Skip to main content

Basic understanding of Cryptocurrency

Cryptocurrency, also known as just crypto, is any type of currency that exists digitally or virtually and uses encryption to make transactions secure. Cryptocurrencies have no central authority that issues or regulates them, instead using a decentralized system to record transactions and issue new units.

What is Cryptocurrency?

Cryptocurrency is a digital payment mechanism that does not rely on banks for transaction verification. It is a peer-to-peer payment system that lets anybody send and receive money from anywhere.

Instead of physical money being carried around and exchanged in real life, Cryptocurrency payments are merely digital records in an online database detailing specific transactions.

When payments are transferred in Cryptocurrency, the transactions are recorded in a public registry. Digital wallets are used to store Cryptocurrency.

Cryptocurrency
Cryptocurrency

The name Cryptocurrency arose because encryption is used to verify transactions. Advanced programming is thus involved in the storage and transfer of Cryptocurrency data between wallets and public records. Providing security and safety is the aim of encryption.

The first Cryptocurrency was Bitcoin, which was founded in 2009 and is still today the most famous. Much of the interest in cryptocurrencies is based on the fact that they are traded for profit, and speculators sometimes drive prices through the roof.

Cryptography is not a new idea

Indeed, cryptography has been used for a long time. During the Second World War, this technology was used to be able to communicate in a more secure way. The goal of encryption is to give protection and safety. Today, the same technology is used to encrypt digital money, but the method has been refined.

With computers and new elements of mathematical theory, systems have been developed that are incredibly safe. They can secure both information and money traveling online in ways that were not before feasible. The first Cryptocurrency that used a modern mathematical system was Bitcoin and it was added back in 2009. Bitcoin is the most popular digital money today, but there are many more.

There can be around 1000 different cryptocurrencies so this is an exciting area, to say the least with a lot going on! 

Cryptocurrency history

You might think that Cryptocurrency was developed with the aim of creating digital money and crushing the big banks, but the currency's cradle is actually a completely different invention.

Founder of Cryptocurrency

Satoshi Nakamoto who is behind Bitcoin did not intend to develop a new currency. When he was about to launch Bitcoin in late 2008, he announced that he had developed a Peer to Peer system for electronic money. That is a system between friends, and users, rather than between users and banking services, and then to users again.

Satoshi Nakamoto


The most important aspect of Satoshi's idea was that he succeeded in developing a decentralized digital monetary system. Many attempts had been made in the past but none had managed to create something that worked as well as Satoshi's system.

Satoshi set out to develop a digital solution for money that was shared between users instead of turning to a central entity to relay money and information. This is what laid the foundation for what we today call Cryptocurrency.

But what exactly are cryptocurrencies?

The technology behind cryptocurrencies is quite complex. If you were to define these in a simple way, you could say that they are limited entries in a database that no one can change without first meeting special requirements.

Anyone who knows a little about common currencies recognizes the concept because it describes every currency that exists. It's the same thing if you look at the money in your bank account. If you take a look at the money in your bank account, it's exactly the same thing. 

These are entries in a database that can only be changed when certain conditions are met. You can also see the concept with completely ordinary coins and notes.

How does Cryptocurrency work?

Cryptocurrency runs on a distributed public ledger called the blockchain, a record of all transactions that is updated and held by everyone who owns the currency.

Cryptocurrency units are created through a process called mining or mining and involve using computing power to solve complex mathematical problems that generate coins. Users can also buy the currencies from brokers, and then save and spend those using cryptographic wallets.

how cryptocurrency work
how cryptocurrency work

You don't possess anything concrete if you hold Cryptocurrency. You have a key that allows you to transmit a record or a unit of measurement from one person to another without the need of a trustworthy third party.

Names of cryptocurrencies

There are thousands of cryptocurrencies. Some of the most famous are:

Bitcoin

Bitcoin was launched in 2009. It was the first Cryptocurrency and is still the most traded. The currency was developed by Satoshi Nakamoto – widely believed to be a pseudonym for an individual or group whose identity is unknown.

Ethereum

Launched in 2015, Ethereum is a blockchain platform with its own Cryptocurrency, Ether (ETH) or Ethereum. After Bitcoin, it is the second most popular cryptocurrency.

Litecoin

This currency is most similar to bitcoin but has moved faster to develop new innovations, including faster payments and processes that allow more transactions.

Ripple

A distributed ledger system called Ripple was established in 2012. Ripple can be used to track more than just Cryptocurrency transactions. Its founding company has worked with a number of banks and financial institutions.

Non-Bitcoin cryptocurrencies are frequently referred to as "altcoins" to differentiate them from the original.

Summary

Bitcoin and other cryptocurrencies can best be described as potential currencies despite not being widely recognized as means of payment. With their significant limitations, it is difficult to develop cryptocurrencies into full-fledged currencies. There are also questions about whether cryptocurrencies are part of a financial bubble.

It is possible, but unlikely, that cryptocurrencies could be used as commodities to any great extent in the future. The potential use of the blockchain technology behind cryptocurrencies is a very interesting question. It is possible that this technology will be used for other purposes, including legal transactions, and security programs.

Labels:

Comments

Post a Comment

Popular posts from this blog

Digital Marketing - What is it and what types are there?

The Digital Marketing method has become both more common and more important as the availability of information has increased. However, what digital marketing means more precisely can vary depending on which platforms and channels you use for your business. In this text, I will go through what digital marketing is and who benefits from digital marketing, and why. I will also describe what SEO and SEM are and how it works. Finally, I will also give you an overview of the important areas of responsibility in digital marketing so that you know how to build a team that is responsible for this. What is digital marketing meaning? Digital marketing refers, just as the name suggests, to marketing that takes place digitally. More precisely, it is about marketing via various digital platforms and digital channels. It is therefore the marketing you do to reach your customers via the computer, mobile phone, or tablet. You can use these devices to place your ads via social media or b...
Post a Comment
Read more

4 Easy ways to earn money with Digital Marketing skills

  How to Make Money With Digital Marketing Want to learn how to make money from Digital Marketing ? Whether it's starting your own online business, selling freelance services, or finding a salaried job, there are many ways to make money using digital marketing. In this guide, I'll present the 12 most effective ways to make money with digital marketing and some practical steps you can take to get started with each one. Let's dive right now. Earn money through Digital Marketing These are the most popular ways to make money with digital marketing. Earn money as a content writer Become an SEO expert and sell SEO services Make money with affiliate marketing Selling consulting services to companies Earn money by selling ads Work as a social media manager Create and sell your own digital products Become a YouTube advertising partner Become an e-commerce expert Manage PPC campaigns for other companies Get a digital marketing job Build your own digital marketing agency ...
1 comment
Read more

9 Reasons how Digital Marketing is effective for small businesss

  Digital marketing is the most effective way to reach out to customers over the internet. It is one of the most exciting tools a marketer can use to increase their online presence. It is going to be the future of marketing, leaving traditional marketing behind. It is a way of increasing awareness and trust in your brand or products/services through digital media. Currently, most great companies from all over the world have invested in digital marketing platforms. These days, not having an online presence is a bad deal for growing businesses. A company can miss out on many great opportunities and ideas that are only available in the online world. These are the main reasons why digital marketing is effective. 1. Digital marketing gives equal opportunity to all businesses Digital Marketing levels the playing field by giving small and medium businesses the opportunity to compete against the big companies and attract their share of the growing traffic. With digital marketing, ...
Post a Comment
Read more