Everyone knows the term ‘Cryptocurrency’. But do we really understand what it is?
I’m going to spare the front parts (where did it originate etc.. if you really want to know, first crypto is bitcoin, created in 2009) because by the time you’ve got that down, your interest would have went to something else. Instead, I’m going to jump right into the juicy parts:
- What it is;
- How it works;
- Different Cyptos
One final note before I summarize what is Cryptocurrency: I am in no way an expert in this field, or even a regular investor in it. But seeing as the digital currency is constantly a hot topic and a potential globally recognized form of currency, I’ve decided to come up with this article. Most information are dug up from the internet, I’m just summarizing it. If the information belongs to you and you want it to be confidential or want special credits, just drop me an email and it can be done.
p.s any information that you wish others should know as well, please just drop me an email or comment, I’ll include it in after verifying it.
What is Cryptocurrency and How it works?
2 main points for cryptocurrency – Privacy and Security. The below information is going to tie the ‘What’ and the ‘How’ aspect of Cryptocurrency together.
Cryptography – The process of converting legible information into an almost uncrackable code, to track purchases and transfers. (Hence the secure aspect of crypto) (Telegraph.co)
2 other important definitions before we move on:
Transactions: A transfer of funds between two digital wallets is called a transaction. TRANSACTIONS ARE PUBLIC, but the parties involved in the transaction are encrypted.
Mining: Mining is the process of confirming transactions and adding them to a public ledger. To add a transaction to the ledger, the “miner” must solve an increasingly-complex computational problem (like a mathematical puzzle).
The validity of each cryptocurrency’s coins is provided by a BLOCKCHAIN. So it begs the question – what is a blockchain?
A blockchain is a digitized, decentralized, public ledger of all cryptocurrency transactions. Constantly growing as ‘completed’ blocks (the most recent transactions) are recorded and added to it in chronological order, it allows market participants to keep track of digital currency transactions without central record keeping.
Information held on a blockchain exists as a shared — and continually reconciled — database. This is a way of using the network that has obvious benefits. The blockchain database isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable. No centralized version of this information exists for a hacker to corrupt. Hosted by millions of computers simultaneously, its data is accessible to anyone on the internet. (Blockgeeks)
Blockchain technology is like the internet in that it has a built-in robustness. By storing blocks of information that are identical across its network, the blockchain cannot:
- Be controlled by any single entity.
- Has no single point of failure.
Solving cryptographic puzzles (via software) to add transactions to the ledger (the block chain) in the hope of getting coins as a reward is cryptocurrency mining. Hence how you eventually get cryptocurrency.
Different types of Cryptocurrency:
First and foremost: Bitcoin. To give readers a gist of how difficult it is to generate a bitcoin (extracted from coinwarz, as of 27th Jan 2018):
|Time Frame||BTC Coins||USD||Power Cost (in USD)||Pool Fees (in USD)||Profit (in USD)|
^Figures are taken if you mine solo and have a fast computer system.
Other forks from bitcoin include:
Ethereum (trading at USD $1048.92 as of 27th Jan 2018)
Litecoin (trading at USD 193.76 as of 27th Jan 2018)
Bitcoin cash (trading at USD $1604.50 as of 27th Jan 2018)
Is cryptocurrency a bubble?
Not going to touch much on this topic; whether it is a bubble or not, opinions are always split 50-50. Just invest within your means (i.e. invest however much you are able to lose, within your capacity).
There is an article on the 4 triggers that could burst the crypto bubble in this site. link: Four triggers could cause a huge cryptocurrency crash
Crypto prices (https://ethereumprice.org)