What is Cryptocurrency?
In the age of digital urbanization, people still look away from simple answers to everyday financial possibilities, relying on physical cash built on trust between the mass public and corporations. Cryptocurrency entered the market with the goal to eradicate the need for physical cash and third party involvement by creating a digital currency that exists only in the digital database known as blockchain.
To put it simply, cryptocurrency is a digital currency where individuals are able to make payments directly to each other through an online system, with minimal transaction fees and no third party involvement. Unlike national currencies that get their value from being legislated as a legal tender, digital currencies have no intrinsic or legislated value, they are worth what people are willing to pay for them in the market.
Where did it come from?
Contrary to popular belief cryptocurrencies have started making ways in the 1980s. Created as an effort to protect cash from small shops and gas stations where banks pushed the idea of customers using credit cards instead of cash to pay for products. Later on in the early 1990s, a huge wave of people tried to build cryptocurrency empires. Most notably from that point in time were DigiCash, HashCash and B-money. None of them had a perfectly functioning technology or the support they needed. Thus the rise of web-based payment systems came to be, with what we still use to this day such as PayPal. It introduced the opportunity of transferring fiat currencies directly between users online. With PayPal being the evidence needed that the web is a viable medium for transferring currency, similar services were created such as WebMoney (a Russian PayPal alternative) as well as e-Gold, an American corporation that lets users buy gold online with the company holding it for the users.
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In the 2000s after the shut down of e-Gold by the FBI, cryptocurrencies began resurfacing in the cryptography community and mailing lists. These were known as the Cypherpunks where people like Julain Assange, the founder of WikiLeaks and Jacob Appelbaum, the developer of Tor, were members of. Despite the resurfacing of the idea of cryptocurrencies, none of them could gather the necessary support to push them into the public eyes, until, 2008.
In 2008 Satoshi Nakamoto published a paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System”. This is the point in which cryptocurrency has really made its mark in history books. Bitcoin was the world’s first real taste into cryptocurrencies and it is still to this day the most famous. Bitcoin’s creator is called Satoshi Nakamoto, but no-one knows who that is. No-one has ever met Satoshi in person so speculation arises that Satoshi could be a man, a woman or a whole group of people! On January 12, 2009, Bitcoin blockchain went online. The first trade of Bitcoin was for 10 BTC (Bitcoins). Satoshi sent it to a coder called Hal Finney. Satoshi only ever spoke on internet message boards and in emails. By April 2011, Satoshi was gone. All that’s left of Satoshi Nakamoto is Bitcoin — and the legacy. In the years to come, bitcoin grew to become not only the number one cryptocurrency available on the market but a household name amongst even those who have no interest in cryptocurrencies.
Over the years the growth in popularity on cryptocurrency has allowed users to transfer anything from money to real-life assets such as real estate, all using blockchain technology. Though there are many kinds of cryptocurrencies that exist in the market today, they all have six things in common. These are the aspects that they need in order to be called cryptocurrency.
Cryptocurrencies are:
Digital: Cryptocurrency is a digital currency, this means that there isn’t a physical version of cryptocurrencies such as coins and notes. They only exist in computers and have no reserves in central banks.
Peer-to-peer: Cryptocurrencies are distributed from individual to individual online. Users don’t deal with one another through third parties such as banks, they deal with one another directly as there are no trusted third parties in cryptocurrency. This type of network ensures that an individual doesn’t make the same entry twice and does this with no central server or authority thus solving the “double-spend” problem
Global: Every country has it’s own currencies known as fiat currencies. The sending process for fiat currencies on a global scale is difficult, whereas cryptocurrencies can be sent all over the world easily.
Encrypted: When dealing with cryptocurrency, your identity will always remain anonymous. Real names aren’t used for accounts but rather each user is given codes to stop their information from being accessed by others.
Decentralized: Cryptocurrency has a structure in which there are no banks and no central authority. Everyone is in charge of their own money and users must be kept accountable for their own money. There is always a controlled supply limited by the network
Trustless: Cryptocurrencies allow users to be 100% in control of their money and information at all times, meaning there is no given trust to any third party or central authority.
We hope you enjoy this brief introduction into the world of cryptocurrency. To start your own crypto trading journey, sign up with us at tradence.io to be a part of the cryptocurrency community and take control of your own money.
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