The semantics of Cryptocurrency is “crypto” which comes from the Greek word “kryptós” meaning “hidden or secret”; and the word “currency” which refers to a system of money generally accepted or in use. So, by all means, cryptocurrency is “hidden money”.
Cryptocurrency, with the use of megacomputers, may also be defined as limited figures in a database that requires a fulfillment of certain conditions before it can be changed or managed. Come to think of it, it’s also how ordinary world currencies work.
They follow certain protocols before they can be handled by anybody. Cryptocurrencies are held by databases of a consensus of peers in a network and secured by unknown mathematical algorithms.
Money is just a figure in a database resembling value (of gold) and the regulation of which is only dictated by certain conditions imposed and accepted by the people who allow it. Same with cryptocurrencies.
They have value because they are given value-hypothetically. All the more, it is given higher value because it is incredibly hard to find, just like gold – you’d have to “mine” them.
And because the world is highly digitized nowadays wherein almost everyone has access to a digital network, it is most likely that transaction of goods happens.
And just as transmitting information can be done through email or SMS through far-reaching signals over thousands of miles away and not necessarily talk vocally face-to-face, so is trade and commerce.
Cryptocurrencies such as Bitcoin, for example, allow people to transact goods, move assets, just like how fiat money works. However, anonymity and a few other grounds draw the line.
No government or central bank regulates the distribution and creation of cryptocurrencies. It is the sheer faith of the bagholders that give cryptocurrencies their value – and this belief is robust.
Let’s have a closer look at cryptocurrencies. It consists of a network of peers called “nodes” or computers. Unlike central banks, cryptocurrencies are decentralized – meaning many people have authority over its regulation and operation.
This makes it secure and transparent as anyone who tries to tweak and manipulate the cryptocurrency will be easily detected by other administrators or so-called “peers”.
Once a transaction is being processed, it only takes little time before it gets confirmed. Once it is confirmed and validated, the transaction is final and irreversible.
It will permanently be recorded in the ledger called “blockchain”. Now, that tiny span of clearance time maybe a loophole to the dishonest few.
Until it is confirmed, the transaction is vulnerable to double spending or forgery, and lest you want to lose double (if you are a seller), you might want to wait for the confirmation first before transferring your goods.
Cryptocurrencies that are lost can never be retrieved. It could be lost by either malice or recklessness. If this happens, nobody can help you get it back.
Not you, not your miner, not Satoshi, and definitely not your bank. There are laid out security measures that help you guard your cryptocurrency and it’s up to you to take that initiative – as everything is virtual after all.
Now it is important to know that only miners are able to confirm transactions. This is their job and they get rewarded with a “coin” for every completed task.
A miner takes a transaction and label it as legitimate then broadcast it into the network. Once a transaction has been verified & confirmed by a miner, each “node” or computer keeps a record of it in its database.
Thus, becoming part of the blockchain. Sealed and unalterable. A few of the best characteristics that best describe cryptocurrencies are:
- Final and Irrevocable
- Alias or Anonymity
- Efficient and Far-reaching
- Secure
- Autonomous
Although the emergence and circulation of Cryptocurrencies were spearheaded by Bitcoin, many cryptocurrencies followed suit and they too are doing very well. They are called “altcoins” or alternative coins.
Here are a few of the best entries for this section in random order:
- Bitcoin
- Ethereum
- Ripple
- Litecoin
- Bitcoin Cash
Aside from the above mentioned, there are hundreds more out there. Most of them are presented as highly lucrative and targeted on investors mainly for the sole purpose of generating money, while others are for the purpose of testing digital innovations especially the cryptocurrency-technology.
Any questions?
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