Cryptocurrencies are digital or virtual currencies that are designed to be secure, anonymous and unalterable. These include Bitcoin, which was the first widely-used cryptocurrency.
In its simplest form, a cryptocurrency is just data that you can exchange for something of value. The most famous example is Bitcoin, which has a fixed supply of 21 million coins and the ability to be transferred around the Internet in a way that anonymizes the sender and receiver.
In its current incarnation, Bitcoin is probably more interesting as an investment than as a currency. But it’s not hard to see how cryptocurrencies might become popular as money in the future.
The main advantage of cryptocurrencies over regular money is that they are easy to transfer without any third party involved. The amount of transaction fees charged by credit card companies, banks and online payment providers like Paypal can easily reach more than 10% of the value you’re paying for your purchase. And usually there are hidden charges too: Paypal charges 2% for using your credit card; Visa charges 3% to process transactions; MasterCard charges 4%. In theory you’ll get some rebate on these charges but in practice if you spend much time online you’ll probably never see it (or else you’ll have to file a claim with your bank).
Cryptocurrency is a new form of money. There are a lot of different types of money: dollar bills, gold coins, bitcoins, pounds sterling, yen, and so on. So why call it cryptocurrency?
The word comes from cryptography, which is the study of writing that can be read only by someone you’ve carefully chosen. In the ordinary language sense of the word cryptography is almost synonymous with secret writing: if you have an ordinary piece of paper and are holding it in your hand and you say “this paper contains secret information,” no one can tell whether you’re telling the truth or not. But if you write on ordinary paper in an ordinary way and then put it under your pillow at night, it’s still not secret unless you can tell me who wrote it and where to find them.
Cryptography has been around for thousands of years. The ancient Greeks invented it as a way to pass messages without letting anyone notice they were passing them. They invented numbers as well as letters to represent their messages; they also invented ways to scramble those numbers so they would be unreadable except to someone who had been given the secret key. And they invented secret words; in fact some scholars think the Greek word for letter was borrowed from Egyptian hieroglyphics, which
Cryptocurrency, or digital money, has been around for a while now. The first thing to understand about cryptocurrency is that it’s not money. It’s a kind of computer code that can be used to buy and sell things, just like normal cash. However, it’s much easier to transfer and keep track of than cash is. But like cash, it’s not controlled by any central authority and it has no official value. Some people call this virtual currency “crypto” because the keys are secure in ways that make them harder to steal and use in fraudulent situations.
Cryptocurrency was invented in the 1980s, when people noticed that banks were using computers to make decisions that weren’t in the best interests of their customers. They were trying to squeeze more fees out of people without giving customers any way to decide how much they should pay for the privilege of using their accounts.
Fortunately for banks and other companies, there already existed a form of virtual currency called “fiat money,” which had been invented in the 1920s as a more convenient way for governments to pay off debts. The idea behind fiat money is simple: you print some new notes and give them to people who owe you money. The notes have no value outside the fact that everyone agrees they
Cryptocurrency is a form of digital money that can be used to pay for goods or services. It’s also known as digital currency, virtual currency, cryptocurrency, and crypto-currency. There are many different kinds of cryptocurrency, but they all have the same features in common.
Cryptocurrency is created by computers solving complex algorithms. It’s like a giant worldwide ledger of transactions. All this activity is called mining, because it involves solving mathematical problems.
The person who creates a cryptocurrency is called its creator. The coins themselves are not physical things, but are really just records in a database that represent ownership of the underlying asset—the parts of the blockchain that contain all the transactions are called blocks. These blocks are linked together into chains: a chain is a list of blocks that add up to an overall history of the currency’s transactions.
A coin’s value can fluctuate like any other asset: it might rise or fall depending on what people think about it and whether other people want to trade it for something else. But it should be kept in mind that cryptocurrencies are still very new and there isn’t enough evidence to say how much they will grow in the future.
Bitcoin is not the only cryptocurrency. You can buy or mine a number of other crypto currencies, such as Ethereum, and even a few noncryptocurrencies, such as dollars and euros.
The appeal of crypto currencies is that they use cryptography to make it harder for anyone to spend your money without your permission. This makes them decentralized: there’s no central bank or government that can print more money or decide what you can do with your money.
Cryptocurrency works by making it hard for anyone to spend your money without your permission. As long as you have your private key (which is basically a password), you control the money. No one else can spend it without your permission.
Cryptocurrency is useful in many situations where we want to send and receive things without trusting any central authority, such as gambling sites, digital rights management schemes, and copyright-protected files.
Blockchain technology can be used for everything from tracking who owns what piece of land, to confirming the provenance of a rare wine, to financial exchanges and more.
Cryptocurrency is a kind of money that is created by the use of cryptography. Cryptography, comprising mathematical problems that need solving and algorithms that transform data into code, is the basis of computer security (the word cryptography comes from the Greek kryptos, meaning hidden).
The best-known example of cryptography is public-key encryption. With it, you can send an email message to someone without either you or your correspondent knowing which key was used to encrypt it. Public-key encryption uses two keys: one public and one private. If you want to send an encrypted email message to me, then I will have the secret key and you will have the public key. The secret key allows me to decrypt the message (turn it back into English) and my correspondent can do likewise with his copy. So if we each have our own private key no one else can read our messages; but if I give my secret key to someone else they can read my messages because they have my public key.
This is all well and good but how do these keys work? How do you calculate them? What
Cryptocurrency is like money, except it’s not money. It’s a medium of exchange that doesn’t exist in physical form. It’s digital. It exists as computer codes, which you can use to buy things online. (You can also hold it–as a virtual wallet–in your computer’s memory.)
This means cryptocurrency has all the same properties of money: it has value, its value can change over time, it can be exchanged for other things, and people are willing to accept it in exchange for real goods and services. The difference is that nobody controls the supply of cryptocurrency code; nobody issues new currency code; and nobody backs up the currency code that already exists in the system with new physical gold or bitcoins.
Cryptocurrency also resembles cash, because both are basically digital equivalents of real-world items. But while hard cash gets spent quickly and quietly, cryptocurrency is more volatile than cash, with price levels rising and falling quickly through the day. The volatility alone makes it unsuitable as an everyday store of wealth or an investment vehicle.