What is Cryptocurrency?
Unlike physical money, which is backed by a country’s government and has a central bank in that country, cryptocurrency exists solely in computer code. It is controlled and regulated directly by the currency’s creators and users. Just like actual money, it can also be exchanged for goods and services so long as the business in question accepts your cryptocurrency of choice. There are several varieties of cryptocurrency, including Bitcoin, Dogecoin, Coinbase and Zerocash. Cryptocurrency is said to get it start from an unknown person or organization going by the name of “Satoshi Nakamoto” in 2009. Bitcoin’s original code was publicly released on Sourceforge.net and, with the help of several collaborators, Bitcoin’s services opened to the public soon after.
How It Works
For physical currency to have any value, it is backed up by a country’s reserves of gold. Gold’s natural scarcity, as well as its difficulty to extract and refine, gives currency its value in the first place. Cryptocurrency follows a similar idea, minus the gold. Instead, cryptocurrency relies on how much work their “miners” put into the currency for its value by way of a fascinating system.
First, a transaction is made between two cryptocurrency accounts. This transaction is stored in a public ledger with the two parties’ names encrypted for security purposes. The ledger serves as publicly viewable proof that the currency is being used in the first place, establishing its value. Next come the “miners,” the backbone of cryptocurrency’s value. Miners confirm a transaction and add it to the public ledger, but they do not do this simply by logging when and where a transaction happened. Instead, they must solve increasingly intricate computational problems. The first miner to do so gets to add a “block” of transactions to the ledger and gets paid a transaction fee for their services. This ensures that the ledger is not altered easily and cements the cryptocurrency’s security and value.
Will It Last?
Cryptocurrency is walking a razor-thin line, so its future is still uncertain. Vulnerabilities in cryptocurrency systems are being discovered daily, as are fixes for these issues. Cryptocurrency needs more organizations to accept it for it to be viable in the future. They need to accomplish this while staying low enough on the radar to avoid too much government regulation. The road that lies ahead will be a bumpy one for sure.