– A bit of story of development, how it works
– Some words about the most famous currencies (Bitcoin, ethereum..)
– Where is used & accepted at the moment
Crypto – The Beginning
Cryptocurrencies emerged as a product of Satoshi Nakamoto, the inventor of Bitcoin, the first and most important cryptocurrency. In late 2008, Satoshi claimed he had developed “A Peer-to-Peer Electronic Cash System.” Satoshi’s invention was way to build a decentralized digital cash system. Satoshi tried to build a digital cash system without a central entity.
To realize digital cash a payment network with accounts, balances, and transaction is needed. However, as every payment system is susceptible to failure, the cryptocurrency method is not tied to a central server, which keeps records about transactions. In a decentralized network every peer in the network needs to have a list of all transactions to crosscheck if incoming transactions are valid or are an attempt to double spend. If the peers of a network disagree on any minor balance, the system halts the transaction. Absolute consensus is key for the system’s functioning.
A cryptocurrency like Bitcoin consists of a large network of peers. Every peer maintains a complete history record of all transactions and the balance of every account. Any transaction is known almost immediately by the network, but gets confirmed after some time. As long as a transaction is unconfirmed, it can be forged. When a transaction is confirmed, it is fixed and unalterable, having become part of the blockchain.
Only miners can confirm transactions as they process them and insert them into the hash after a series of complicated mathematical equations completed on a mining “farm”. After a transaction is confirmed by a miner, every node has to add it to its database, as it has become part of the blockchain. The miners get rewarded with tokens of cryptocurrencies for their work.
Cryptocurrencies are money that promises to preserve and increase its value over time. Cryptocurrencies are also a fast and comfortable means of payment with a worldwide grasp, being entirely anonymous. Cryptocurrencies are also used as a means of speculation, rapidly developing into an incredibly dynamic, fast-growing market for investors and speculators. While Bitcoin remains the most famous cryptocurrency, several other cryptocurrencies exist, such as:
Bitcoin is used as a global means of payment and is the de-facto currency of cyber-crime and a massive speculative asset.
The creation of Vitalik Buterin occupies second place in the hierarchy of cryptocurrencies. However, unlike Bitcoin, Ethereum can process transactions and complex contracts and programs, making it the instrument of choice for blockchain applications.
Though less popular than Bitcoin or Ethereum, Ripple has a native cryptocurrency, the XPR, which does not serve as a medium to store and exchange value, but more as a token to protect the network against spam.
Litecoin was one of the first cryptocurrencies after Bitcoin. Faster in processing than Bitcoin, with a larger amount of tokens and different mining algorithm. The LTC is tailored to be more of a backup for Bitcoin, should the latter ever fail.
This algorithm was invented to add privacy, which Bitcoin lacks. In Bitcoin, every transaction is registered in the blockchain and the trail of transactions can be followed. With Monero, it has become almost anonymous, though the token remains of low value.