Global Cryptocurrency Market For Beginners

Posted in Cryptocurrency Basics on . Tags:#cryptocurrency
Share:
Cryptocurrency Market For Beginners

Cryptocurrency is a sort of computerized money that is intended to be secure and, in a few cases, anonymous. It is a payment platform locked forever to the internet that utilizes cryptography.

Cryptos are decentralized to give users a place to make secure payments and store money (called HODLing in the cryptosphere) while not having to trust a bank or third-party payment platform. Each user downloads and sets up their wallet. Each wallet is a node in the network. So, instead of one central bank is in control, each user is their bank, controlling their own money, while having access to the entire blockchain.

The blockchain is the entirety of a crypto coin. Bitcoin, Ether, Litecoin, etc. Each has its blockchain, which is a complete public (except for Monero, which is entirely anonymous) ledger of the life of that coin. From the mining of each currency, through every transfer, to each coin's current location; everything is recorded to the blockchain to give clarity and transparency; making a hack of the system impossible since no person could hack every wallet on the planet; especially with paper wallets; which cannot be cut, even if all others could be. 


But where did it all begin? 


Back in 2008, an unknown internet user, or users, published the Bitcoin Whitepaper under the name Satoshi NakamotoIn this White Paper, Satoshi addressed the most significant issues of money since humanity began trading seashells and handfuls of salt for chickens, eggs, and meats 10,000 years ago. Among those issues was the fact that traditional banking puts our money into the hands of others, under centralized control. Bitcoin eliminated that by being the world's first truly decentralized currency. 

Then, there is the issue of payments over a distance. Bitcoin eliminated that problem as well by and through the very system whereby a wallet user at one location on the planet can now send money to another wallet user, regardless of the receiver's location.

After Bitcoin came, others, Ethereum, Doge, Litecoin, Monero, and other currencies, appeared over the years, all using the same system of decentralization and instant transfer, each using its encryption and each with its unique properties. Each of these currencies was created with a new coin code, a new wallet system, and a new blockchain, each with a set beginning when its first coins was "mined,"; called a Genesis Block.

Then came "forks," like Bitcoin Cash. These forks are created on the back of the existing crypto. So, unlike Ethereum, which has it's own Genesis Block, Bitcoin Cash has a fork date; but, its actual Genesis Block was the same as Bitcoin's Genesis Block. 


So, how are these coins created? 


Essentially each coin is a complex series of numbers, carefully encrypted. Those numbers are created through a process known as mining, where a computer works a sophisticated algorithm (math problem) to find an answer. When the proper solution has reached the miner who solved that issue is rewarded with a "block" of coins. In Bitcoin, a block reward is currently 6.25 BTC. That amount has dropped over the years as the difficulty of the mining algorithm increases, while the premium decreases. 


Why does the mining difficulty increase?


Miners are necessarily clarifying transfers between users. So, if I send Bitcoin to you, that transfer is sent to the network and added to hundreds of others to form a block. Every transaction in the neighborhood is checked against the existing blockchain. So, the BTC I send to you is traced back to its mining event, step by step from the beginning. As you can imagine, the more blocks that are mined, the more of a history the mining operation must review before each transfer can be "confirmed." Once all of the assignments in a block are confirmed, everyone receives their funds, and that block of transactions is added to the blockchain. 


So, the beauty of cryptos, born almost a decade ago, is transparency and security like the world has never known. That is the gift of Satoshi. Happy HODLing!!!


Danny Donahue

Comments

Scroll to top