What is cryptocurrency?
At the end of this article you should know more about cryptocurrency more than anyone else. We will explain the most important thing about cryptocurrencies.
Cryptocurrencies have become a global sensation known to most people. Though popular still remain like a piece of information that is not yet understood by most people, banks, governments and many companies.
As at 2016, you will have had a hard time looking for a major bank, accounting firm, a software company or a government that did not research cryptocurrencies, publish a paper about it.
According to Thomas Carper, US-Senator said: “Virtual currencies, perhaps most notably Bitcoin, have captured the imagination of some, struck fear among others, and confused the heck out of the rest of us”. Beyond the level of release by the press which has invariably overwhelmed majority of people – even bankers, consultants, scientists, and developers – thereby leading to a very limited knowledge of cryptocurrency. The basic concept was not understood.
So let‘s go through the whole story. What is cryptocurrency?
- What is the origin of cryptocurrency
- How can we use it?
- What is cryptocurrency and what is its origin?
Cryptocurrencies emerged as a side product of an invention, Satoshi Nakamoto, who is the unknown inventor of Bitcoin, the first and still the most important cryptocurrency, never intended to invent a currency.
As at 2008 when Satashi made an announcement of Bitcoin, said he developed “A Peer-to-Peer Electronic Cash System.” His goal was to invent something no other person has created before the invention of digital cash. Satoshi Nakamoto, 9th January 2009 said: “Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-Peer network toprevent double-spending. It’s completely decentralized with no server or central authority.”
Satoshi Nakamoto in an E-mail to Dustin Tramell quoted: “after more than a decade of failed Trusted Third Party based system (Digicash,etc), they see it as a Lost cause. I hope they can make the distinction, that this is the first time I know of that we’retrying a non-trust based system.” After Satoshi saw how all the centralized digital cash system failed, he tried to build a digital cash system. Satoshi build a Peer-to-Peer network without a central entity.
Decision That Gave Birth To Cryptocurrency
However, It was this decision that gave birth to cryptocurrency. They are the strip that Satoshi found and realize digital cash. Though, this is a bit technical and complex, but if yu get it you will know more about cryptocurrencies than most people do.
To start using digital cash, you need a payment network with accounts, balances, and transaction. The only problem every payment network needs to solve is to resolve and prevent the so-called double spending. This is done via a central server who keeps record and accounts about balances.
Using decentralized network, you don’t have this server. All that is required is to make every single entity of the network to do this job. Every Peer in the network needs to have a list with all detail transactions to check if the future transactions are valid or attempt to double spend.
The mind burgling question is, how can these entities keep these records? The Peer need an absolute consensus, usually when the Peers disagree about only one single, minor balance, everything is broken. Before, a central authority is required to declare the state of the balance.
How can you achieve consensus without a central authority in Cryptocurrency?
Nobody had an answer until Satoshi emerged out of nowhere. The thought was that it was quite impossible thing to do. But it was proved it was possible by Satoshi. Satoshi’s main goal was to achieve consensus without central authority. Cryptocurrencies are part of this history – this became the part that made it so thrilling, fascinating and even helped it to roll over the world.
Then what is cryptocurrency? Simply say Cryptocurrencies is limited to entries in a database no one can alter without fulfilling specific conditions.