The word “crypto” is derived from the Greek word “kryptos”. It means “secret” or “hidden”. The secrecy relates to the New Currency, the news of which has burst like a bombshell in the world of Finance. The concept of Money, as the prime medium of exchange, is now itself at stake. The value of Money comes from its exchange intermediacy, and its ability to measure and store wealth. The first mint was around the 7th Century BC, and the earliest known coins come from the city of Ephesus, Ionia, Western Turkey, around 650 BC. Bank notes first evolved around 1661 AD, and up to that time, Money was real. Virtual Money first came with the Credit Card in 1946. But the Basic Value of the Units of Money was always tethered to a particular Currency, and a particular Nation. The Nation guaranteed the value of its currency, and International Agreements like the Bretton Woods guaranteed the par value or comparative exchange rate of each currency. But the new “Cryptocurrency” does not recognize national barriers. It is available only through Crypto Exchange or a Virtual Exchange at a secret location, and can only be exchanged at an asset value determined through the Cryptocurrency Exchange.
How They Work
A Crypto Exchange is a “secret “online exchange where people desiring to exchange assets can do so, either directly or through the medium of crypto currencies. They are virtual folders that use strong cryptography to secure the financial transactions, control the creation of additional units and determine the exchange value of the virtual currencies at any particular moment in time.
How They Leverage
Blockchain Technology is used to leverage decentralization, so as eliminate interference from any government or nation. This also achieves transparency for all participants, and immutability, that creating absolute stability and openness to all transactions. Direct peer to peer financial transactions, without intermediaries, are easily achieved, thus improving cost effectiveness.
Why They Work
A Cryptocurrency Exchange works primarily because of Decentralization. This was believed impossible, and experts naturally assumed there could be no agreement on parity value of different currencies unless a government constituted authority intervened. It was this concept that was found fallacious, and launched Cryptocurrency. Double Spending is the main problem which every payment network has to first solve, and consensus in this regard is normally achieved by a dedicated server which keeps account of all transactions. But Crypto Currencies do not have such Central Servers. Instead, a list of every single transaction is attached by Blockchain Technology ensure absolute consensus, and every individual can further make sure that all the transactions made are validated.
This is a thrilling new development that is poised to take over the World of Finance today.