What is cryptocurrency?

SINCE the 1980s, talk of establishing an electronic form of money has captivated the world.

In 2009, the first decentralized cryptocurrency, Bitcoin, was created.

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What is cryptocurrency?

Cryptocurrency is formally defined by Dr Jan Lansky – a professor proficient in computer science, mathematics, and economics – as a system that meets six conditions:

• The system does not require a central authority
• The system keeps an overview of cryptocurrency units and their ownership
• The system defines whether new cryptocurrency units can be created
• Ownership of cryptocurrency units can be proved exclusively cryptographically
• The system allows transactions to be performed in which ownership of the cryptographic units is changed
• If two different instructions for changing the ownership of the same cryptographic units are simultaneously entered, the system performs at most one of them

Known as a digital currency used to work as a medium of virtual exchange, cryptocurrency is not reliant on any central authority – including a government or bank.

Cryptocurrency exchanges are saved via blockchain, which is just another word for a growing list of records secured by cryptography.

Cryptography is simply the study of secure communications techniques.

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What is bitcoin?

Bitcoin is a virtual currency that was created in January 2009 by an unknown computer whizz using the alias Satoshi Nakamoto.

Unlike physical currencies such as dollars, pounds, or euros – which come in physical notes and coins – Bitcoin isn’t printed or minted.

Instead, Bitcoin tokens are a digital-only form of payment and are created by computer code.

On August 18, 2008, the domain name ‘bitcoin.org’ was registered.

Months later, a paper authored by the mysterious Satoshi Nakamoto entitled Bitcoin: A Peer-to-Peer Electronic Cash System was published and linked to a cryptography mailing list.

While Bitcoin remains the most widely used form of decentralized currency, other cryptocurrencies exist, including Litecoin, Namecoin, Peercoin, Dogecoin, Gridcoin, Primecoin, Ripple, Nxt, Auroracoin, Dash, NEO, MazaCoin, Monero, Titcoin, Verge, Stellar, Vertcoin, Ethereum, Ethereum Classic, Nano, Tether, Firo, Zcash, Bitcoin Cash, EOS.IO, Cardano, TRON, AmbaCoin, Avalanche, Shiba Inu, DeSo, SafeMoon, and Internet Computer.

As of February 28, 2022, Bitcoin is currently worth $41,656.00.

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How are cryptocurrency transactions recorded?

Within a blockchain, a series of blocks containing a timestamp and transaction data exists.

It’s basically a virtual bank ledger, without the formal backing of an actual bank.

A cryptocurrency wallet exists for the purpose of sending or receiving digital currencies.

Cryptocurrency networks exist via computer, which is known as a node.

A node works to support the relevant network through transactions, validations, or copies of the blockchain.

Timestamping is used to essentially prove the validity of cryptocurrency transactions within a blockchain ledger.

There are various methods of timestamping, including proof of work and proof of stake.

The proof-of-work method sees one party prove to others a certain amount of computational effort has been expended per exchange.

On the other hand, the proof-of-stake method selects validators in proportion to a blockchain’s quantity of holdings in an associated cryptocurrency.

The validation of transactions within cryptocurrency networks is known as mining.