Blockchain-related topics are extremely hot today and cryptocurrencies are one of them. This blog decided to launch a series of articles where we will describe in a plain language such things as blockchain, cryptocurrency, smart contracts, and ICOs.
It can be difficult to describe this cutting-edge technology with simple words but we will give it a try because it seems very important to explain something which may completely change somebody’s life within the next couple of years.
So, basically, what is cryptocurrency? From the term itself, you can see that it has something to do with cryptography and money.
First, let us define what normal currencies are. Currencies are a type of economic buffer, where they allow people to convert their efforts into something that maintains its value and may be converted back into goods or other services at a subsequent point in time.
For its part, cryptography is the procedure for converting normal plain text into unintelligible text and vice-versa. Modern cryptography deals with confidentiality (data can’t be understood by anybody), integrity (data cannot be altered), and authentication ( sender and receiver can affirm each other).
“Cryptocurrency is a medium of exchange (just like regular money) that is in the electronic world and is based on encryption, which makes transactions secure.” – Michael Cao on cryptocurrency.
A cryptocurrency is an alternative form of payment to money, credit cards, and checks. The tech behind it allows you to send it straight to others without going via a 3rd party such as a bank card. As a result, you don’t have to use your social security or credit score as collateral and allows you to be reasonably pseudonymous.
To put it differently, cryptocurrencies are like digital accounting systems. They keep a record of transactions. The transactions are bundled into blocks, which are cryptographically signed, hence crypto money, and the customer doing the signing gets some amount of units of digital money (and possibly transaction fees) as a reward for doing the job of calculating the cryptographic signature.
It is possible to send money back to your family without incurring hefty foreign fees if you’re working in another country. Merchants no longer have to fret about payment fraud or invalid checks because people can only pay what they have.
The most famous cryptocurrency is, of course, Bitcoin, that left everybody interested in the topic of crypto by its explosive rise, and it has been the de facto benchmark for cryptocurrencies. Apart from Bitcoin, there are several other pretty important cryptocurrencies like Ethereum (ETH), Litecoin (LTC), Dash, and EOS. But the most important thing is that today you can start your personal cryptocurrency.
The main quality of cryptocurrencies, security, is provided by Blockchain technology, a system of computers having an identical replica of the database and altering its records by a common arrangement based on pure mathematics. Moreover, thanks to a few of the main benefits of Blockchain, smart contracts, it becomes possible to create your own cryptocurrency and customize your own personal token. A token is a kind of privately issued cryptocurrency, a component of value that an organization generates to regulate and self-govern its business model, and enable its users to interact with its goods while facilitating the sharing and distribution and benefits to all its stakeholders.
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