What is Cryptocurrency?
Few people know this, but cryptocurrencies emerged as a side product of another invention. Satoshi Nakamoto is the unknown inventor of Bitcoin which is the first and still the most important cryptocurrency. Bitcoin was never actually intended to be a currency. The most important part of Satoshi‘s invention was that he found a way to build a decentralized digital cash system and he succeeded where many others had previously failed.
But what exactly is cryptocurrency? It’s an internet-based medium of exchange which uses cryptographical functions to conduct financial transactions. Cryptocurrencies use blockchain technology to gain decentralization, transparency, and immutability. The most important feature of a cryptocurrency is that it is not controlled by any central authority: the decentralized nature of the blockchain makes cryptocurrencies theoretically immune to the old ways of government control and interference.
Bitcoin (one type of cryptocurrency) is a permissionless, irreversible, and pseudonymous means of payment is an attack on the control of banks and governments over the monetary transactions of their citizens.
Cryptocurrencies can be sent directly between two parties via the use of private
and public keys. These transfers can be done with minimal processing fees, allowing users to avoid the steep fees charged by traditional financial institutions. If you take away all the noise around cryptocurrencies and reduce it to a simple definition, you find it to be just limited entries in a database no one can change without fulfilling specific conditions. This may seem ordinary, but, believe it or not: this is exactly how you can define a currency.
“While it’s still fairly new and unstable relative to the gold standard, cryptocurrency is definitely gaining traction and will most certainly have more normalized uses in the next few years. Right now, in particular, it’s increasing in popularity with the post-election market uncertainty. The key will be in making it easy for large-scale adoption (as with anything involving crypto) including developing safeguards and protections for buyers/investors. I expect that within two years, we’ll be in a place where people can shove their money under the virtual mattress through cryptocurrency, and they’ll know that wherever they go, that money will be there.” – Sarah Granger, Author, and Speaker.
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