What is Cryptocurrency?

Cryptocurrency is a tradable digital asset or currency in digital form, based on blockchain technology that only exists online. Cryptocurrency uses encryption to verify and protect transactions, which is where its name comes from. There are currently more than a thousand different cryptocurrencies globally, and many people believe that they are the key to a fairer future economy.

The most straightforward cryptocurrency works by recording transactions in a database to calculate how much currency each person or their address holds. In this sense, the system is not much different from the current operation of the bank. Moreover, the funds you spend online follow a similar principle: You send money from your bank account to another account by deducting the number associated with your account, which is your balance. This is just information recorded on the database, and no physical exchange occurs.

Every cryptocurrency works on the same basis because it is a large log of information data, transactions, used to determine the amount of cryptocurrency that each “set” is attributed to it. The difference is that cryptocurrency is purely digital, and there is no choice to take out cryptocurrency in the form of banknotes or coins.

When using cryptocurrency, you have a public key and a private key, both displayed as strings of random numbers and letters. It would help if you never share your private key with anyone. It is also essential to record the private key and store it in a safe and reliable place. In terms of encryption, there is no “I forgot my private key” option. If the private key is lost, everything controlled by the permit will be lost.

The main difference between cryptocurrency and traditional financial models is the decentralization of cryptocurrency. This means that when you spend cryptocurrency, the transaction’s approval does not come from a central institution, such as a bank or PayPal, but a peer-to-peer computer network. It is legal to reach a consensus on your transaction, which many people consider as one of the most attractive yet destructive aspects of cryptocurrency. This power distribution is ushering in a new era in which currency is controlled by the people, not by large corporations like banks. Organization. Most cryptocurrencies also provide privacy protection because everyone’s identity is hidden behind the most advanced cryptography, which means everyone’s privacy remains the same.

The functions of cryptocurrencies are similar to the fiat currencies we use today, as they could be used to pay for goods and services. Although the number of companies accepting cryptocurrency in the past was minimal, it is now growing as awareness spreads and becomes more mainstream. The most common is Bitcoin because it was the first to be created and the most widespread Bitcoin in the world. However, companies are beginning to see the limitations of only accepting Bitcoin, so they are also starting to explore other cryptocurrencies.

Cryptocurrency can be used for many different purposes, not just as a means of transaction. For example, cryptocurrencies can have explicit utilities, such as LSK tokens.

The first time most people heard about cryptocurrency was the emergence of Bitcoin. However, when Satoshi Nakamoto, the mysterious founder of Bitcoin, created the world’s first viable cryptocurrency, he did not intend to invent a currency. Digital currency is a concept that has always existed before Bitcoin. The best example is the DigiCash company founded in 1989, which tried to create the world’s first widely used digital currency. DigiCash is an electronic money company that created an anonymous payment protocol based on cryptography. However, after failing to gain mainstream adoption, DigiCash was forced to file for bankruptcy in 1998, among several other issues.

 

Ten years later, perhaps in response to the economic collapse in 2008, an unknown developer, until today is known as Satoshi Nakamoto, published a white paper on a decentralized peer-to-peer electronic cash system, which is open The form of the online-source project (meaning that any developer can participate in it).  This project is called Bitcoin and is the first example of a functional cryptocurrency.

 

Since then, thousands of cryptocurrencies and utility tokens have sprouted, including serious projects that aim to change the world by adopting blockchain technology like Lisk and currencies created purely as jokes, such as Dogecoin. Interviewing an AISG sophomore Richie Liu, “it’s only this year I first heard of cryptocurrencies, since it has been on the news a lot recently,  but I never really knew how it worked.” Another question was asked to sophomore Tony Park, saying that “I know about Dogecoin since there are so many memes and jokes about it, and I always knew about Bitcoin, and this year had been a crazy year for cryptocurrencies.” With the technology to further extend cryptocurrencies, this has led to a booming industry based on this currency transaction.