Cryptocurrency is a virtual currency developed with cryptography to enhance security. As a virtual currency, it is connected with the internet and users can get and send the electronic money across the globe. Cryptocurrencies utilize blockchain technology that’s a public ledger system which records each transaction. The public ledger is shared and decentralized across personal computers thus it is not handled by one person or entity. In addition, its not hosted on 3rd party servers. Samples of cryptocurrencies include Bitcoin, Ripple, IOTA, DASH, Ethereum, Litecoin, Bitcoin Cash, and Bitcoin Gold one of tens of thousands of others.
The Arrival of Cryptocurrencies
Before 2008, many individuals do not fully understood what cryptocurrencies were and how to make and operate a successful electronic money system. Unknown to many people, a person or group of individuals with all the pseudonym Satoshi Nakamoto published a whitepaper on a cryptography email list. What many people don’t know is that Satoshi Nakamoto established Bitcoin as a side item and never meant to make a cryptocurrency.
Since the first cryptocurrency to hit the global marketplace, it was developed to eliminate the bottlenecks familiar with the fiat money. During time of the announcement, Satoshi had established the first version of Bitcoin that was uploaded to Sourceforge. He went ahead to make the first digital wallet, purchased bitcoin.org and published the first web site that hosted content associated with Bitcoin. Even though the first cryptocurrency was born in the year 2009, cryptography itself has been around since World War II. If you recall your history well, throughout war, the allies used all means to try and decode all the Enigma that was utilized by Germans to send cipher texts.
Alan Turing a brilliant mathematician, computer researcher, logician, cryptanalyst and philosopher is credited for having helped to promote the field of cryptography. This was after he helped in all the deciphering of German ciphers and all the creation of a machine- all the Bombe that was able to decrypt the Enigma. Thanks to his contribution, Alan Turing changed all the course of Second World War allowing allies to overcome all the Germans and all the Japanese eventually ensuring a victory for all the rest of all the world. Utilizing fundamentals of cryptography, Satoshi Nakamoto was capable to create a digital monetary system which was decentralized. The use of cryptography helped to get rid of the likelihood of double spending and also eliminating the probability of unethical people from stealing cryptocurrencies.
How it works – Before you understand how cryptocurrencies work, there are a few terms you need to know and will be discussed in the next blog.