough to serve as a
means of payment for black markets and any other outlawed economic activity.

Future of Cryptocurrencies:

The future of cryptocurrency looks increasingly better every year since 2013. On
one hand, the entire global financial system is becoming increasingly digitized; on
another, minting paper and coins is an expensive process that may one day
become obsolete. Also, people are using the internet more and more for retail
purchasing and someone has to provide the ways of transferring the money.

Overall, cryptocurrencies have a long way to go before they can replace credit
cards and traditional currencies as a tool for global commerce. Many people are
still unaware of cryptocurrency and need to be educated about it to be able to
apply it to their lives. Businesses need to start accepting it. They need to make it
easier to sign up and get started.