What is Cryptocurrency? Understanding Bitcoin and Beyond
Staff Writer / 10-02-2020 / News
At some point, you’ve probably heard the terms “cryptocurrency” or “Bitcoin”, but just what is cryptocurrency and why should you care?
There’s no denying that cryptocurrencies such as Bitcoin are the future. The term cryptocurrency is defined simply as “decentralized digital money”.
According to crypto-expert and author Ray King, there are six distinct features that a cryptocurrency must have:
It is purely digital and exists only on computers. There are no buildings, banks or physical notes or coins involved.
They shouldn’t have a central computer or server. In fact, they are typically distributed across a number of computers. These are called Decentralized Networks.
Users deal with each other directly. There are no banks or trusted third parties such as Pay-Pal. The cryptocurrency is passed from one person to the other online.
This simply means that you don’t have to give out any of your personal information. Absolutely anyone can own or use cryptocurrency.
This is the basis of cryptocurrency. Every user has a special code that stops their information being stolen by other users. It’s called cryptography and is almo st impossible to hack because the data is encrypted.
Since there are no trusted third parties like banks involved, users always in complete control of their information and money thanks to the system, which doesn’t rely on a centralised database or “ledger” to track all transactions.
The final feature of a cryptocurrency is that it is available in any part of the globe. Cryptocurrency can be bought and sold or transferred anywhere in the world. They literally have no borders.
The Rise of Cryptocurrencies
People have been trying to create cryptocurrencies since the early nineties, but it wasn’t until 2009 that someone got it right. Satoshi Nakamoto created the wor ld’s first fully decentralized digital cash system - Bitcoin, which uses blockchain technology. To prove just how private and anonymous cryptocurrency really is, nobody actually knows the true identity of Bitcoin creator Satoshi Nakamoto – it could be a man, a woman or even a group of people.
Bitcoin quickly became popular amongst users who saw its potential. In April 2011, a Bitcoin (BTC) was worth just $1(USD). By the end of 2017, at its peak, a single Bitcoin was worth more than $20,000. However, since then it has dropped to around $7,500.
Apart from Bitcoin, there are hundreds of other cryptocurrencies around and all of them want to change the world. Some examples of these are Litecoin and Ethereum. The la tter has quickly skyrocketed in value since its inception in 2015. It’s officially the second most valuable cryptocurrency available and was used by UNICEF to raise money for children in Syria. Trading cryptocurrencies has also become a popular business for online platforms like Binance, Bitstamp and Coinbase.
Even celebrities are getting in on the action. Rapper 50 Cent, also known as Curtis Jackson, accepted Bitcoin as payment for his 2014 album and collected 700BTC. By January 2018, he confirmed that he made nearly $8 Million dollars according to celebrity website TMZ.
Cryptocurrencies are seen as the future. They help to stomp out corruption and also provides users with much needed security. You stay in control of your money and your information instead of giving those out to third parties like the banks who hold your personal information and your money. Here’s to the future of cryptocurrency.