Cryptocurrencies have gained popularity recently, but there may still be people who wonder what it is. Therefore, this article will set out to explain the term.
While cryptocurrencies have gained popularity in the recent years, there may be people who still wonder what is a cryptocurrency. Therefore, this article will set out to explain the term with the help of cryptocoinnews.com. How familiar are you with cryptocurrencies?
Cryptocurrencies are designed to exchange digital information by the help of cryptography. Cryptography is used to control the transactions and the creation of new coins. Bitcoin was the first cryptocurrency that was created back in 2009. Since then hundreds of others have appeared – often called Altcoins (“Bitcoin alternatives”).
Cryptocurrencies are fully decentralized as governments have no control over them. By contrast, the Federal Reserve System (federalreserve.gov) controls the value of USD through the process of printing flat money.
With fiat currencies like USD, financial institutions can always print more money, hence cause inflation. Cryptocurrencies like Bitcoin are designed to decrease in production over time – Bitcoin can`t have more than 21 million coins in circulation.
History of creation
Bitcoin was created in 2009 by a pseudonymous developer named Satoshi Nakamoto. The cryptocurrency uses SHA – 256 that is a set of cryptographic hash function created by the US National Security Agency. Bitcoin uses the Proof – of – work system. Nowadays, most cryptocurrencies use either Proof–of–work or Proof–of-Stake protocols.
Firstly, cryptocurrencies are secured because it is difficult to find hash set intersections. Secondly, even in the case of “51% attack”, the attacker is limited in its actions.
Finally, cryptocurrencies are less likely to have transaction holds placed on them. Moreover, they are pseudo-anonymous which makes them less susceptible to seizure by law enforcement. While this enhances security, some experts fear that dishonest users might benefit from this feature.
At the same time, others claim cryptocurrencies might be the future. According to Forbes (forbes.com), cryptocurrencies have technological and social value as they “encourage community contribution and collaboration”.