In this post, we are going learn about Cryptocurrency, their history, cryptocurrency ecosystems, cryptocurrency networks, cryptocurrency wallets and cryptocurrency legality, etc.
Cryptocurrency is a digital currency in which digital encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.In 1983 the American cryptographer David Chaum conceived an anonymous cryptographic electronic money called ecash.Later, in 1995, he implemented it through Digicash, an early form of cryptographic electronic payments which required user software in order to withdraw notes from a bank and designate specific encrypted keys before it can be sent to a recipient.
Bitcoin, created in 2009, was the first digital cryptocurrency. Since then, various other cryptocurrencies have been created.The first decentralized cryptocurrency, bitcoin, was created in 2009 by pseudonymous developer Satoshi Nakamoto. It used SHA-256, a cryptographic hash function, as its proof-of-work scheme.In October 2011, Litecoin was released. It was the first successful cryptocurrency to use scrypt as its hash function instead of SHA-256.Another notable cryptocurrency, Peercoin was the first to use a proof-of-work/proof-of-stake hybrid.IOTA was the first cryptocurrency not based on a blockchain, and instead uses the Tangle.
These are frequently called altcoins which is short form of alternative coins.
In cryptocurrency ecosystems the safety, integrity and balance of ledgers is maintained by a community of mutually distrustful parties referred to as “miners”.Members of the general public using their computers to help validate and timestamp transactions, adding them to the ledger in accordance with a particular time stamping scheme. Miners have a financial incentive to maintain the security of a cryptocurrency ledger.The validity of each cryptocurrencies coins is provided by a blockchain. A blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block typically contains a hash pointer as a link to a previous block with a timestamp and transaction data.
In cryptocurrency networks, mining is a validation of transactions. For this effort, successful miners obtain new cryptocurrency as a reward. The reward decreases transaction fees by creating a complementary incentive to contribute to the processing power of the network.
A cryptocurrency wallet stores the public and private “keys” or “addresses” which can be used to receive or spend the cryptocurrency. With the private key, it is possible to write in the public ledger, effectively spending the associated cryptocurrency.
Legality of cryptocurrencies varies substantially from country to country and is still undefined or changing in many of them. While some countries have explicitly allowed their use and trade, others have banned or restricted it.Likewise, various government agencies, departments, and courts have classified bitcoins differently. China Central Bank banned the handling of bitcoins by financial institutions in China during an extremely fast adoption period in early 2014.In Russia, though cryptocurrencies are legal, it is illegal to actually purchase goods with any currency other than the Russian ruble.
I think this will answers yours basic questions about cryptocurrencies, in upcoming posts, we will see Cryptocurrencies, cryptocurrency ecosystems, cryptocurrency networks, cryptocurrency wallets and cryptocurrency legality in details so stay connected.