Cryptocurrency

Cryptocurrencies have been attracting a lot of interest lately. You can regularly find them being mentioned on the news, from a relative, or on friends. This write up covers the subject of cryptocurrency and its technology for those who know very little about the subject.

What is cryptocurrency?

Cryptocurrency is an electronic money created with technology controlling its creation and protecting transactions, while hiding the identities of its users.

Crypto- is short for “cryptography”, and cryptography is computer technology used for security, hiding information, identities and more. Currency simply means “money currently in use”.

Cryptocurrencies are a digital cash designed to be quicker, cheaper and more reliable than our regular government issued money. Instead of trusting a government to create your money and banks to store, send and receive it, users transact directly with each other and store their money themselves. Because people can send money directly without a middleman, transactions are usually very affordable and fast.

To prevent fraud and manipulation, every user of a cryptocurrency can simultaneously record and verify their own transactions and the transactions of everyone else. The digital transaction recordings are known as a “ledger” and this ledger is publicly available to anyone. With this public ledger, transactions become efficient, permanent, secure and transparent.

The first cryptocurrency was bitcoin.

What is bitcoin?

Bitcoin is the first digital cash created in 2009. It was made by an unknown person or group who went by the name, Satoshi Nakamoto.

Bitcoin is unique because it does not rely on government/bank created money. In addition, transactions occur directly between pseudonymous people (their real names are not known), meaning there are no banks or middlemen.

Each transaction is recorded on a digital record kept by many people across the world known as the “blockchain”. The data on the blockchain is publicly available and stored on many computers. Because there are so many copies being simultaneously maintained, the transaction and banking data is very safe and virtually impossible to manipulate.

Individuals protect their bitcoins using their digital wallet. A wallet is software that can only be accessed by using a key, which is a long string of letters and numbers.

Bitcoin’s price has risen into the thousands of dollars, but you can still own bitcoin by purchasing a fraction of it for dollars.

What is blockchain?

Blockchain is technology for creating permanent, secure digital recordings that don’t rely on any single person or group. Blockchains can record any information, though the first example was created to record bitcoin transactions.

Imagine the blockchain as a book of records. Each page in that book, is a block, and can record anything. Blocks are created one after the other, chained to each other creating what we know as the blockchain.

There are hundreds of blockchains created by many groups to records all sorts of information including art, medical records, computer information and much more.

What is a smart contract?

A smart contract mixes blockchain technology with contracts to make a more efficient and affordable system of doing business.

What is mining?

Mining is the computer process of recording and verifying information on the digital record known as the blockchain. Because mining requires computer power, people do this work in return for money. Each computer that fulfills this process can earn a reward in digital money and sometimes brand new, virgin coins.

The currencies modeled after Bitcoin are collectively called altcoins, and in some cases “shitcoins,” and have often tried to present themselves as modified or improved versions of Bitcoin. While some of these currencies may have some impressive features that Bitcoin does not, matching the level of security that Bitcoin’s networks achieves has largely yet to be seen by an altcoin..

There are more than 4,000 cryptocurrencies in existence as of January 2021

The 10 Most Important Cryptocurrencies Other Than Bitcoin

Ethereum (ETH)

Litecoin (LTC)

Cardano (ADA)

Polkadot (DOT)

Bitcoin Cash (BCH)

Stellar (XLM)

Chainlink

Binance Coin (BNB)

Tether (USDT)

Monero (XMR)

Sources: decryptionary.com, Investopedia

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