What is cryptocurrency?
If you take away all the noise around cryptocurrencies and reduce it to a simple definition, you find it to be just limited entries in a database no one can change without fulfilling specific conditions. This may seem ordinary, but, believe it or not: this is exactly how you can define a currency.
Take the money on your bank account: What is it more than entries in a database that can only be changed under specific conditions? You can even take physical coins and notes: What are they else than limited entries in a public physical database that can only be changed if you match the condition than you physically own the coins and notes? Money is all about a verified entry in some kind of database of accounts, balances, and transactions.
So, to give a proper definition – Cryptocurrency is an internet-based medium of exchange which uses cryptographical functions to conduct financial transactions. Cryptocurrencies leverage blockchain technology to gain decentralization, transparency, and immutability.
How miners create coins and confirm transactions
Let‘s have a look at the mechanism ruling the databases of cryptocurrencies. A cryptocurrency like Bitcoin consists of a network of peers. Every peer has a record of the complete history of all transactions and thus of the balance of every account.
A transaction is a file that says, “Bob gives X Bitcoin to Alice“ and is signed by Bob‘s private key. It‘s basic public key cryptography, nothing special at all. After signed, a transaction is broadcasted in the network, sent from one peer to every other peer. This is basic p2p-technology.
what is cryptocurrency
Blockchain and Cryptocurrency
The transaction is known almost immediately by the whole network. But only after a specific amount of time it gets confirmed.
Confirmation is a critical concept in cryptocurrencies. You could say that cryptocurrencies are all about confirmation.
As long as a transaction is unconfirmed, it is pending and can be forged. When a transaction is confirmed, it is set in stone. It is no longer forgeable, it can‘t be reversed, it is part of an immutable record of historical transactions: of the so-called blockchain.
Only miners can confirm transactions. This is their job in a cryptocurrency-network. They take transactions, stamp them as legit and spread them in the network. After a transaction is confirmed by a miner, every node has to add it to its database. It has become part of the blockchain.
For this job, the miners get rewarded with a token of the cryptocurrency, for example with Bitcoins. Since the miner‘s activity is the single most important part of the cryptocurrency-system we should stay for a moment and take a deeper look at it.
caleb-chen: What is Ethereum“In the next few years, we are going to see national governments take large steps towards instituting a cashless society where people transact using centralized digital currencies. Simultaneously, the decentralized cryptocurrencies – that some even view as harder money – will see increased use from all sectors.” – Caleb Chen London Trust Media
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Of course, actually 'shutting down' Liberty Dollars was as easy as arresting the head of the company and seizing the offices and the precious metals used as backing. The decentralized Bitcoin, with no leader, no servers, no office, and no tangible asset backing, does not have the same vulnerability.bitcoin it bitcoin blue форекс bitcoin Many beginners in cryptocurrency believe that Ethereum is only as a financial currency, like Bitcoin. This is wrong for many reasons; let’s look at the basics.daily bitcoin
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Checkpoints which have been hard coded into the client are used only to prevent Denial of Service attacks against nodes which are initially syncing the chain. For this reason the checkpoints included are only as of several years ago. A one megabyte block size limit was added in 2010 by Satoshi Nakamoto. This limited the maximum network capacity to about three transactions per second. Since then, network capacity has been improved incrementally both through block size increases and improved wallet behavior. A network alert system was included by Satoshi Nakamoto as a way of informing users of important news regarding bitcoin. In November 2016 it was retired. It had become obsolete as news on bitcoin is now widely disseminated.bitcoin png bitcoin лотереи
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