Cryptocurrencies like Bitcoin, Litecoin, and Peercoin are growing in popularity. Here’s how they work.
Everything You Need To Know about What is Cryptocurrency [Ultimate Guide]
What is Cryptocurrency?
Cryptocurrency is a virtually encrypted currency which is backed by the security of cryptography. It is a digital currency for which encryption techniques are used to regulate its use and generate its release. Cryptocurrency is not regulated or controlled by any bank, government or centralized financial authorities.
Instead, it relies on the power of the Internet to guarantee its value and confirm transactions. Users on a network verify every transaction, and those transactions then become a matter of public record. This prevents the same digital currency or coin from being spent twice by the same person.
Cryptocurrency is one of those financial terms which aims to reduce the involvement of financial institutes in the transaction process.
Who Introduced Cryptocurrency and Why?
Satoshi Nakamoto, the unknown inventor of Bitcoin.
In his announcement of Bitcoin in late 2008, Satoshi said he developed “A Peer-to-Peer Electronic Cash System.“
His goal was to invent something; many people failed to create before digital cash. Since many years, a number of banks were trying to introduce the facility like cryptocurrency however, they failed to do so because of the system limitations and keys encryption process.
Soon after his first try, he realized that a viable digital cash system cannot be operated under the centralized system. Though it is true that decentralization of the digital cash system decreases its overall security, however, this problem is relatively solve-able in nature and can be corrected with the proper encryption of public and private keys.
Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double-spending. It’s completely decentralized with no server or central authority. – Satoshi Nakamoto, 09 January 2009, announcing Bitcoin on SourceForge.
How are cryptocurrency records kept?
That digital public ledger on which all transactions are recorded is called the blockchain. Data is stored across a network, so it’s not susceptible to exploitation by hackers or central failure.
Each record or series of records on the blockchain is known as a block. A block is sent to the network and added to the blockchain after it’s accepted by the network as a valid transfer. Once verified, the blocks cannot be changed.
Mining Of Cryptocurrency
Cryptocurrencies are released to the world through a process called “mining.” For you to mine this currency, you must attempt to solve a computational puzzle known as a hash, which allows you to add the next block. These transactions are then recorded in the blockchain for all to see.
When you solve this hashes you get some of the revenue from this by means of a cryptocurrency.
Mining is the process of using a computer to perform complex calculations on blocks of data which maintain the Bitcoin network. Miners are rewarded for their efforts with a certain amount of Bitcoins.
This is like mining a gold for this you need some equipment [Powerful Hardware]
- Mining hardware : You’ll need an ASIC chip for your computer designed specifically to mine cryptocurrency.
- Mining software : Look for free software with easy-to-follow instructions that explain how these programs work with your ASIC.
- Bitcoin wallet : If you complete a block, you’ll need to store your bitcoin in a wallet.
I write a full article on Bitcoin you can read it for more information
But keep in mind nowadays mining is very difficult
Different type of Cryptocurrencies
Bitcoin uses peer-to-peer technology to operate with no central authority or banks; managing transactions and the issuing of bitcoins is carried out collectively by the network. Bitcoin is open-source; its design is public, nobody owns or controls Bitcoin and everyone can take part. Through many of its unique properties, Bitcoin allows exciting uses that could not be covered by any previous payment system.
Altcoin
It won’t be wrong to call the Altcoin as the successful sister of Bitcoin because more or less they both perform the similar kind of work. However, according to the officials of Altcoin, this system is better than the Bitcoin because it is stronger in nature and aims to add extra security to the entire
transaction process.
Litecoin
Now if we talk about another famous cryptocurrency by-product named asLitecoin then, it is quite interesting to see that operations of Litecoin are backed by the scrypt rather than SHA-256. It is pretty evident that SHA-256 is quite famous amongst the cryptocurrency users, however, in 2011, developers planned to give a try to the oldest platform named as scrypt
The basic purpose behind launching the scrypt was to provide a good open solution to the public where they could mine the algorithms without installing any sort of difficulty mining system based software.
Ripplecoin
The basic purpose behind the launch was to equip users with an open source network which is further backed by the SHA-256. Moreover, the developers had the vision of introducing the PayPal for the digital currencies and they actually become successful in convincing the people that Ripplecoin can work as the PayPal
Increase use of Darknet markets
Cryptocurrency is also used in controversial settings in the form of online black markets, such as Silk Road. The original Silk Road was shut down in October 2013 and there have been two more versions in use since then; the current version being Silk Road 3.0. The successful format of Silk Road has been widely used in online dark markets, which has led to a subsequent decentralization of the online dark market. In the year following the initial shutdown of Silk Road, the number of prominent dark markets increased from four to twelve, while the amount of drug listings increased from 18,000 to 32,000.
Darknet markets present growing challenges in regard to legality. Bitcoins and other forms of cryptocurrency used in dark markets are not clearly or legally classified in almost all parts of the world.
People use this currency to buy drugs, weapons and many illegal things on darknet because Bitcoin addresses are not themselves linked to a person or entity.
You can also like to read Dark Web
Bitcoin Cash is a peer – to – peer (P2P) electronic cash for the Internet. It is fully decentralized, with no central bank and requires no trusted third parties to operate.
ReplyDeleteCardano is a cryptocurrency which holds the 7th rank on a popular cryptocurrency website.
Ethereum is a new development which is also a type of cyptocurrency which is built upon blockchain technique and is currently the second most valuable cryptocurrency on the market.
As discussed ripple is another cryptocurrency available on the internet with an acronym (XRP). It was originally founded by a single company, Ripple Labs and continues to be backed by it.