A cryptocurrency, cryptocurrency or cryptocurrency is a digital asset intend as a medium of exchange where the ownership records of individual coins. These are stored in a ledger in the form of a computerize database, using strong cryptography to protect transaction records, control the creation of additional coins. And verify the transfer of ownership of coins.
Cryptocurrencies do not exist in physical form (e.g. paper money) and are usually not issue by a central authority. Unlike central bank digital currencies (CBDCs), cryptocurrencies are decentralize and control.
If a cryptocurrency is mint or creates before issuance, or issue by a single issuer, it is usually consider centralize. With decentralized control, each cryptocurrency operates through a distributed ledger technology, usually a blockchain, as a public database for financial transactions.
First released as open source software in 2009, Bitcoin was the first decentralize cryptocurrency. Since Bitcoin’s introduction, many other cryptocurrencies have created.
History for Cryptocurrency
In 1983, American cryptographer David Chaum conceived an anonymous cryptocurrency called ecash. Later, in 1995, he implemented it through Digicash, one of the first forms of cryptographic electronic payments that required user software to withdraw and name notes from banks. This made the digital currency untraceable to the issuing bank, the government or a third party.
In 1996, the NSA published a paper entitled “How to Mint a Coin: The Cryptography of Anonymous Electronic Cash: The Cryptography of Anonymous Electronic Cash) describing a cryptocurrency system, first on the MIT mailing list and later in 1997 in the American Law Review (Vol. 46, No. 4).
In 1998, Wei Dai published a description of “b-money”, which presented a distributed anonymous electronic money system. Shortly after, Nick Szabo described Bitcoin.
Like Bitcoin and later cryptocurrencies, Bitgold (not to confuse with the later gold-based exchange Bitgold) was described as an electronic money system that require users to perform a proof-of-work function, the solution to which was cryptographically summarize and publish.
Cryptocurrency In 20’s century
In 2009, the leading decentralize digital currency Bitcoin was develop by architect Satoshi Nakamoto, apparently a pseudonym. He used SHA-256, a cryptographic hash function, in his proof-of-work solution.
In April 2011 , Namecoin emerged to build a decentralized DNS, which would make controlling the network problematic. Shortly after, in October 2011, Litecoin was launch. It uses script as a hash function instead of SHA-256. Another famous cryptocurrency, Peercoin, uses a proof-of-work/proof-of-stake hybrid.
On 6 August 2014, the UK announce that the Treasury had asked to study cryptocurrencies and what role, if any, they might play in the UK economy. The study will also shed light on whether regulation should considered.
In June 2021, El Salvador became the first country to accept bitcoin as legal tender after the Legislative Assembly approved by a vote of 62-22 a bill introduced by President Najbucer to make cryptocurrencies legal tender.
Cryptocurrency Alternative currencies
Tokens, cryptocurrencies and other types of digital assets that are not Bitcoin are collectively refer to as alternative cryptocurrencies, often abbreviated as “altcoins” or “altcoins”.
Paul Wigner of the Wall Street Journal also describes altcoins as “an alternative version of Bitcoin” because it is the model protocol for altcoin designers.
The term is often used to describe coins and tokens that have emerge in the wake of Bitcoin. For a list of these cryptocurrencies, see the article List of cryptocurrencies.
Altcoins often have potential differences from Bitcoin. For example, Litecoin aims to process a block every 2.5 minutes instead of Bitcoin’s 10 minutes, which allows Litecoin to confirm transactions faster than Bitcoin.
Another example is Ether, which has smart-contract capabilities that allow decentralised applications to run on its blockchain. According to Bloomberg News, Ether is the most active blockchain in the world and has the largest “following” of any alternative currency, according to the New York Times.
Block chain tokens can offer other functions besides payments, such as in decentralized apps or smart contracts. These terms are usually reserve for alternative tokens.
Decentralize cryptocurrencies are produce collectively by the entire cryptocurrency system at a rate that is set at the time the system is create and is publicly available.
In centralized banking and economic systems, such as the Federal Reserve System, boards or governments control the money supply by printing fiat units or requiring additional digital passbooks.
The case of decentralized cryptocurrencies, companies or governments cannot produce new units and have not yet provided support to other companies, banks or entities that hold the value of assets measured against them.
As of May 2018, there are more than 1,800 cryptocurrency specifications. In a cryptocurrency system, the security, integrity and balance of the ledger are maintain by a community of mutual distrust known as miners; they use their own computers to help verify and mark transactions by adding them to the ledger according to a specific timestamping scheme.
Most cryptocurrencies are design to gradually reduce the production of that currency and limit the total amount of that currency in circulation. Cryptocurrencies are more difficult for law enforcement to seize than regular money held by financial institutions or kept as cash.
The validity of the coins of each cryptocurrency is guarantee by the blockchain. A blockchain is a continuously growing list of records, call blocks, that are link together and protect by cryptography. Each block usually contains a hash pointer as a reference to the previous block, a timestamp and transaction data. By design, a blockchain is inherently protect against data changes.
In the cryptocurrency world, a node is a computer connect to a cryptocurrency network. A node supports a network of related cryptocurrencies by: Forwarding transactions, validating or hosting a copy of the blockchain.
Proof of Stake is a method of securing a cryptocurrency network. That requires users to prove ownership of a certain amount of coins to achieve distributed consensus. It is unique compare to proof of work frameworks that perform onerous hash calculations to approve electronic exchanges.
So, The system is highly dependent on the cryptocurrency and there is no standard form of cryptocurrency yet. Some cryptocurrencies use a mix of proof-of-work and proof-of-participation fundamentals.
In a cryptocurrency network, mining is the validation of a transaction. For this effort, valid miners receive new cryptocurrencies as rewards.
Cryptocurrency wallets store public and private “keys” (addresses) or seeds that can be used to receive or spend cryptocurrencies. With a private key, it is possible to write to the public ledger and effectively spend the cryptocurrency in question. With a public key, it is possible for others to send currency to the wallet.
Bitcoins are pseudonymous rather than anonymous because the cryptocurrency in the wallet is not tied to a person but to one or more specific keys (or “addresses”). Thus, the owner of the bitcoin is not identifiable, but all transactions are public in the blockchain.