Let’s answer the question what is a Cryptocurrency?
I know you might already have an answer to the question what is a Cryptocurrency?
You might even give examples like Bitcoin, Ethereum etc, but you might still learn a thing or two from the few paragraphs below,
Hi, my name is Musa “The Giant” from Durban, South Africa.
I have been in the in a crypto-space since late 2015.
Let’s get started…
What is a Cryptocurrency?
A cryptocurrency, aka a Digital Currency, is essentially a Digital Money that can be spent via the Internet.
In more depth, Cryptocurrencies are restricted entries into a database (Blockchain) that are created using cryptography rather than people or banks.
All of these entries are shared over a peer-to-peer network known as a Blockchain. A Blockchain is a Public Ledger of transactions, more simply put, a receipt of transactions that can be seen by the public.
This public ledger works as a fraud prevention device/software, as it prevents digital currencies from being spent twice (double-spending) or being counterfeited.
Every user on the network has access to the transactions that have occurred on the network. This allows for the entire history of the transactions made using a respective cryptocurrency to be seen by anyone.
The public ledger (The Blockchain) also allows for the balance of any account to be visible by all on the network, though the identity of the owner is kept anonymous.
Cryptocurrencies are able to accomplish what a bank offers while also offering anonymity and decentralization.
Each entry on the network is represented by a respective number of coins (it is different with every currency, as each has a different value, total supply, usage etc.).
Coins are generated using a computer program that works to find the next block in the blockchain. The people who run this program are called Miners.
The Mining of the coin secures the network and confirms transactions. The blocks found by Miners are solved by programs that are essentially cryptographic puzzles that are solved to discover new blocks.
The hash connects, or chains, the new block with all previous blocks, creating the ledger and securing the transaction. This is where the term Blockchain was derived from.
The value of each cryptocurrency comes from their respective networks and the value in which the members of that network decide to trade the coin at.
Benefits of Cryptocurrencies:
1. Irreversible Transactions:
– After a cryptocurrency is sent from one digital wallet to another and the transaction is confirmed, the transaction is irreversible. This acts as a form of fraud protection as there is no chance for chargebacks to occur.
– Rather than a centralized bank, cryptocurrencies are stored in Offline Wallets that can only be accessed using the computer in which the wallet is downloaded on. These wallets may also possess a security code that is only known by the owner.
Wallets are represented by a randomly generated address that can be changed repeatedly, thus making it nearly impossible to link a wallet address with an identity.
Though a public ledger of transactions on the network can be viewed by anyone, these ledgers are not connected to any single person’s identity directly.
Different altcoins have varying levels of anonymity. Each Wallet is essentially its own bank in charge of how and when it’s currency is spent.
3. Globally Accessibility:
– Entries on the network are broadcast over the Internet immediately and a confirmed in a short period of time, generally just a few minutes.
– Cryptocurrencies are very secure. The use the latest cryptographic techniques, which are essentially very complicated math equations, in order to maintain a high level of security.
5. Controlled Supply:
– These currencies have a finite number of coins that will ever be created and once all have been produced no more can be made.
Counterfeiting and double spending of coins is also made more difficult because of this. This is unlike cryptocurrency’s fiat counterpart, which can be printed at will by the government who owns the fiat,
I hope this post better answered the question “what is a cryptocurrency?”
Please help more people discover and learn from this post by pressing the share buttons.
Crypto-Musa The Giant!