What is Cryptocurrency: 21st-Century Unicorn – Or The Money Of The Future?
1.Cryptocurrency is an Internet-based medium of exchange, which uses encryption functions for financial transactions. Cryptocurrency uses blockchain technology to achieve decentralization, transparency and immutability.
2. The most important feature of cryptocurrency is that it is not controlled by any central authority: the decentralized nature of blockchain makes cryptocurrency theoretically immune to the influence of old methods of government control and intervention.
3. Encrypted currency can be sent directly between two parties through the private key and public key. These transfers can be completed with minimal fees, so that users can avoid the high fees charged by traditional financial institutions.
Nowadays, cryptocurrency (purchasing cryptocurrency) has become a global phenomenon that most people know. In this guide, we will tell you everything you need to know about cryptocurrencies and what they can bring into the global economic system.
Nowadays, you‘ll have a hard time finding a major bank, a big accounting firm, a prominent software company or a government that did not research cryptocurrencies, publish a paper about it or start a so-called blockchain-project.
However, in addition to the noise and press releases, the vast majority of people-even bankers, consultants, scientists, and developers-have very limited knowledge of cryptocurrencies. They often don’t even understand the basic concepts. So let’s walk through the whole story. What is cryptocurrency?
How cryptocurrency works ?
Few people know, but cryptocurrency is a by-product of another invention. Satoshi Nakamoto is the unknown inventor of Bitcoin. He was the first and most important cryptocurrency, but he never intended to invent a currency. In a Bitcoin statement issued in late 2008, Satoshi Nakamoto said that he developed a “peer-to-peer electronic cash system.” His goal is to invent something. Many people failed to create digital cash before creating it.
The most important part of Satoshi Nakamoto’s invention is that he found a way to build a decentralized digital cash system. In the 1990s, there were many attempts to create digital currencies, but they all failed.
After seeing all centralized attempts failed, Satoshi Nakamoto tried to build a digital cash system without a central entity. It’s like a peer-to-peer network for file sharing. This decision became the birth of cryptocurrency. They are Satoshi Nakamoto who discovered the lost property to realize digital cash. The reason for this is a bit technical and complicated, but if you can understand it, you will know cryptocurrency better than most people. So let’s try to make it as simple as possible: To implement digital cash, you need a payment network with accounts, balances and transactions. This is easy to understand. A major problem that every payment network must solve is to prevent so-called double spending: preventing an entity from spending the same amount twice. Usually, this is done by a central server, which records information about the balance.
In a decentralized network, you do not have this server. Therefore, you need every entity of the network to complete this work. Each peer in the network needs to have a list of all transactions to check whether future transactions are valid or whether to double consumption. But how can these entities reach a consensus on these records? If the peers of the network disagree on a single small balance, everything will break. They need absolute consensus. Usually, you again need a central authority to declare the correct balance status. But if there is no central authority, how can you reach a consensus? No one knew until Satoshi appeared suddenly. In fact, no one believes it is even possible. Satoshi proved it. His main innovation is to reach consensus without central authority. Cryptocurrency is part of the solution-the part that makes the solution exciting, fascinating and helps it spread all over the world.
What is cryptocurrency ?
If you eliminate all the interference surrounding cryptocurrency and simplify it to a simple definition, you will find that it is only a limited entry in the database, and no one can change it if certain conditions are not met. This may seem ordinary, but believe it or not: this is how money is defined.
Deposit money in your bank account: What else is there other than database entries that can only be changed under certain conditions? You can even withdraw physical coins and banknotes: what else is there other than the limited entries in the public physical database that can only be changed under physical conditions instead of actually owning coins and banknotes? Funds all involve some kind of account, balance and verified entries in the transaction database. Therefore, it is necessary to give an appropriate definition-cryptocurrency is an Internet-based medium of exchange, which uses encryption functions for financial transactions. Cryptocurrency uses blockchain technology to achieve decentralization, transparency and immutability.