When Satoshi Nakamoto invented Bitcoin in late 2008, he never imagined that crypto currency would become such a raging concept in the future.
While it has taken the world by storm, the concept still remains a mystery for the majority of people.
Originally invented as an electronic cash system to support transactions among peers, crypto currency today is applauded as the most potential new age currency.
After many failed attempts to build decentralized digital cash system, Satoshi found that digital cash could be exchanged through consent without a central authority. In a decentralized network, node bityard every peer has a list containing all the transactions to confirm their validity in future.
If the peers disagree about even one single, negligible balance, everything is broken. They need an absolute consensus.
Since a decentralized network lacks a central authority, cryptocurrency needs a mechanism that prevents its abuse. Satoshi made the rule that the miners (primarily, anybody can be a miner), should invest some of their computer's work to be eligible for this task.
It's like solving a cryptologic puzzle to build a block that you can add to the block chain. As a motivation, he is awarded some Bitcoins once the transaction is confirmed. This is how valid Bitcoins are created. You can create only a particular amount of cryptocurrency in a given time.
What Is Cryptocurrency?
Basically, cryptocurrencies are entries in decentralized consensus-databases. Cryptocurrencies are created through using encryption techniques. Taking away all the noise, just consider cryptocurrencies as entries in a database that can't be changed without satisfying certain conditions.
Cryptocurrency is a mode of exchange, generated and stored automatically in a block chain through cryptography to manage the formation of financial units and to confirm the transfer of money. Bitcoin is one of the popular cryptocurrencies of today.
Properties Of Cryptocurrency That You Need To Know
To comprehend the concept of Cryptocurrency, let's take a look at its properties:
Once the transaction is confirmed, it can't be undone, by any means.
It is done forever; no matter if you send money to a trickster or it is robbed from your computer. There is no reversing whatsoever.
There is no connection between the transactions and real world identities. Bitcoins is an address of around 30 characters.
While you can look at the transaction flow, it is impossible to relate the real world character of the user to that address.
Instant global access
The transaction is instantly propagated and confirmed in the network. Since a global network of computers is involved, you can send bitcoin to your next door neighbour or to a distant user.
Geographic locations don't matter.
Cryptocurrency is encrypted and stored through a private key system. If you have the private key, you can make the transaction. Robust cryptography makes it impractical to break this system.
Use at your will
Since there is no central authority, you can use cryptocurrency at your will. Just download and install the software and you can send and receive cryptocurrencies.
No permission needed.
New Era Of Economy With Cryptocurrencies
Cryptocurrencies can be considered as digital gold. Secure money that increases its worth in time. Cryptocurrencies are fast becoming a comfortable mode of payment worldwide.
While Bitcoin is certainly the most popular cryptocurrency, we introduce you to the other cryptocurrencies famous today:
This is world's first cryptocurrency that is seen as the digital gold benchmark in the cryptocurrency arena.
Bitcoin is used as a means of payment globally. It is valued at around 650 Dollar with its transaction volume touching 200.000 daily.
It takes the second spot in the ranking order of cryptocurrencies. Ethereum can process transactions, as well as, complex programs and contracts.
There are several replicas of ethereum so it is a collection of cryptocurrencies, and not a single currency.
Litecoin is labelled as the digital silver or the younger brother of Bitcoin. With a fresh mining algorithm and with a greater amount of token, Litecoin was a real invention. However, it couldn't find a real deal and slipped down in the ranking order.
Nevertheless, it is still actively used and stored as a backup (to Bitcoin).
Monero is based on the cryptonite algorithm that was invented to enhance the privacy that Bitcoin doesn't offer. Every bitcoin transaction is documented and can be followed.
With the introduction of the cryptonite algorithm, it became possible to cut through that path.
Besides these, there are several other cryptocurrencies that promise to make a mark in the cryptocurrency arena.
There is a huge scope for cryptocurrencies as new ones emerge and old ones die every day.
Every cryptocurrency comes out with a promise, only to be replaced by some new cryptocurrency. In a couple of years, cryptocurrencies may be legalised for business transactions and micropayments. On the flip side, cryptocurrencies have besieged the scope of the economic system as it cannot be controlled or changed by a government institution or a bank or any central body.
It has enough scope to double as a medium of payment for outlawed economic activities and black markets.