I have seen questions like “Is Bitcoin a cryptocurrency” ? “What is Cryptocurrency”? “Differences between crypto and cryptocurrency” and several other funny questions which I don’t wanna talk about. I once asked such too. I will be providing answer(s) to your questions. Kindly read through.
A cryptocurrency is a digital currency or internet-based medium of exchange that uses cryptography as a means of security (the science of hiding information). Digital Signatures are used to secure cryptocurrency transactions and to enable people confirm that their transactions are successful. The cryptocurrency market is not under the control of one person, government or any central authority, rendering them theoretically unaffected by government interference or manipulation.
HOW CRYPTOCURRENCIES WORK
Cryptocurrencies use decentralised technology which enables a user to make secure transactions/payments and also store money without the need to use their name or go through the bank. They run on a distributed public ledger called “Blockchain” which is a record of all transactions updated and held by currency holders.
Cryptocurrencies can be transferred directly between two persons through the use of private and public keys. These transfers can be done with minimal processing fees, helping you and I save the pricy fees usually charged by traditional financial institutions.
Confirmation is a very important notion in the market of cryptocurrency. Cryptocurrencies work with confirmation. A transaction that is unconfirmed is considered to be pending and can be forged. When the transaction is confirmed, then it is considered a successful transaction. It can no longer be forged, neither can it be reversed, it is part of an immutable record of historical transactions: of the so-called blockchain.
The first cryptocurrency was Bitcoin and it’s also the best among all the cryptocurrencies you’ve heard about till date.
HISTORY OF CRYPTOCURRENCY
Decades ago before the existence of Bitcoin, a lot of cryptographers have been working on the development of their own cryptocurrency. The most well-known of these attempts came from “Nick Szabo”, a computer scientist. He developed a cryptocurrency called “Bit gold” in 1998. Bit gold wasn’t officially launched so it was regarded as the cryptocurrency that paved the way for Bitcoin. This short story should answer the question “What is the first Cryptocurrency” ? The answer is Bitcoin !
LIST OF POPULAR CRYPTOCURRENCIES
USES OF CRYPTOCURRENCY
Oh! You’ve been wondering what can we use this for ? Like what is cryptocurrency when it can’t be used? When you have Cryptocurrencies, you can transfer a large portion of your wealth anonymously without the interference of your government or anyone. It can also be used to pay bills mostly online. I have bought several digital goods with Bitcoin. Cryptocurrencies can be used for anything your money in your bank account can be used for. It depends on the seller, if he/she will accept payment with a digital currency.
PROPERTIES OF CRYPTOCURRRENCY
1.) High Security: Cryptocurrencies are stored in a public key cryptography structure. Only the owner of the private key can transfer cryptocurrency(ies). Strong cryptography and the magic of big numbers make it impossible to break this scheme. Also your bitcoin address is well secured.
2.) Fast and global: Transactions are completed immediately in the network and are confirmed within few minutes. Since it takes place in a global connection of computers, your physical location does not matter. Transactions can be made between two parties located in different parts of the world.
3.) Irreversibility of transactions: Like I said earlier, “confirmation” is a very crucial notion when doing transactions with cryptocurrencies. After confirmation, a transaction can‘t be reversed by anyone. Once you have sent to someone, it can’t be reversed. There is no way to reverse a transaction made with cryptocurrency.
4.) Freedom : Everyone can use cryptocurrency. You just download the software on your device. After installation on your device, you can begin to make transactions with cryptocurency, pay bills, etc. You don’t need to take permission from anyone before making use of cryptocurrencies.
PROPERTIES OF CRYPTOCURRRENCY
The rate at which a cryptocurrency can be exchanged for another currency fluctuates extensively due to the high degree of cryptocurrency scarcity. Bitcoin Price has experienced some rapid surges and collapses in value, going up as high as $19,000 per Bitcoin in December, 2017 and coming down to around $11,000 in the following months.
There is a concern that crypto currencies like Bitcoin are not rooted in any material goods. According to some research, however, it was made known that the cost of producing a Bitcoin, which requires an increasingly large amount of power is directly related to the Bitcoin price in cryptocurrency market.
Alot of observers see huge advantages in cryptocurrencies, like the possibility of preserving value against inflation and facilitating exchange while being more easy to transport and divide than precious metals and existing outside the influence of central banks and governments.
In conclusion with accordance to Jan Lansky, a crypto currency possesses the following characteristics :
- The system does not require a central authority as they are invulnerable to government interference.
- The system keeps an overview of cryptocurrency units and their ownership.
- The system defines if new cryptocurrency units can be created. If new crypto currency units can be created, the system defines how to create new units, and how to determine the ownership of these new units.
- Ownership of crypto currency units can be proved exclusively cryptographically.
- The owner of a unit of cryptocurrency can transfer this unit. For this transfer to be successful, the current owner must prove the ownership.
- If two different instructions for changing the ownership of the same cryptographic units are entered at the same time, the system performs at most one of them.
This article will be updated with links to articles of related topics mentioned, as we keep blogging frequently, to help aid your perfect understanding about What is Cryptocurrency, Investing in cryptocurrency market and how to make more money with your crypto currencies.
Let me know what you think about this post by leaving a comment in the comment box below. Thank you.
Have you learnt one or two things from this post? Please share to your friends on social media using any of the social media buttons below. Sharing is caring.