A cryptocurrency is a form of payment which is similar to the currencies commonly used such as United States Dollar or the British Pound. However, unlike these currencies, cryptocurrencies are decentralized. There is no central government to print more of them out to cause inflation. In fact, cryptocurrencies have been formulated to gradually decrease in production as time goes by. Bitcoin, for instance will never have over 21 million coins in dissemination.
Cryptography is used to ensure the security and privacy of transactions and exchanges, and to regulate the creation of new coins. Cryptography was developed during the Second World War, after the need for secure communication arose. It has undergone many development with elements of computer science and mathematical theory, and now it is used in financial system for decentralized currency.
Many other digital cash before bitcoin had the problem of users double spending the same coin, which was why they had a central server. However, since bitcoin is decentralized, it needs consensus. Cryptocurrencies employe the use of a decentralized system which allows users to make safe and secure transactions and store their currency. Once the transaction is recorded, there is no going back, it is settled in the blockchain. In fact, no one knew it was possible until Satoshi did it out of no where.
The world's first ever cryptocurrency is bitcoin developed by Satoshi almost a decade ago in 2009. A mass reproduction of cryptocurrencies has taken place over the last decade, resulting in the existence and availability of over 900 cryptocurrencies on the internet. While some are almost as popular as bitcoin, others have been relegated to the background. All these other cryptocurrencies are usually referred to as altcoins as they are alternatives to bitcoin.
Cryptocurrencies are generated via a process known as mining. Mining entails the use of computer power to crack complex mathematical problems that create the coins. As time goes on, the difficulty of mining the coin gets harder. Check out our mining article here. Users can also choose the purchase the currencies from an exchange, and keep and spend them with the use of a coin wallet.
The use of blockchaining technology is still burgeoning in the world of trade and finance. There are more applications that should be contemplated. There are other industries such as supply chain or pharmaceutical companies that could probably benefit from this.
The most popular cryptocurrencies currently are Bitcoin, Ethereum, Dash, Litecoin, Dogecoin, and Ripple.
Check out our slides on How to Get Started with a Coin Wallet to get started with cryptocurrency today!