Altcoins Talks - Cryptocurrency Forum
Cryptocurrency Ecosystem => Crypto currency Mining => Topic started by: Niko on September 27, 2018, 05:59:15 PM
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What is cryptocurrency?
21st-century unicorn - or the money of the future?
This introduction explains the most important thing about cryptocurrencies. After you've read it, you'll know more about it than most other humans.
Today cryptocurrencies (Buy Crypto) have become a global phenomenon known to most people. While still somehow geeky and not understood by most people, banks, governments and many companies are aware of its importance.
In 2016, you'll have a hard time finding a major bank, a big accounting firm, a prime software company or a government that did not research cryptocurrency, publish a paper about it or start a so-called blockchain-project.
"Virtual contexts, possibly most notably Bitcoin, have captured the imagination of some, stuck fear among others, and confused the heck out of the rest of us." - Thomas Carper, US-Senator
But beyond the noise and the press releases the overwhelming majority of people - even bankers, consultants, scientists, and developers - have a very limited knowledge about cryptocurrencies. They often fail to even understand the basic concepts.
So let's walk through the whole story. What are cryptocurrencies?
Where did cryptocurrency originate? Why should you learn about cryptocurrency? And what do you need to know about cryptocurrency?
What is cryptocurrency and how cryptocurrency emerged as a side product of digital cash
Few people know, but cryptocurrency emerged as a side product of another invention. Satoshi Nakamoto, the unknown inventor of Bitcoin, the first and still most important cryptocurrency, never intended to invent a currency.
In his announcement of Bitcoin in late 2008, Satoshi said he developed a "Peer-to-Peer Electronic Cash System."
His goal was to invent something; many people failed to create before digital cash.
Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double-spending. It's completely decentralized with no server or central authority. - Satoshi Nakamoto, 09 January 2009, announcing Bitcoin on SourceForge.
Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double-spending. It's completely decentralized with no server or central authority. - Satoshi Nakamoto, 09 January 2009, announcing Bitcoin on SourceForge.
The single most important part of Satoshi's invention was that he found a way to build a decentralized digital cash system. In the nineties, there have been many attempts to create digital money, but they all failed.
... after more than a decade of failed Trusted Third Party based systems (Digicash, etc), they see it as a lost cause. I hope they can make the distinction, that this is the first time I know of that we're trying a non-trust based system. - Satoshi Nakamoto in an E-Mail to Dustin Trammell
After seeing all the centralized attempts fail, Satoshi tried to build a digital cash system without a central entity. Like aPeer-to-Peer network for file sharing.
This decision became the birth of cryptocurrency. They are the missing piece Satoshi found to realize digital cash. The reason why is a bit technical and complex, but if you get it, you'll know more about cryptocurrencies than most people do. So, let's try to make it as easy as possible:
To realize digital cash you need a payment network with accounts, balances, and transaction. That's easy to understand. One major problem every payment network has to solve is to prevent the so-called double spending: to prevent that one entity spends the same amount twice. Typically, this is done by a central server who keeps record about the balances.
In a decentralized network, you do not have this server. So you need every single entity of the network to do this job. Every peer in the network needs to have a list with all transactions to check if future transactions are valid or an attempt to double spend.
But how can these entities keep aconsensus about this records?
If the peers of the network disagree about only one single, minor balance, everything is broken. They need an absolute consensus. Usually, you take, again, a central authority to declare the correct state of balances. But how can you achieve consensus without a central authority?
Nobody did know until Satoshi emerged out of nowhere. In fact, nobody believed it was even possible.
Satoshi proved it was. His major innovation was to achieve consensus without a central authority. Cryptocurrencies are a part of this solution - the part that made the solution thrilling, fascinating and helped it to roll over the world.
]
What is cryptocurrency: 21st-century unicorn - or the money of the future?
This introduction explains the most important thing about cryptocurrencies. After you've read it, you'll know more about it than most other humans.
Today cryptocurrencies (Buy Crypto) have become a global phenomenon known to most people. While still somehow geeky and not understood by most people, banks, governments and many companies are aware of its importance.
In 2016, you'll have a hard time finding a major bank, a big accounting firm, a prime software company or a government that did not research cryptocurrency, publish a paper about it or start a so-called blockchain-project.
"Virtual contexts, possibly most notably Bitcoin, have captured the imagination of some, stuck fear among others, and confused the heck out of the rest of us." - Thomas Carper, US-Senator
But beyond the noise and the press releases the overwhelming majority of people - even bankers, consultants, scientists, and developers - have a very limited knowledge about cryptocurrencies. They often fail to even understand the basic concepts.
So let's walk through the whole story. What are cryptocurrencies?
Where did cryptocurrency originate? Why should you learn about cryptocurrency? And what do you need to know about cryptocurrency?
What is cryptocurrency and how cryptocurrency emerged as a side product of digital cash
Few people know, but cryptocurrency emerged as a side product of another invention. Satoshi Nakamoto, the unknown inventor of Bitcoin, the first and still most important cryptocurrency, never intended to invent a currency.
In his announcement of Bitcoin in late 2008, Satoshi said he developed a "Peer-to-Peer Electronic Cash System."
His goal was to invent something; many people failed to create before digital cash.
Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double-spending. It's completely decentralized with no server or central authority. - Satoshi Nakamoto, 09 January 2009, announcing Bitcoin on SourceForge.
Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double-spending. It's completely decentralized with no server or central authority. - Satoshi Nakamoto, 09 January 2009, announcing Bitcoin on SourceForge.
The single most important part of Satoshi's invention was that he found a way to build a decentralized digital cash system. In the nineties, there have been many attempts to create digital money, but they all failed.
... after more than a decade of failed Trusted Third Party based systems (Digicash, etc), they see it as a lost cause. I hope they can make the distinction, that this is the first time I know of that we're trying a non-trust based system. - Satoshi Nakamoto in an E-Mail to Dustin Trammell
After seeing all the centralized attempts fail, Satoshi tried to build a digital cash system without a central entity. Like aPeer-to-Peer network for file sharing.
This decision became the birth of cryptocurrency. They are the missing piece Satoshi found to realize digital cash. The reason why is a bit technical and complex, but if you get it, you'll know more about cryptocurrencies than most people do. So, let's try to make it as easy as possible:
To realize digital cash you need a payment network with accounts, balances, and transaction. That's easy to understand. One major problem every payment network has to solve is to prevent the so-called double spending: to prevent that one entity spends the same amount twice. Typically, this is done by a central server who keeps record about the balances.
In a decentralized network, you do not have this server. So you need every single entity of the network to do this job. Every peer in the network needs to have a list with all transactions to check if future transactions are valid or an attempt to double spend.
But how can these entities keep aconsensus about this records?
If the peers of the network disagree about only one single, minor balance, everything is broken. They need an absolute consensus. Usually, you take, again, a central authority to declare the correct state of balances. But how can you achieve consensus without a central authority?
Nobody did know until Satoshi emerged out of nowhere. In fact, nobody believed it was even possible.
Satoshi proved it was. His major innovation was to achieve consensus without a central authority. Cryptocurrencies are a part of this solution - the part that made the solution thrilling, fascinating and helped it to roll over the world.
What are cryptocurrencies really?
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.
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 that 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. Nothing special at all, again.
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 cryptocurrency. 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 not 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 cryptocurrency-system we should stay for a moment and take a defect look on it.
What are miners doing?
Principally everyone can be a miner. Since a decentralized network has no authority to delegate this task, a cryptocurrency needs some kind of mechanism to prevent one ruling party from abusing it. Imagine someone creates thousands of peasants and ]
What is cryptocurrency: 21st-century unicorn - or the money of the future?
This introduction explains the most important thing about cryptocurrencies. After you've read it, you'll know more about it than most other humans.
Today cryptocurrencies (Buy Crypto) have become a global phenomenon known to most people. While still somehow geeky and not understood by most people, banks, governments and many companies are aware of its importance.
In 2016, you'll have a hard time finding a major bank, a big accounting firm, a prime software company or a government that did not research cryptocurrency, publish a paper about it or start a so-called blockchain-project.
"Virtual contexts, possibly most notably Bitcoin, have captured the imagination of some, stuck fear among others, and confused the heck out of the rest of us." - Thomas Carper, US-Senator
But beyond the noise and the press releases the overwhelming majority of people - even bankers, consultants, scientists, and developers - have a very limited knowledge about cryptocurrencies. They often fail to even understand the basic concepts.
So let's walk through the whole story. What are cryptocurrencies?
Where did cryptocurrency originate? Why should you learn about cryptocurrency? And what do you need to know about cryptocurrency?
What is cryptocurrency and how cryptocurrency emerged as a side product of digital cash
Few people know, but cryptocurrency emerged as a side product of another invention. Satoshi Nakamoto, the unknown inventor of Bitcoin, the first and still most important cryptocurrency, never intended to invent a currency.
In his announcement of Bitcoin in late 2008, Satoshi said he developed a "Peer-to-Peer Electronic Cash System."
His goal was to invent something; many people failed to create before digital cash.
Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double-spending. It's completely decentralized with no server or central authority. - Satoshi Nakamoto, 09 January 2009, announcing Bitcoin on SourceForge.
Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double-spending. It's completely decentralized with no server or central authority. - Satoshi Nakamoto, 09 January 2009, announcing Bitcoin on SourceForge.
The single most important part of Satoshi's invention was that he found a way to build a decentralized digital cash system. In the nineties, there have been many attempts to create digital money, but they all failed.
... after more than a decade of failed Trusted Third Party based systems (Digicash, etc), they see it as a lost cause. I hope they can make the distinction, that this is the first time I know of that we're trying a non-trust based system. - Satoshi Nakamoto in an E-Mail to Dustin Trammell
After seeing all the centralized attempts fail, Satoshi tried to build a digital cash system without a central entity. Like aPeer-to-Peer network for file sharing.
This decision became the birth of cryptocurrency. They are the missing piece Satoshi found to realize digital cash. The reason why is a bit technical and complex, but if you get it, you'll know more about cryptocurrencies than most people do. So, let's try to make it as easy as possible:
To realize digital cash you need a payment network with accounts, balances, and transaction. That's easy to understand. One major problem every payment network has to solve is to prevent the so-called double spending: to prevent that one entity spends the same amount twice. Typically, this is done by a central server who keeps record about the balances.
In a decentralized network, you do not have this server. So you need every single entity of the network to do this job. Every peer in the network needs to have a list with all transactions to check if future transactions are valid or an attempt to double spend.
But how can these entities keep aconsensus about this records?
If the peers of the network disagree about only one single, minor balance, everything is broken. They need an absolute consensus. Usually, you take, again, a central authority to declare the correct state of balances. But how can you achieve consensus without a central authority?
Nobody did know until Satoshi emerged out of nowhere. In fact, nobody believed it was even possible.
Satoshi proved it was. His major innovation was to achieve consensus without a central authority. Cryptocurrencies are a part of this solution - the part that made the solution thrilling, fascinating and helped it to roll over the world.
]
What is cryptocurrency: 21st-century unicorn - or the money of the future?
This introduction explains the most important thing about cryptocurrencies. After you've read it, you'll know more about it than most other humans.
Today cryptocurrencies (Buy Crypto) have become a global phenomenon known to most people. While still somehow geeky and not understood by most people, banks, governments and many companies are aware of its importance.
In 2016, you'll have a hard time finding a major bank, a big accounting firm, a prime software company or a government that did not research cryptocurrency, publish a paper about it or start a so-called blockchain-project.
"Virtual contexts, possibly most notably Bitcoin, have captured the imagination of some, stuck fear among others, and confused the heck out of the rest of us." - Thomas Carper, US-Senator
But beyond the noise and the press releases the overwhelming majority of people - even bankers, consultants, scientists, and developers - have a very limited knowledge about cryptocurrencies. They often fail to even understand the basic concepts.
So let's walk through the whole story. What are cryptocurrencies?
Where did cryptocurrency originate? Why should you learn about cryptocurrency? And what do you need to know about cryptocurrency?
What is cryptocurrency and how cryptocurrency emerged as a side product of digital cash
Few people know, but cryptocurrency emerged as a side product of another invention. Satoshi Nakamoto, the unknown inventor of Bitcoin, the first and still most important cryptocurrency, never intended to invent a currency.
In his announcement of Bitcoin in late 2008, Satoshi said he developed a "Peer-to-Peer Electronic Cash System."
His goal was to invent something; many people failed to create before digital cash.
Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double-spending. It's completely decentralized with no server or central authority. - Satoshi Nakamoto, 09 January 2009, announcing Bitcoin on SourceForge.
Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double-spending. It's completely decentralized with no server or central authority. - Satoshi Nakamoto, 09 January 2009, announcing Bitcoin on SourceForge.
The single most important part of Satoshi's invention was that he found a way to build a decentralized digital cash system. In the nineties, there have been many attempts to create digital money, but they all failed.
... after more than a decade of failed Trusted Third Party based systems (Digicash, etc), they see it as a lost cause. I hope they can make the distinction, that this is the first time I know of that we're trying a non-trust based system. - Satoshi Nakamoto in an E-Mail to Dustin Trammell
After seeing all the centralized attempts fail, Satoshi tried to build a digital cash system without a central entity. Like aPeer-to-Peer network for file sharing.
This decision became the birth of cryptocurrency. They are the missing piece Satoshi found to realize digital cash. The reason why is a bit technical and complex, but if you get it, you'll know more about cryptocurrencies than most people do. So, let's try to make it as easy as possible:
To realize digital cash you need a payment network with accounts, balances, and transaction. That's easy to understand. One major problem every payment network has to solve is to prevent the so-called double spending: to prevent that one entity spends the same amount twice. Typically, this is done by a central server who keeps record about the balances.
In a decentralized network, you do not have this server. So you need every single entity of the network to do this job. Every peer in the network needs to have a list with all transactions to check if future transactions are valid or an attempt to double spend.
But how can these entities keep aconsensus about this records?
If the peers of the network disagree about only one single, minor balance, everything is broken. They need an absolute consensus. Usually, you take, again, a central authority to declare the correct state of balances. But how can you achieve consensus without a central authority?
Nobody did know until Satoshi emerged out of nowhere. In fact, nobody believed it was even possible.
Satoshi proved it was. His major innovation was to achieve consensus without a central authority. Cryptocurrencies are a part of this solution - the part that made the solution thrilling, fascinating and helped it to roll over the world.
What are cryptocurrencies really?
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.
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 that 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. Nothing special at all, again.
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 cryptocurrency. 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 not 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 cryptocurrency-system we should stay for a moment and take a defect look on it.
What are miners doing?
Principally everyone can be a miner. Since a decentralized network has no authority to delegate this task, a cryptocurrency needs some kind of mechanism to prevent one ruling party from abusing it. Imagine someone creates thousands of peasants and ]
What is cryptocurrency: 21st-century unicorn - or the money of the future?
This introduction explains the most important thing about cryptocurrencies. After you've read it, you'll know more about it than most other humans.
Today cryptocurrencies (Buy Crypto) have become a global phenomenon known to most people. While still somehow geeky and not understood by most people, banks, governments and many companies are aware of its importance.
In 2016, you'll have a hard time finding a major bank, a big accounting firm, a prime software company or a government that did not research cryptocurrency, publish a paper about it or start a so-called blockchain-project.
"Virtual contexts, possibly most notably Bitcoin, have captured the imagination of some, stuck fear among others, and confused the heck out of the rest of us." - Thomas Carper, US-Senator
But beyond the noise and the press releases the overwhelming majority of people - even bankers, consultants, scientists, and developers - have a very limited knowledge about cryptocurrencies. They often fail to even understand the basic concepts.
So let's walk through the whole story. What are cryptocurrencies?
Where did cryptocurrency originate? Why should you learn about cryptocurrency? And what do you need to know about cryptocurrency?
What is cryptocurrency and how cryptocurrency emerged as a side product of digital cash
Few people know, but cryptocurrency emerged as a side product of another invention. Satoshi Nakamoto, the unknown inventor of Bitcoin, the first and still most important cryptocurrency, never intended to invent a currency.
In his announcement of Bitcoin in late 2008, Satoshi said he developed a "Peer-to-Peer Electronic Cash System."
His goal was to invent something; many people failed to create before digital cash.
Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double-spending. It's completely decentralized with no server or central authority. - Satoshi Nakamoto, 09 January 2009, announcing Bitcoin on SourceForge.
Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double-spending. It's completely decentralized with no server or central authority. - Satoshi Nakamoto, 09 January 2009, announcing Bitcoin on SourceForge.
The single most important part of Satoshi's invention was that he found a way to build a decentralized digital cash system. In the nineties, there have been many attempts to create digital money, but they all failed.
... after more than a decade of failed Trusted Third Party based systems (Digicash, etc), they see it as a lost cause. I hope they can make the distinction, that this is the first time I know of that we're trying a non-trust based system. - Satoshi Nakamoto in an E-Mail to Dustin Trammell
After seeing all the centralized attempts fail, Satoshi tried to build a digital cash system without a central entity. Like aPeer-to-Peer network for file sharing.
This decision became the birth of cryptocurrency. They are the missing piece Satoshi found to realize digital cash. The reason why is a bit technical and complex, but if you get it, you'll know more about cryptocurrencies than most people do. So, let's try to make it as easy as possible:
To realize digital cash you need a payment network with accounts, balances, and transaction. That's easy to understand. One major problem every payment network has to solve is to prevent the so-called double spending: to prevent that one entity spends the same amount twice. Typically, this is done by a central server who keeps record about the balances.
In a decentralized network, you do not have this server. So you need every single entity of the network to do this job. Every peer in the network needs to have a list with all transactions to check if future transactions are valid or an attempt to double spend.
But how can these entities keep aconsensus about this records?
If the peers of the network disagree about only one single, minor balance, everything is broken. They need an absolute consensus. Usually, you take, again, a central authority to declare the correct state of balances. But how can you achieve consensus without a central authority?
Nobody did know until Satoshi emerged out of nowhere. In fact, nobody believed it was even possible.
Satoshi proved it was. His major innovation was to achieve consensus without a central authority. Cryptocurrencies are a part of this solution - the part that made the solution thrilling, fascinating and helped it to roll over the world.
]
What is cryptocurrency: 21st-century unicorn - or the money of the future?
This introduction explains the most important thing about cryptocurrencies. After you've read it, you'll know more about it than most other humans.
Today cryptocurrencies (Buy Crypto) have become a global phenomenon known to most people. While still somehow geeky and not understood by most people, banks, governments and many companies are aware of its importance.
In 2016, you'll have a hard time finding a major bank, a big accounting firm, a prime software company or a government that did not research cryptocurrency, publish a paper about it or start a so-called blockchain-project.
"Virtual contexts, possibly most notably Bitcoin, have captured the imagination of some, stuck fear among others, and confused the heck out of the rest of us." - Thomas Carper, US-Senator
But beyond the noise and the press releases the overwhelming majority of people - even bankers, consultants, scientists, and developers - have a very limited knowledge about cryptocurrencies. They often fail to even understand the basic concepts.
So let's walk through the whole story. What are cryptocurrencies?
Where did cryptocurrency originate? Why should you learn about cryptocurrency? And what do you need to know about cryptocurrency?
What is cryptocurrency and how cryptocurrency emerged as a side product of digital cash
Few people know, but cryptocurrency emerged as a side product of another invention. Satoshi Nakamoto, the unknown inventor of Bitcoin, the first and still most important cryptocurrency, never intended to invent a currency.
In his announcement of Bitcoin in late 2008, Satoshi said he developed a "Peer-to-Peer Electronic Cash System."
His goal was to invent something; many people failed to create before digital cash.
Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double-spending. It's completely decentralized with no server or central authority. - Satoshi Nakamoto, 09 January 2009, announcing Bitcoin on SourceForge.
Announcing the first release of Bitcoin, a new electronic cash system that uses a peer-to-peer network to prevent double-spending. It's completely decentralized with no server or central authority. - Satoshi Nakamoto, 09 January 2009, announcing Bitcoin on SourceForge.
The single most important part of Satoshi's invention was that he found a way to build a decentralized digital cash system. In the nineties, there have been many attempts to create digital money, but they all failed.
... after more than a decade of failed Trusted Third Party based systems (Digicash, etc), they see it as a lost cause. I hope they can make the distinction, that this is the first time I know of that we're trying a non-trust based system. - Satoshi Nakamoto in an E-Mail to Dustin Trammell
After seeing all the centralized attempts fail, Satoshi tried to build a digital cash system without a central entity. Like aPeer-to-Peer network for file sharing.
This decision became the birth of cryptocurrency. They are the missing piece Satoshi found to realize digital cash. The reason why is a bit technical and complex, but if you get it, you'll know more about cryptocurrencies than most people do. So, let's try to make it as easy as possible:
To realize digital cash you need a payment network with accounts, balances, and transaction. That's easy to understand. One major problem every payment network has to solve is to prevent the so-called double spending: to prevent that one entity spends the same amount twice. Typically, this is done by a central server who keeps record about the balances.
In a decentralized network, you do not have this server. So you need every single entity of the network to do this job. Every peer in the network needs to have a list with all transactions to check if future transactions are valid or an attempt to double spend.
But how can these entities keep aconsensus about this records?
If the peers of the network disagree about only one single, minor balance, everything is broken. They need an absolute consensus. Usually, you take, again, a central authority to declare the correct state of balances. But how can you achieve consensus without a central authority?
Nobody did know until Satoshi emerged out of nowhere. In fact, nobody believed it was even possible.
Satoshi proved it was. His major innovation was to achieve consensus without a central authority. Cryptocurrencies are a part of this solution - the part that made the solution thrilling, fascinating and helped it to roll over the world.
What are cryptocurrencies really?
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.
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 that 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. Nothing special at all, again.
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 cryptocurrency. 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 not 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 cryptocurrency-system we should stay for a moment and take a defect look on it.
What are miners doing?
Principally everyone can be a miner. Since a decentralized network has no authority to delegate this task, a cryptocurrency needs some kind of mechanism to prevent one ruling party from abusing it. Imagine someone creates thousands of peasants and spreads forged transactions. The system would break immediately.
So, Satoshi set the rule that the miners need to invest some work of their computers to qualify for this task. In fact, they have to find a hash - a product of a cryptographic function - that connects the new block with its predecessor. This is called the Proof-of-Work. In Bitcoin, it is based on the SHA 256 Hash algorithm.
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Cryptocurrency is a digital or electronic currency that can be used to make transactions with online networks. Unlike fiat currencies, crypto was created to solve mathematical problems based on cryptography.
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@ 88percent, and crypto was created to facilitate transaction activities. Like making transfers at low and fast costs. Other than that, crypto is very special because it is not easily falsified.
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Cryptocurrency is a digital currency that was popular ten years ago. Crypto is currently expanding even though there are still many controversies. Even so, there are still lots of new crypto coins popping up.
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A cryptocurrency is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets. Cryptocurrencies are a kind of alternative currency and digital currency.
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I can easily define crypto currency as a digital money that has uniqely designed to have value and its being accepted as a legal means of payment and can also be exchamged for fiat. Another thing i will like to add is that most of the activites related to crypto currency are conducted online
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Cryptocurrency is a global payment system that is easy, cheap and fast. Aside from being a payment system, crypto currency can also be used as a compact and easy to move wealth storage asset.
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Cryptocurrency is a digital asset which is similar to fiat but exists in the digital realm. It has benefits such as worldwide accessibility and general decentralization. There are many ways to obtain one such as mining, faucets and trading.
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Crryptocurrency is "Digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank'' This is the answer that you will get if you searching in Google, and this is the answer in general...
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is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets.
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a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.
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Bitcoin, first released as open-source software in 2009, is generally considered the first decentralized cryptocurrency.[6] Since the release of Bitcoin, over 4,000 altcoins (alternative variants of Bitcoin, or other cryptocurrencies) have been created.
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A cryptocurrency is a digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of some security features.
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Today cryptocurrencies (Buy Crypto) have become a global phenomenon known to most people. While still somehow geeky and not understood by most people, banks, governments and many companies are aware of its importance.
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https://btconly.io/27462 please open the mining
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I know cryptocurrency since bitcoin price was 350 dollar and I think it is just a digital currency and truthly this is more than that
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Cryptocurrency is a technology for making digital currencies. This technology uses cryptography for security which makes it cannot be faked. The value of the price of cryptocurrency is largely determined by the buy and sell strength of the users of this technology.