By simple definition, cryptocurrency is an electronic currency. It is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets. According to the mission of its founders, it was founded to eliminate third-party transactions. As a result, there is a transfer payment “from hand to hand”, without the participation of unauthorized persons. Today, we shall learn one or two things about Cryptocurrency: What is it & how it works.
When and why was electronic money introduced?
The principles of cryptography(methods to ensure data privacy and integrity of their authentication) have been in use for more than four thousand years. Although very few people are likely to be interested in its historical references.
So we move on to the present. For the first time, the basics of cryptography were used for operations with e-currency in 1990. However, the payment system company DigiCash was highly centralized. Therefore, the project went bankrupt 8 years after opening.
What is a cryptocurrency for dummies?
This is an opportunity to carry out financial transactions without the knowledge of government organizations. In general, it is not surprising that e-money is so popular. Modern technologies allow us to make payments quickly, despite the location of the parties to the transaction. However, absolute security is also not guaranteed. Of course no one today can give that?
What are the advantages of cryptocurrency?
- Decentralization. In e-currencies, we do not have any emission centers. In addition and in contrast to the national currency, this does not belong to anyone. It belongs only to the owners of the coins.
- Transparency of transactions. All transaction data forever remain in the database. So any time you can pick up and track your transactions.
- Commission constitutes a fraction of a percent for operations within the system that makes cryptocurrency a very profitable way of calculation in countries where banking is very expensive.
- There is no centralized control. So you can not be afraid that someone will be able to cover your wallet or cancel the transaction.
- Furthermore, there is a high degree of Anonymity. In contrast to the same Webmoney and others like him, there is no need for identity documents. There is no need to show a passport, to register the purse.
- Availability. Any internet user with a home computer can deal with his own coin production.
- Full binding to computer resources, unlike world currencies. cryptocurrency is tied to computing power.
Development of Cryptocurrencies
Many who have heard of cryptocurrency or are even familiar with the concept has only associated with the word “Bitcoin”. This does not come as surprise, after all, bitcoin is the first and most popular cryptocurrency we have today.
In English, it sounds like the definition of cryptocurrency. We can say that the definition of bitcoin was dated back to like 7 years ago. By the way, there is still no consensus on who was hiding under the name of the creator of this flagship cryptocurrency. Satoshi Nakamoto – one person or a whole group of developers. However, in 2014, he published an article by an American journalist about the exposure.
Over time, there were other kinds of cryptocurrencies. According to some estimates, today, we have more than two thousand coins. Security of transactions is ensured by blockchain technology (blockchain). The latter allows you to keep a record of translations of virtual assets, to avoid fraud. At its core, it’s a chain with strictly distributed data blocks. The advantage is that there should not be any way to fake or change information.
List of the Most Popular kinds of Electronic Currencies
Bitcoin (Bitcoin, BTC)
In fact, this is the ancestor of all flagship cryptocurrencies. Bitcoins are usually compared with gold coins. Mainly due to the fact that its rate is consistent with market prices for real gold. And, perhaps because “extract” them pretty hard – generated by solving complex mathematical problems on the principle of Proof-to-work (proof of performance).
Litecoin is called the “silver cryptocurrency”. This system is under its parent for 2 years. Founder Charlie Lee tried to equate the compliance rates of the cryptocurrency on the stock exchange to the market value of silver. Here, transactions are nearly 4 times faster than BTC. All thanks to more convenient options of mining (extraction cryptocurrency) and the use of crypt function.
Primecoin is rather an edited copy of Bitcoin. It launched in 2013. Bitcoin differs from its utility computing. This system is involved in the computation of prime numbers, in particular, the Cunningham chain.
Peercoin ( PPC)
founded in 2012, the first two systems differ unlimited emission of coins. But there is inflation, whose size is about 1% per year. Used in the development of open-source bitcoin. A distinctive feature is that in this system, income is distributed among miners and currency holders
is an offshoot of a bitcoin alternative DNS server system. There is also a restriction of emission in 21 Mill. This system is much more complicated to point cryptocurrency by implementing a distributed Domain Name System. Most of nmc used to pay for registration or renewal of domain names in the zone .bit.
The name of the local currency – Ether. This cryptocurrency appeared on the scene less than six months ago, but it is rapidly gaining popularity. By the way, its creator – a young Canadian of Russian origin Vitaly Buterin. His system is already being called “cryptocurrency 2.0”. Operating at an affordable blockchain, this platform offers more than Bitcoin. One of the key concepts – “smart contracts” that automate most of the processes of the transaction.
Probably the only one in the world cryptocurrency, which received the name in honor of the internet meme with a dog. The system entered the market in 2013 and was characterized by a rapid initial period of mining. Created on the basis of Litecoin.
Where is the best place to keep Cryptocurrency?
Keep your e-currency on a personal removable disk. As an online store can always hack. Or, at least, on a virtual machine (VirtualBox type), where only your wallet will hang. It is worth mentioning that the safety of your funds depends primarily on you. So, if you do not plan to immediately exchange and withdraw money, it is better to protect them from hackers’ attacks and break-ins. Also, you can keep with a reliable exchange service with an excellent reputation such as Bankcomat.com