What is Crypto currency?
Crypto currency is a virtual money which have not any physical form. If we buy crypto currency we should pay our actual money and we can use as actual money while we spend it.
It exists only in online. So, it also may be called online currency which could not hold on hand, we could not touch it, we could not smell it but it will be save in digital wallet. But while holding crypto currencies we do not have any actual money it just a virtual money. It will not transfer to actual money until we have not sell it.
Crypto currencies are created with the help of computer networking software. Crypto currencies volume were already decided to create in fixed units.
Suppose we have a piece of land of in Kathamandu city, it is already decided how much Hectare it will be. Because we can not increase or decrease land size and one hectare unit is already decided. So, we can create fix hectare units form this piece of land. Like this crypto currencies are created.
Suppose there are different crypto currencies such as Bitcoin, Litecoin, Ethereum, Steller, Libra etc. The total supply of Bitcoin is capped at 21 Million, it means that when supply of anything is unlimited then its value will be decreased.
When value of money or currencies decreased that means decrease of purchasing power of money then price of goods and services will be increases i.e. inflation. So to control inflation and value of crypto currencies it will be capped to the limited supply.
Who crate the crypto currencies?
Any one create crypto currencies but it will require advance technical knowledge. Such as ‘Satoshi Nakamoto’ create Bitcoin in October 31, 2008, Google Engineer ‘Charlie’ create Lite coin as a alternative crypto currency in October, 2011 etc.
Like this you can also create crypto currencies but for that you should have advance technical knowledge, time, money and other resource. There are more than 5000 different crypto currencies are available in the internet.
Creation of crypto currencies is not a big thing. Because it will be a currency when people believe and willing to invest on it. Suppose we make paper note as a currency as Nepalese Rupee, Indian Rupee, American dollar, then it has not any value because it is not authorized and people are not ready to accept as currency.
A Currency will be a currency when it is limited and have some value. For example diamond is expensive because it is limited in earth and it will be scare in future. Due to the limited supply of diamond, it will be more expensive in future. So, peoples are investing on this.
Like this, crypto currencies must be in limited quantity or supply. We are investing on Bitcoin because we know that it is limited and its supply will not increase in future. Nobody can create additional Bitcoin in future. After some years it will be scarce and expensive.
Who control crypto currencies?
Crypto currency is a decentralized currency which means it is not controlled by any individual, company, Bank and Financial institutions. This currency does not follow the traditional banking system which is controlled by a specific organization and company.
There is no middle man in the transaction of Bitcoin. While buying and selling of Bitcoin there is no any broker or middleman. So, the transaction safe, secure and fast. Nobody know how much Bitcoin I have. So, it is only controlled by whom which have Bitcoin.
Centralized currencies such as dollar, Rupee, Dinar, Peso etc. are different national currencies of different nations and these currencies also have international authorization and acceptance. These Currencies are controlled by national and international Bank and Financial institutions.
The government controlled the supply of national currencies. In case of centralized currencies government can increase and decrease the supply of such currencies according to economic condition of nation.
Who can Buy or Sell Crypto currencies?
According to the government rules and regulation, you can buy and sell crypto currencies. If it is legal in your country you can trade crypto currencies. If is illegal in your county, you will be punished according to law of your nation. In case of Nepal, Nepal Rastra Bank fully band the transactions of crypto currencies. With the help of different crypto currencies software you can buy and sell crypto currencies.
How is price up and down?
According to law of demand and supply, when demand of any goods and services increase or supply of any goods and services decreases then price of goods and services will be increases and vice versa. This is the general rule of demand.
Like this price of crypto currencies up and down daily. When there is high demand of crypto currencies and peoples are ready to pay higher price for the crypto currencies then its price will be higher and when people does not want to pay higher price for crypto currency or there is lower demand then its price will be decreased. The price of crypto currencies is set with the help of demand and supply.
When demand and supply price will be equal the price will be set. It means that is also an agreement price where buyer is ready to buy and seller also ready to sell their goods and services or crypto currencies at this price.
Like in share market is it the latest transaction price. Not actual or fixed price, which may be change in a second. It means that when we buy goods form a retail store there is fixed price of goods and services which were already set.
If you bought in the morning and evening is not matter because we can purchase this product in same price. But price is crypto currencies may be change in second by second according to demand and supply of crypto currencies. So, it is most risky. You should research on it before trading crypto currencies.
What is crypto currency market?
Crypto currency market is that market where different crypto currencies such as Bitcoin, Litecoin, Ethereum, Steller, Libra etc. are traded. It is also called crypto currency exchange market, Digital currency exchange market, coin or crypto market. With the help of crypto market you can change your paper currency into crypto currency and crypto currency into paper currency.
Binance, Bitfinex, Bithumb, Bitflayer, Bittrex, Karken, CuCoin etc. are the some examples of crypto market.
Crypto currency transactions are recorded in digital ledger. It is also called block blockchain which record each and every transaction. Different crypto miners records this transaction. This is a decentralized technology. So, everyone can record this transactions but it require advance technical knowledge. For this recording crypto miners gets some crypto currencies as commission or as reward.
Is it illegal for me to trade crypto currency in Nepal?
Yes, this is illegal to buy and sell crypto currencies from Nepal. The government of Nepal or Nepal Rastra Bank also band to buy or sell crypto currencies for Nepalese who are living in the foreign county. So, if you are a Nepalese citizen you cannot buy and sell any crypto currencies. If you are Nepalese citizen and trading crypto currencies in 2020, you will be punished according to the banking offence and punishment act.
Big 5 advantages of crypto currencies
- No any geographical barrier: It means that you can trade crypto currencies form any part of the world. There is no any barrier to pay and receive barrier like paper and coin currency.
- There is low transaction cost. It means that you can trade with very low transaction cost because there is no middleman while buying and selling crypto currencies. It is a direct deal with buyer and seller.
- It is more safer than paper currency because no one can know how much crypto currencies you have and there is not any control of any organization like bank and financial intuitions.
- You can pay and receive any amount of transactions there is no limit and barriers like bank and financial intuitions to pay certain level of amount in a day or per month.
- You can trade crypto currencies 24/7 there is no any restriction like banking hour, office hour like traditional banking system and stock market.
Big 5 disadvantages of crypto currencies
- There is not any actual or minimum value of crypto currencies like stock value. In share market we can get as equal to book value if company goes down or liquidation. In share market we can manage our losses with right share and dividend but there is no anyone to minimize our loss when crypto price goes down.
- In case of technical errors and wrong transactions there is not anyone to response you. If you forget your wallet password or unable to recover then you will be in 100% loss. Because there is not any institution responsible for this transaction and there is not any record. If you have proof of your transaction also, there is not any authority to complain or submit.
- If different companies stop using crypto currency then it will be worthless. Suppose you have Bitcoins, if people move from Bitcoin to other crypto currencies then its value will be worthless. If government band to trade crypto currencies then it also will be value less.
- With the help of crypto currencies illegal activities and fraud will be increase because there is no any detail of transactions and traders.
- It is not widely accepted in current time. It will be widely accepted in future but in this time we cannot use anywhere to pay or buy goods and services like paper currency.