All About Cryptocurrency – a Brief Overview

All About Cryptocurrency – a Brief Overview

For those that are not aware of the trend, cryptocurrency is the electronic alternative form of currency. This form of decentralized currency was star

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For those that are not aware of the trend, cryptocurrency is the electronic alternative form of currency. This form of decentralized currency was started in 1998 and is not controlled by centralized systems such as the Federal Reserve System. Most people have heard about cryptocurrency with the popular Bitcoin craze; however most don’t understand how it came into being before the trend surfaced.

In 2009 Bitcoin was first brought into being by the individuals and pseudonymous developer Satoshi Nakamoto. This was a currency based on “proof of work” scheme. Within the cryptocurrency world the basis is set upon integrity and balance of the entire system. Ledgers are meticulously maintained by groups of trustworthy people called “miners”. They are people within the general public that are trusted to maintain the ledgers and are financially compensated to do so in a specific timestamping order. This form of currency came into being when it was noticed that there are those within communities that are not trusting of the current banking system. Unlike paper money, cryptocurrency cannot be created by governments, and therefore is not provided the usual backing from banking institutions. This form of currency is also less likely to be confiscated by law enforcement officials.

In April of 2011 Namecoin was created to attempt to form a decentralized DNS or domain name system and in October of the same year Litecoin was released. There have been several more released versions since 2011 and have been increasingly more successful. As of 2014, the UK has been doing a study on cryptocurrencies and how they can be integrated into the economy along with what, if any, regulation should be implemented.

There are also downsides to owning cryptocurrency and attempting to use it. Fraud has been an issue for this form of virtual currency almost since its introduction to main stream. Millions of bitcoins have been lost due to wire fraud, money laundering, underground markets, and theft. There have been multiple cases within the U.S. legal system alone where bitcoin was involved. Locations that have been operating one day and shut down the next with no warning, class action lawsuits to defunct companies that sell the cryptocurrency, and even federal agents that are caught stealing the coins from investigations. The best known court case was in August 2016. The now defunct company owners of Cryptsy and Cryptsy’s have been accused of destroying evidence, and misappropriating of millions of dollars in deposits. They are currently believed to have fled the U.S. to escape prosecution.