So you have seen it all around on the net seemingly exploding out of nowhere! But what you don't realize is that Cryptocurrency or Crypto as it is often called has been around for sometime now. Have you been wondering what is cryptocurrency ?
Cryptocurrency is a digital currency that is produced through using file encryption software application. Bur really what is cryptocurrency. This method is a service to security and control concerns that prevented a purely digital currency from being successfully developed in the past. If you hear someone speaking about among these currencies, it's probably in a cryptocurrency format. This kind of digitally developed and secured money is currently in a period of extremely cool experimentation, so let's take a look at how it work, why it's popular, and where cryptocurrency is heading in the future.
Today, cryptocurrency has become a global phenomenon but few people know that cryptocurrencies surfaced as a side product of another invention this is what is cryptocurrency.
Here we can explain what is cryptocurrency.
What Is Cryptocurrency
The unknown inventor of Bitcoin and cryptocurrency, Satoshi Nakamoto, did not intend to invent a currency.
In the late 2008, in his announcement of Bitcoin, Satoshi stated he developed a peer-to-peer Electronic Cash System for file sharing.
His aim was to invent something which many people failed to create before digital cash.
The notable part of Satoshi’s invention was that he found a means to make decentralized digital cash system which people failed in the nineties. This is the beginnings of what is cryptocurrency.
This invention gave birth to cryptocurrency. Satoshi found that they are the missing piece to realize digital cash more about what is cryptocurrency.
To realize digital cash you require a payment network with accounts, balances, and transaction. To prevent one entity from spending the same amount twice, usually, a central server is there who keeps record about the balances, getting more into what is cryptocurrency.
However, you don’t have this server in a decentralized network. Every single entity of the network is needed to do this job. Each peer in the network requires to have a list with all transactions to make sure whether the future transactions are valid or if there is an attempt to double spend.
But how can these bodies keep a consensus about these records?
Exactly what is cryptocurrency? When the peers of the network disagree about even a single, minor balance, the whole thing is broken. What they need is an absolute consensus. This is what is cryptocurrency. Typically, a central authority is needed to declare the correct state of balances. But how can one achieve consensus in the absence of a central authority?
Satoshi emerged out of nowhere and proved it was possible with what is cryptocurrency. His major innovation was to achieve consensus without a central authority. Cryptocurrencies are a part of this solution.
What actually is cryptocurrency?
Cryptocurrencies in simple terms mean limited entries in a database no one can change without fulfilling specific conditions. This is what is cryptocurrency.
How miners create coins and confirm transactions
Like Bitcoin, a cryptocurrency consists of a network of peers. Every peer keeps a record of the entire history of all transactions and therefore of the balance of every account.
More about what is cryptocurrency. The transaction is known almost immediately by the entire network though it gets confirmed only after a specific amount of time.
You can easily say cryptocurrencies are all about confirmation. This is what is cryptocurrency.
As long as transactions remain unconfirmed, it is pending and can be forged. Only when a transaction gets confirmed, it is no longer forgeable, it can‘t be reversed, and becomes a part of an immutable record of historical transactions; of the so-called blockchain. We are getting closer as to what is cryptocurrency,
Miners are the only ones who can confirm transactions. They take transactions, stamp them as legit and distribute them in the network. After a transaction is confirmed, every node has to add it to its database to become part of the blockchain.
For this job, the miners get rewarded with a token of the cryptocurrency, for example with Bitcoins. More about what is cryptocurrency. Since the miner‘s activity is the single most important part of cryptocurrency system we should stay for a moment and take a deeper look into it.
What do miners do?
Principally, everybody can be a miner. Having no authority to delegate this task in a decentralized network, a cryptocurrency requires some kind of mechanism to stop one ruling party from abusing it.
A rule was set by Satoshi through which the miners require to invest some work of their computers to qualify for this task getting into what is cryptocurrency mining. They need to find a hash, which is a product of a cryptographic function that links the new block with its predecessor. It is called the Proof-of-work. In Bitcoin, it is based on the SHA 256 Hash algorithm.
Regarding SHA 256, it is only important you know that it can be the basis of a cryptologic puzzle the miners compete to solve. This is more what is cryptocurrency. After getting a solution, a miner can build a block and add it to the blockchain. A miner has the right to add a so-called coinbase transaction which provides him with a specific number of Bitcoins as an incentive. It is the only way to make valid Bitcoins.
Only a specific amount of cryptocurrency token can be made in a given amount of time as the difficulty of this puzzle increases the amount of computer power the whole miner’s invest. See how this all works now in what is cryptocurrency. No peer in the network can break this is part of the consensus.
Revolutionary properties
Bitcoin, as a decentralized network of peers that maintain a consensus about accounts and balances, is more a currency compared to the numbers you see in your bank account. This is what is cryptocurrency in comparison to banking.
Cryptocurrencies are entries about token in decentralized consensus-databases. They are called CRYPTOcurrencies as the consensus-keeping process is protected by strong cryptography. Cryptography is used to build Cryptocurrencies and it is secured by math.
For understanding the properties of cryptocurrencies we need to separate between transactional and monetary properties. More about what is cryptocurrency and it's properties.
Transactional properties:
- Irreversible: A transaction can‘t be reversed after confirmation. What is cryptocurrency and Pseudonymous .
- Pseudonymous: Transactions and accounts are not connected to real-world identities. Bitcoins are received on so-called addresses. What is cryptocurrency and Fast and Global.
- Fast and global: Transactions are made nearly instantly in the network and are confirmed in a couple of minutes. What is cryptocurrency and Secure.
- Secure: the funds of Cryptocurrency are locked in a public key cryptography system. Only the owner who has access to the private key can send cryptocurrency. What is cryptocurrency and Permissionless.
- Permissionless: Cryptocurrency is software that anyone can download for free without permission. Afterinstallation, you can receive and send Bitcoins or other cryptocurrencies
Monetary properties:
- Controlled supply: Most of the cryptocurrencies limits the supply of the tokens. The supply decreases in time in Bitcoin. It reaches its final number somewhere in around 2140. The supply of the token is controlled by a schedule written in the code. It implies the monetary supply of a cryptocurrency in every given moment can be calculated approximately today in the future. What is cryptocurrency and the no debt but bearer.
- No debt but bearer: Cryptocurrencies don‘t represent debts but themselves.
Cryptocurrencies: Dawn of a New Financial System
Due to its revolutionary properties mostly, cryptocurrencies have become a huge success. What is cryptocurrency, and why is it successful. Cryptocurrencies are digital gold. It is secure money that promises to preserve and increase its value over time. Cryptocurrencies are also an easy means of payment with an international scope. They are private and anonymous enough to serve as a means of payment for black markets and other outlawed economic activities. See how this is all tying together into what is cryptocurrency?
Cryptocurrencies are also used as a means of speculation and a store of value dwarfs the payment aspects. Cryptocurrencies gave rise to a dynamic, fast-growing market for investors and speculators. Exchanges including Okcoin or shapeshift allow the trade of many cryptocurrencies. What is cryptocurrency and more about Bitcoin.
While Bitcoin is still the most popular cryptocurrency, investors and users should also keep an eye on numerous cryptocurrencies. The most popular cryptocurrencies of today are listed under.
Bitcoin
Bitcoin is used as a worldwide means of payment and is the de-facto currency of cyber-crime including darknet markets or ransomware. Seven years after its introduction, Bitcoin‘s price has increased from zero to more than 650 Dollar. Its transaction volume reached more than 200.000 daily transactions. What is cryptocurrency and more about Ethereum.
Ethereum
Ethereum, the brainchild of Vitalik Buterin comes in second place. Other than Bitcoin its blockchain validate a set of accounts and balances and so-called states. Ethereum can process complex contracts and programs. Its flexible nature makes Ethereum the perfect instrument for blockchain -application. What is cryptocurrency and more about Ripple.
Ripple
Ripple is more about a network that process IOUs than the cryptocurrency itself. The XRP currency doesn‘t serve as a means to store and exchange value. It is more of a token to safeguard the network against spam. Every XRP-token was created by Ripple Labs. The company runs the Ripple network, and is distributed by them on will. What is cryptocurrency and more about Litecoin.
Litecoin
Faster than bitcoin, with more token and a new mining algorithm, Litecoin was an innovation. It made possible the emergence of numerous other cryptocurrencies which used its codebase but made it lighter. While Litecoin was unsuccessful to find a real use case, it is still actively developed and traded. What is cryptocurrency and more about Monero.
Monero
This algorithm was introduced to add the missing privacy features in Bitcoin. With Bitcoin, every transaction is documented in the blockchain and one can follow the trail of transactions. But the introduction of a concept called ring-signatures made the cryptonite algorithm to cut through that trail.
Besides those, there are hundreds of cryptocurrencies of several families. Most of them are nothing more than attempts to reach investors and quickly make money, but a lot of them promise playgrounds to test innovations in cryptocurrency-technology.
Future of Cryptocurrency
The market of cryptocurrencies is ever evolving. There will always be new questions as to what is cryptocurrency. New cryptocurrencies emerge almost every day, old ones die, early adopters get wealthy and investors lose money. Each cryptocurrency is launched with a promise but few survive the first months. Most of them are dumped by speculators. They live on as zombie coins until the last investor loses his hope to see a return on his investment. Always more to learn about what is cryptocurrency.
Markets are not clean. But certainly, cryptocurrencies are here to stay. People buy Bitcoin to secure themselves against the devaluation of their national currency. More and more questions are always being asked about what is cryptocurrency. In Asia mainly, a market for Bitcoin payment has emerged. The Bitcoin using darknets of cybercrime are prospering.
The revolution is already taking place. Institutional investors have begun to invest in cryptocurrencies. Banks and governments comprehend that this invention has the prospect to draw their control away. Cryptocurrencies, obviously, is changing the world. You can either be an observer or can become part of history in the making and keep asking questions to find out what is cryptocurrency.
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Great post, glad to see more people are getting involved and informed!