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 own wallet. Each wallet is a node in the network. So, instead of one central bank being in control, each user is their own 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 own blockchain; which is a complete, public (except for Monero; which is completely anonymous) ledger of the life of that coin. From the mining of each coin, 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 possibly hack every wallet on the planet; especially with paper wallets; which cannot be hacked, 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 Nakamoto. In this White Paper Satoshi addressed the biggest issues of money since mankind 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 own encryption, and each with its own 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 were "mined"; called a Genesis Block.
Then came "forks", like Bitcoin Cash. These forks are created on the back of an existing crypto. So, unlike Ethereum, which has its 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 complex algorithm (math problem) to find an answer. When the proper answer has reached the miner who solved that issue is rewarded with a "block" of coins. In Bitcoin, a block reward is currently 12.5 BTC. That amount has dropped over the years as the difficulty of the mining algorithm increases; while the reward decreases.
Why does the mining difficulty increase?
Miners are essentially 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 block is checked against the existing blockchain. So, the BTC I send to you is traced back to its own 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 transfers 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!!!
What is Cryptocurrency for Dummies | Main Secret
Posted in Crypto Basics on Mar 20, 2018This introduction explains the foremost necessary factor concerning cryptocurrency and its existence. Once you read this, you will be aware of the bare basics of Cryptocurrencies.
Cryptocurrency Future | Crypto as a Payment Method
Posted in Crypto Basics on Mar 20, 2018Let's investigate a portion of the many advantages to companies that accept cryptocurrency from customers and clients.
What is FIAT Money | Cryptocurrency Advantages
Posted in Crypto Basics on Mar 20, 2018A cryptocurrency is a form of money. Think of it as a new, electronic "cash-of-the-future".
Cryptocurrency Wallets | How To Store Your Cryptocurrency Safely
Posted in Crypto Basics on Apr 01, 2018How to store your cryptocurrency coins and tokens safely is a vital topic for everyone in the cryptosphere.
Value of Cryptocurrency and How It Is Determined?
Posted in Crypto Basics on Apr 08, 2018In order to determine the value of a crypto we must first understand the nature of the beast. "Crypto" is a generic term to describe any coin or token built upon, and recorded on, a blockchain ledger.