What is Cryptocurrencies – Current Affairs for UPSC, IAS, CDS, NDA, SSC CGL

Cryptocurrencies or virtual currencies are type of an regulated digital money. They are manly decentralized peer to peer system and transacted between users directly without an intermediary. These transactions are verified by network nodes and recorded in public distributed ledger called blockchain.

They are neither issued by Central Bank nor it is attached to flat currency, but it is used and accepted among the members of a specific virtual community. They are being transferred stored or traded electronically.

Example of virtual currency is a bitcoin, litecoin, darkcoin, peercoin, dogecoing, primecoin etc.

A cryptocurrency is a system that meets six conditions:-

  1. The system does not require a central authority, distributed achieve consensus on its state.
  2. The system keeps an overview of cryptocurrency units and their ownership.
  3. The system defines whether new cryptocurrency units can be created. If new cryptocurrency units can be created, the system defines the circumstances of their origin and how to determine the ownership of these new units.
  4. Ownership of cryptocurrency units can be proved exclusively cryptographically.
  5. The system allows transactions to be performed in which ownership of the cryptographic units is changed. A transaction statement can only be issued by an entity proving the current ownership of these units.
  6. If two different instructions for changing the ownership of the same cryptographic units are simultaneously entered, the system performs at most one of them.

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