Cryptocurrency can be defined as a digital form of currency which incorporates cryptography from security. Cryptocurrencies it started way back in the 1980s whereby a renowned cryptographer, David Chaum, developed a secure algorithm which allowed electronic funds transfer. This algorithm has brought about the development of all cryptocurrencies in the existence today.
Cryptocurrency is basically organic in nature and most of these currencies have no central authority. Since 1800, cryptocurrency has not been in existence until Satoshi Nakamoto introduced Bitcoin in 2009. When creating this currency, Satoshi was not creating a currency. He was developing a peer-to-peer electronic cash system. When he succeeded in creating a decentralized digital cash system, he won the hearts of many investors especially those who loved having the control of their cash.
The success of Bitcoin development is what has given birth to other currencies. Perhaps to understand the cryptocurrency, we can lay it in the simplest terms possible.
First, in order to transact cash online, you need to have accounts with balances. There are instances that you may end up spending twice and to avoid this, there is a central authority that oversees you do not spend more than what you intend. This is what makes the online bank transactions.
With a decentralized network, which covers all the cryptocurrencies available, there is no this server and to keep these transactions there is a peer in the network that keeps the list of all your transactions. However, if at some point the peers disagree, they had to reach a consensus and it proved to be impossible without involving a central authority.
Satoshi noted this problem and when developing Bitcoin, this is the problem that he was trying to solve. Cryptocurrencies are built to run on cryptography and these are not secured by people. In order to understand the cryptocurrency properties, you need to distinguish between the transactional and money properties. Some of their major transactional properties include;
- The transactions are irreversible.
- The people involved in a transaction are anonymous as all that is needed to transact is the wallet account number.
- It is very secure and this is one of the reasons it has gained so much popularity over the last 9 years, etc.
Cryptocurrency markets move very fast and each passing days there is a launch of a new currencies that comes with a new promise which intends to improve the world. By the look of things, it seems that cryptocurrency is the new medium of exchange and it will continue growing.