Crypto Exchange: Digital Currency in Digital Era

 Crypto Exchange 

Digital Currency in Digital Era

Today crypto exchange is the world's most popular topic that is talked about, after sports and films. Our mode of money transactions has changed drastically from barter system to physical currency system to an online bank to bank transaction till entirely virtual system of cryptocurrencies now. Previously, there was a time, when money was pegged to precious metals like silver and gold, but, now with the awareness of cryptocurrencies, people peg money to cryptocurrency these days. Hence, crypto is the new gold on the basis of which people value their money. Here, in this blog, we are going to understand the meaning of crypto exchange and cryptocurrencies and why are people going gaga over it so much, these days. However, cryptocurrencies, bitcoins, or bitcoin Ethereum may seem incomprehensible to some, but here in this blog, I will be comprehending them to you in simple words. 

So let's get to the basic question what are a cryptocurrency and a crypto exchange?

Cryptocurrency is nothing but basically, a website where you can buy sell, and exchange cryptocurrencies for other digital currencies and traditional currencies too like INR or USD. 

But why Crypto? Now to learn this, we have to understand how to use it and how many types of currencies are used in this market. But most interesting, who actually came up with this idea in the first place and how was the idea of currency conceived?

The dot-com bubble, also known as the dot-com boom, the tech bubble, and the Internet bubble, was a stock market bubble in the late 1990s, a period of massive growth in the use and adoption of the Internet. It was at that time when the concept of digital currency slowly came into being yet was not that widely accepted as access to the internet wasn't really established well to the general public as such. Several programmers and organizations undertook a risk to create a sort of similar line of the traditional currency but this time digitally which would be out of any authority reach. However, ironically, the organizations which were planning to set up a digital currency market were they would have had all the authority under them. Fortunately, they founded the venture but unlike today, the digital currency market back then was full of frauds and other financial challenges. Due to the reason why it was considered to be a failed initiative. But, later, Satoshi Nakamoto a programmer (or a group of programmers) altered the belief in  2009 and introduced Bitcoin which is also the first ever cryptocurrency.

Types of crypto exchanges

There are two basic types of crypto exchange and those are: 

•Centralised exchange: It is a profit-oriented company or it is owned by a particular person. Here, the owner has every right to control your money as he wants. The chances of your data getting hacked are more likely to happen. Centralized exchange requires a high liquidity cost (i.e., to transact a coin you need to pay a high amount of money) 

•Decentralised exchange: The control, in this type of exchange of transaction is under the hands of the public who are investing and not in the hands of one single owner. There is no existence of an owner here, rather, the only owner is you and whoever is investing in it. In, the absence of a particular owner, the general public has got all the control over their own money without the inference of the one owner. The chances of getting your data hacked are quite less over here because of the access and control is your hands. You require a very low cost of liquidity for the transaction of a coin. 

In both of the types, you are required to create an account to invest but you do not need a KYC to invest in a decentralized exchange, whereas, in a centralized exchange, you would need a KYC to submit to be labeled as a registered and valid user. 

Now, the turn of the most important question comes, why Crypto?

Crypto because, firstly, unlike the 90s when it was first set up and also unlike other modes of transaction, it is way safer do you know the value of 1 BTC (Bitcoin) is equal to 1 829 558.46 INR? So, why not crypto? 

Types of Crypto Currencies

Cryptocurrencies can be more than 15 types but five main types of crypto curcryptocurrencies

• Bitcoin: Being the oldest cryptocurrency, it acts as a traditional currency only. A digital coin is created on its own blockchain and acts in much the same way as traditional money. It has been the very first decentralized cryptocurrency using blockchain technology to facilitate digital transactions. 

• Ethereum: It is a token used for digital transactions on the Ethereum network itself. Ethereum network is a platform that uses blockchain technology to create smart contracts and other decentralized applications (meaning the software doesn't have to be distributed on app exchanges like Apple's (NASDAQ: AAPL) App Store or Alphabet's (NASDAQ: GOOGL)(NASDAQ: GOOG) Google Play Store, where they might have to give a 30% cut of any revenue to the tech giants). The coins are measured in units called Ether. Ethereum is both a cryptocurrency and a software development sandbox.

• Tether: Tether is a stablecoin or a currency tied to a fiat currency. The idea behind this type of cryptocurrency is to get together the benefits of a cryptocurrency (such as no need for financial intermediaries) with the stability of a currency issued by a sovereign government (versus the wild price fluctuations inherent with many cryptos). Its value depends on the value of USD.

• Binance coin: Like Ether currency, the Binance coin is available on the Binance platform, along with other digital coins on the same platform. Binance Coin can be used as a type of currency, but it also facilitates tokens that can be used to pay fees on the Binance exchange and to power Binance's DEX (decentralized exchange) for building apps.

• USD coin: Just like tether and by its name itself, it is pegged to the U.S dollar. Also like Tether, USD Coin is hosted on the Ethereum blockchain. The idea behind the USD Coin was to create a "fully digital" dollar, one that has the stability of U.S. fiat currency but it doesn't require you a bank account or that the holder living in a particular country. Rather than an investment, USD Coin is envisioned as everyday money that can be spent with merchants on the internet. 

How crypto exchange set crypto coin price? 

A crypto coin's value depends on its buying and selling in the crypto market. Say, if there is an increment in the buying of a coin then the price of that crypto coin rises and if there is an increment in the selling of a coin then its price may decrease in the market.

Conclusion: 

Public companies like Tesla, Marathon Digital Holdings, Block, Inc., and more are trading in crypto exchanges to enable strength control over the capital of the enterprise and to manage the risks and opportunities of engaging in digital investments. Since,  the announcement of Elon Musk, that, a Tesla car could be purchased through cryptos, it has made people go gaga and crazy about cryptos as they were already crazy over owning a Tesla. However, the faster the value of these cryptocurrencies can rise high, the faster their value can get down, and just like any other market cryptocurrency market is also subject to market risks.

By Sonali Munda