Before we moving on our topic Cryptocurrency I should introduce with the Internet.
It is a network of networks that consists of private, public, academic, business, and government business of a local to the global scope, linked a broad array of electronic, wireless, and optical networking technologies.Internet carries a vast range of information resource and service such as-
- Interlink Hypertext Documents
- Application of Word Wide Web (WWW)
- Electronic Mail
- File Sharing
Note: The Internet has no centralized governance in either technological implementation or policies for access and usage; each constituent network sets its own policies.
So let’s walk through the whole story: What is Cryptocurrency
- Where did Cryptocurrency originate?
- Why should you learn about cryptocurrency?
- And What do you know about cryptocurrency?
A Cryptocurrency is a digital asset designed to work as a medium exchange that uses cryptography to secure its transaction, to control the creation of additional units and to verify the assets.
The first decentralized cryptocurrency, bitcoin was created in 2009 by Satoshi Nakamoto.It uses SHA-256, a cryptographic hash function.
In a decentralized Network, you don’t have this server.So You and I should need every single entity of Network to do this Job.Every peer in the Network needs to have a list with all transaction to check it future transaction is valid or an attempt to double spend.
But, How can this entity keep this records?
If the peers of the Network disagree about only one single, minor balance, everything is broken.They need some absolute, Isn’t.Usually, you take, again, a central authority to declare the correct state of balances.
But how can you achieve without a central authority?
Nobody did know until Bitcoin emerged out of nowhere.In fact, Nobody believed it was even possible.
But Bitcoin proved it was.His major innovation was to achieve consensus without a Central Authority.Cryptocurrency is a part of it.Isn’t.
What is Cryptocurrency Really?
I will reduce it to a simple definition just for you, You find it to be just limited entries in a database no one can exchange without fulfilling the specific condition.This may seem ordinary, but believe it or not: by this, you can only define Currency.
Take the money into your Bank Account.
What is more than entries in a database that can only be changed some specific conditions?You can even take physical coins and notes: What are they else than limited entries in a public database that can only be changed if you match the conditions than you physically own coins and notes?
Money is all about verified entries in some kind of database of accounts, balance, transaction.
Now How Miners Creates Coin and Confirm Transaction:
A Cryptocurrency like Bitcoin consists of a network of peers.Every peer has a record of the complete history of all transaction and thus the balance of every account.
A transaction is set to the file says that “Person A gives X Bitcoins to Person B” and is signed by Person A Private Key, That’s it.After signed, a transaction is broadcasted in the network, sent from one peer to every other peer.It is based on P2P-Technology.
The transaction is almost completed immediately by the whole network.It requires an only specific amount of time.
Only miners can confirm the transaction.This is their job in the cryptocurrency.
For this Job, miners are rewarded with some commission.
What Really Miners Do?:
Everybody can become the miner.Since a decentralized network has no authority to delegate the task, a cryptocurrency needs some kind of mechanism to prevent from ruling party from abusing it.Imagine someones create thousands of peers and spread forged transactions.
So, Bitcoin set the rule that miners need to invest some work of their computers to qualify the task.
In fact, they have to find a hash cryptographic functions.In Bitcoin, it is based on SHA 256 Hash algorithm.
Now you are wondering that What is SHA 256?But Don’t mind you don’t need to understand about SHA 256.It’s only important you know that it can be the basics of a cryptologic puzzle the miners complete to solve.
As an incentive, he has the right to add a so-called Coinbase transaction.That gives them a specific amount of Bitcoin.
Bitcoin can only be created if the miners solve a cryptologic puzzle.Since the difficulty of this puzzle increases the amount of power the whole miner invest, there is only a specific amount of cryptocurrency token that can be created in a given amount of time.
Is Cryptocurrency Dawn of a new economy?
- We can say cryptocurrency is digital gold.
- Sound money that is secure from political influence.Money that promises to preserve and increase its value over time.
- Cryptocurrencies are also a fast and comfortable with a worldwide scope.
- They are private and anonymous enough to serve as a means of payment for the black market and other outlawed activity.
- But most cryptocurrencies are used for payment.
- Cryptocurrencies give a birth to an incredibly dynamic, fast-growing market for investors and.
- Exchanges like Okcoin, Poloniex or Shapeshift enables the trade of hundreds of cryptocurrencies.
- These daily trade volumes exceed that of major European Stock Exchanges.
At the same time, the praxis of Initial Coin Distribution(ICO), mostly facilitated by Ethereum smart contacts, gave life to incredibly successful crowdfunding projects, in which often an idea is enough to collect millions of dollars.
In this rich ecosystem of coins and token, you experience extreme volatility.
While the Bitcoin remains by far the most famous cryptocurrency and the most other cryptocurrency have zero non-speculative impact, investors.
Users should keep an eye on the new cryptocurrencies to maximize their profits.
What is the future of Cryptocurrencies
- The market of cryptocurrencies is fast and wild.
- Almost every day a new cryptocurrency is created.
- Every cryptocurrency comes with a promise, mostly a big story to turn the world around.
- Only a few survive the first month and most are pumped and dumped by speculators and live on as zombie coins until the last badge holder loses hope ever to see the return on his investment.
- Markets are dirty. But this doesn‘t change the fact that cryptocurrencies are here to stay.
“The revolution is already happening. Institutional investors start to buy cryptocurrencies. Banks and governments realize that this invention has the potential to draw their control away. Cryptocurrencies change the world. Step by step. You can either stand beside and observe – or you can become part of history in the making.”
As its simplest, Bitcoin is either virtual currency or reference of the technology.You make the transaction by check, wiring, or cash.You can also use Bitcoin, where you refer the purchaser to your signature, which is a long line of security encrypted with 16 distinct symbols.
The purchase decodes the code with his smartphones to get the cryptocurrency.Put another way, cryptocurrency is an exchange of digital information that allows you to buy and sell goods.
The transaction gains its security and trust by running on a peer-to-peer computer network that is similar to Skype, BitTorrent, a files sharing system.
Monero is the most prominent example of the crptonite algorithm.This algorithm was invented to add the privacy features Bitcoin is missing.If you’re using Bitcoin, every transaction is documented in BlockChain and the trail of the transaction is followed.With the introduction of a concept called ring-signatures, the cryptonite algorithm was able to cut through that trail.
Currently, Ripple is not much popular.While Ripple has a native-cryptocurrency.XRP, the currency, doesn‘t serve as a medium to store and exchange value, but more as a token to protect the network against spam.
Ripple Labs created every XRP-token, the company running the Ripple network, and is distributed by them on will. For this reason, Ripple is often called pre-mined in the community and dissed as no real cryptocurrency, and XRP is not considered as a good store of value.
Banks, however, seem to like Ripple. At least they adopt the system at an increasing pace.
Other than Bitcoin its blockchain does not only validate a set of accounts and balances but of so-called states. This means that Ethereum can not only process transactions but complex contracts and programs.
This flexibility makes Ethereum the perfect instrument for blockchain -application. But it comes at a cost. After the Hack of the DAO – an Ethereum based smart contract – the developers decided to do a hard fork without consensus, which resulted in the emerge of Ethereum Classic. Besides this, there are several clones of Ethereum, and Ethereum itself is a host of several Tokens like DigixDAO and Augur. This makes Ethereum more a family of cryptocurrencies than a single currency.