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What is Cryptocurrency?

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cryptocurrency

What is Cryptocurrency?

what is cryptocurrency

Cryptocurrency is an encrypted type of digital/virtual currency that generates money and verifies each transaction. This transaction is added to what is called a “Transaction Blockchain”, in which the “mining” occurs. “Mining” is a process that creates new coins.

How does cryptocurrency verifies each transaction? Well, because it is a digital/ virtual currency it contains the information of the past and present owner of the currency. This allows the present owner of the currency to know if they actually own it and that it has not been spent yet.

What is a Transaction Blockchain?

A “blockchain” is a permanent database, which saves each transaction in a perfect chronological order. All of this transactions data are known as “blocks” which get chained with all of the other existing transactions.

The blockchain does not only save information about the transactions, it also records all of the information of each user address and its balance.

Why cryptocurrency future technology?

Cryptocurrency is one of the safest ways to do money transactions, because it uses cryptography as its security system. This type of currency has an “organic nature” which means that there’s no kind of authority that can actually interfere in it.

Thanks to it’s nature this currency isn’t backed by the government, which means that the transactions can’t be manipulated by anyone not even by the government.

So, if it is not controlled by any kind of authority, who controls it? In order to eliminate the need of a third person controlling the transactions, this currency uses it’s users to validate the transactions when one person pays to another for services or for any other reason.

The person that created this type of currency is Nick Szabo, who created “Bit Gold”, the first digital currency in the world. Nick worked on “Bit Gold” for almost 7 years  (1198 – 2005).  “Bit Gold” is also known as the “precursor” of “Bitcoin”, the most innovative payment network that offers a new kind of money based on cryptocurrency.

Of course, Bitcoin is not the only cryptocurrency that exists, it is only the first one that managed to capture the publics attention. Bitcoin most important competitors are: Litecoin, Namecoin and PPCoin among others.

Cryptocurrency has multiple benefits, it doesn’t only allow the user to achieve transactions easier and faster, but it also offers a lower fee than most banks, which means that the money is transferred with a minimal fee process. The fact that cryptocurrencies have a lower cost for each transaction payment allows it to be much more efficient than the traditional options. Another benefit that this gives to its users is that it’s not influnciates by banks or governments.

Even though this type of “digital wallet” has a lot of different tools to maintain the virtual currency safe, the possibility or threat of hackers is high and because of the fact that the prices of this currency is based in supply and demand, at the moment in which the user exchanges the Cryptocurrency for another kind currency the prices can fluctuate widely.

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