Simple Explanation About Cryptocurrencies & How It Works

In Features, General, Technology

They say cash is no longer in and cryptocurrency is the new trend for a good reason. Cryptocurrencies make a good investment due to its decentralized characteristic, despite the risk that goes with it. 

What makes cryptocurrencies exciting and what are the risks that goes with it?


What does cryptocurrency mean?


Cryptocurrency is a digital structure of currency designed to be used as an exchange medium. It makes use of cryptography, a process by which deciphering of transferred contents are involved in tracing transfers and procurements. Since World War II, cryptography has been used to secure intelligence and developed in the digital age with mathematical ideology along with computer science. With the help of technology, it becomes a measure to protect communication as well as money online.


How does it work?


The system associated with cryptocurrency allows payment to be transferred between users without running on any central authority like banks. Bitcoins are not printed bills just like dollars or euros. They are created by computers all over the world with free software.


The Bitcoin inventor


Satoshi Nakamoto as we know it is the inventor of Bitcoin which is the mother of all bitcoins. He has no intention to invent a currency but an electronic payment system centered on mathematical information. His idea was to develop a means of exchange with no central authority involved, and the information can be delivered electronically to a protected, valid, and irreversible manner.


Major Types of Cryptocurrencies


Cryptocurrencies come in different kinds and designs and with different technology and approach.  


Bitcoin (BTC) is the most dominant of all currencies and as earlier mentioned was conceptualized by Nakamoto in 2009. Its circulation is established by regular users using “Bitcoin mining.” It can be forwarded wherever and whenever you want with little or no charge and without regards to national borders or any regulations imposed by the bank or government.  


Litecoin (LTC) uses Scrypt encryption system, opposing SHA-256. This cryptocurrency’s absolute available amount for mining and circulation is quadruple of Bitcoin’s quantity. It means that Litecoin has four times its quantity that is obtainable to Bitcoin.


Ethereum can be used as a platform to produce blockchain applications as well as new tokens. It uses smart contracts and together with distributed applications to be developed and run with no intermission, scam, intervention or manipulation by a third party.


Upcoming Cryptocurrency…


There are already existing cryptocurrencies in the market, but it doesn’t mean that no digital currency will emerge. Decenternet is a promising platform that uses a decentralized system and is expected to become a key player in terms of cryptocurrency. Its currency called “Spice” is the core of its trade and commerce and can be exchanged with other digital currencies.


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