CRYPTOCURRENCY (Syllabus: GS Paper 3 – Economy)

Context: Finance ministers and central bank governors from G20 nations recently adopted a roadmap for regulating crypto assets in Marrakesh, Morocco.

Cryptocurrency

• About: Cryptocurrency refers to a digital or virtual currency that employs cryptography for security measures.
• Decentralization: One of the defining features of cryptocurrencies is their decentralized nature, which means they are not under the control of any government or institution.
• Examples: Prominent examples of cryptocurrencies include Bitcoin, Ethereum, and Litecoin.
• How Does Cryptocurrency Work: It operates through a decentralized digital ledger called the blockchain, where transactions are publicly recorded and verified by a network of computers worldwide. 

oThis system relies on cryptographic techniques to secure transactions and prevent manipulation, enabling peer-to-peer, trustless, and borderless digital transactions.

Three key-elements of crypto-currency:

• It is a digital representation of value,
• It can be transferred electronically and
• It is recorded in a digital ledger (Blockchain Technology) that is widely accessible.