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Why in the News?
Singapore-headquartered cryptocurrency lending and trading platform Vauld suspended withdrawals, trading and deposits because of volatile market conditions and financial difficulties.
About Cryptocurrency:
A Cryptocurrency is a medium of exchange, such as the rupee or the US dollar, but is digital in format.
For Example, Bitcoin, Ethereum
It uses encryption techniques to both control the creation of monetary units and to verify the exchange of money.
In traditional financial deals, where two parties are using fiat money, a third-party organisation — usually a central bank — assures that the money is genuine and the transaction is recorded.
With cryptocurrencies, a chain of private computers — a network — is constantly working towards authenticating the transactions by solving complex cryptographic puzzles.
For solving the puzzles, these systems are rewarded with cryptocurrencies. This process is called mining.
These are decentralised in nature, which means that no single entity owns or controls them. Moreover it does not rely on central banks, and is a collection of data, overall designed to work as a medium of exchange, using its underlying technology, the blockchain.
There are two types of crypto assets – coins and tokens. Coins have their own blockchain network while tokens are part of projects built on top of existing blockchains.
They are not backed by conventional assets such as gold reserves.
