Do you know why money transactions happen for every item we buy, and why it all started?
Hi! I’m Priyanka, today I will walk you through the story of transactions, their evolution, and why we all are frequently listening to the word crypto in our day-to-day conversations.
The story of Transaction?
In the early days of human evolution, people used a popular method called Barter System to get the required essentials from the person who owns it. In the Barter system, people exchange the goods they have and the goods they require among themselves without using the monetary medium.
Let’s understand it simply, If a person X has 5 gold coins with him and a person Y has 5 silver coins with him. Now person X needs 5 silver coins and the Person Y has it. So, after talking to each other about the requirement, Person X and Person Y exchanged the coins among them. Now, Person X has 5 silver coins and the Person Y has 5 gold coins. But wait, Is the value of 5 gold coins equal to 5 silver coins?
This is the major disadvantage of the barter system. We couldn’t estimate the correct value of any item through this system, and also the probability of coinciding with the needs of two persons is very less.
To overcome the barter system, a monetary medium is introduced. The evolution of this method of trading goods has also gone through several changes from the day it started to the present day.
As per the history of money,
- In 1000 B.C, The first metal coin was developed using base metals.
- In 500 B.C, stamped coins were made from precious metals.
- In 118 B.C, The first banknote was printed using leather.
- In 700–800 A.D, China started using banknotes for trading items.
- In 1816 A.D, Banknotes are tied to the value of gold. The mean, The standard of money, is measured to gold.
- In the present, we are transformed from physical monetary exchange to digital transactions.
Wow!! That’s a roller coaster journey of the currency which we are using in the present day. But what is the future of currency? Any guesses?
I guess some of you guessed it right, yes it’s cryptocurrency. Cryptocurrency became a new trend in the present day. It’s high time that every one of us understands crypto and how it works?
Cryptocurrency is a virtual currency secured by cryptography. In the present day, the transactions we made are centralized by financial institutions. But whereas crypto is a step towards a decentralized currency. The network we use for Cryptocurrency transactions are crypto networks, and it is immutable. This immutable feature of the crypto makes the transactions very safe and secure. It is impossible to manipulate the data which was stored in these networks.
The technology used by this virtual currency is Blockchain technology. Blockchain is a digitalized public ledger where users constantly add data. The simple way to understand this technology is to add a new block of transaction information to the existing transaction history blocks. To add these blocks of information to the crypto network, it takes to solve complicated codes of cryptography and to manage that hefty computer networks and a lot of electricity have been used.
These crypto networks and blockchain technology make cryptocurrency a future trading method for any requirement. Since we have different currencies existing in the present day, the same goes with crypto also. Cryptocurrencies have a lot of different currencies in them. But types of cryptocurrencies are not differentiated based on the nation, they are differentiated based on the function. Some popular cryptocurrencies are :
(i) Bitcoin
(ii) Ethereum
(iii) Litecoin
(iv) Cardano
(v) Polka-dot
(vi) Bitcoin cash
(vii) Stellar
(viii) Dogecoin
(xi) Binance coin and many more…
Every currency has its functionality and in recent times Bitcoin has stolen the attention of many investors, I will discuss that in the next article. Some cryptocurrencies have a maximum limit of mining in the market. Like for bitcoin, 21 million bitcoins are the limit.
The major advantage of cryptocurrency is that transactions are safe and secure. Crypto transactions are cheaper and faster also they use decentralized systems that do not collapse to a single point.
Crypto transaction has their disadvantages. The major disadvantage is no third party is involved in the transaction process. This feature can be exploited by criminals for proceeding with different illegal activities. A lot of energy is consumed for mining activities. If these disadvantages are eliminated from cryptocurrency trading, then we can confidently say that
“Our future is encrypted by Crypto”
Thank you!
Have a nice day :)
