A Deeper Understanding of Cryptocurrency

As already established, miners are very important in cryptocurrency. It is possible for any person to be a miner. However, cryptocurrency operates in a network that is decentralized and without any authority for delegation of tasks. This is one thing that makes it necessary for cryptocurrency to need a mechanism that will prevent any kind of abuse. It is possible that one could create forged transactions and then spread them. This could lead to the complete breakdown of the system.

This is why there was a need to set rules. The rule requires that miners invest their computers so as to qualify. The miners need to have a hash-a cryptographic function product-that connects a new block to the predecessor. This is what is referred to as proof-of-work. Different systems have different algorithms.

What it is

The technicalities of cryptocurrency may not be for everyone to grasp. However, you only need to know that there could be a cryptologic puzzle which the miners are required to solve and it is usually a kind of a competition. When a solution is found, the miner builds a block and then adds it onto the block chain. The miner is given the right to add coin base transactions which gives him a number of coins. In this way, the coins created bare valid.

The difficulty of the puzzle increases the power of what a miner invests and therefore, the amount of the currency that one is allowed to create at one time is restricted. No one within the network can break this consensus.

So as to be able to understand the various properties of the cryptocurrencies, there is a need to separate the monetary and transactional properties. Most of the cryptocurrencies have got some common properties, but they aren’t that permanent.

Transactional Properties:

Irreversible

When a transaction is confirmed, you can reverse it. If you send money, that is it. Remember, there is no safety net and therefore you need to be careful.

Pseudonymous

Neither accounts nor transactions are connected to any real identities in the world. You can analyze the flow of transactions, but it isn’t possible to connect to the identity of the users in those addresses.

Fast

Transactions are easily propagated and confirmed in minute’s time. They take place within a global network and so they are indifferent to physical location.

Secure

The funds are locked in cryptography system. You need a private key to send cryptocurrency. It is quite impossible to break the scheme.

Permission less

Cryptocurrency is software that you can download freely. There is no one to prevent you from engaging.

Monetary Properties:

Controlled supply

Most of the cryptocurrencies limit tokens supply.

No debt

Cryptocurrencies do not represent debts like most accounts do. They are money.

So as to grasp the impact of the cryptocurrencies, both properties should be considered. The properties show an attack on the control of governments and banks over different money transactions for citizens. No one is hindered from using cryptocurrency or to accept a payment and there is no way to undo the transaction.

Resource

Cryptocurrency is limited, and it is a controlled supply that not even the government of a country can change. Other central institutions like banks can’t change it either. This means the entire monetary policy scope is attacked. Control is taken from the central banks and they can’t control deflation and inflation through monetary supply manipulation.

About Sphere Network:

Sphere is the new generation of social network. They are creating a decentralized social network based on blockchain technologies, where members take back the power with every click and every social connection.

Join our upcoming ICO.