Introduction
Definition:
- According to Google: “Cryptocurrency is digital money that doesn't require a bank or financial institution to verify transactions, and can be used for purchases or as an investment. Transactions are then verified and recorded on a blockchain, an unchangeable ledger that tracks and records assets and trades.”
According to #LEOGLOSSARY Cryptocurrency is a digital medium of exchange that allows wallets to engage in peer-to-peer transactions. This is done using encrypted algorithms
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According to #INVESTOPEDIA Cryptocurrency is a digital or virtual currency secured by cryptography, which makes it nearly impossible to counterfeit or double-spend.
Most cryptocurrencies exist on decentralized networks using blockchain technology—a distributed ledger enforced by a disparate network of computers.
A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation.
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According to #BLOCKCHAIN101, Cryptocurrency is a digital or virtual currency that uses cryptography for security. It is decentralized and operates on a blockchain, which is a public ledger that records all transactions. Cryptocurrency can be used for various purposes, such as buying goods and services, or as a form of investment.
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The question I had when I first learned about cryptocurrency was what do these words mean?
- I wrote a post once, called the tyranny of vocabulary. In it I wrote that it’s hard to understand explanations about technical topics because they are in technical terms. Therefore only the technologists understand. The corollary thought here being.. It’s hard to understand cryptocurrency, when the explanation is in cryptocurrency words, which only cryptophiles (lovers of crypto) understand. As a regular new to crypto person, I didn’t understand. So the next section of this paper is defining common cryptocurrency words. So you can have a better understanding of cryptocurrency.n
Body
The vocabulary of cryptocurrency
- cryptic an adjective which means something has a meaning that is mysterious or obscure.
- Cryptography is the practice of secure communication usually by something called code, frequently a secret or secret code.
Cryptocurrency is digital money that doesn't require a bank or financial institution to verify transactions and can be used for purchases or as an investment. Transactions are then verified and recorded on a blockchain, an unchangeable ledger that tracks and records assets and trades.
A type of money or currency, which exists only on the internet, not in a physical form, in the computer world created by the digits 0, 1 and 2, and thus called a digital word. So cryptocurrency is a mysterious type of money, which exists only in the computer or digital world, and is created by and lives on a blockchain. So now we have an idea, but now we have other questions, like what’s a blockchain? What’s a block?
- Algorithms refer to software instructions which determine how the tokens are minted, what the schedule is, and what rewards and payments are made.
- One way to look at them is a set of instructions which dictates the way the blockchain carries out it's functions.
- For example the algorithm for Bitcoin dicttes there will only be 21 million. It also disctates the halving or drop in the amount of Bitcoin minted by the blockchin by 50% every 2 years.
#Block - A block is a computer file that records cryptocurrency transactions in a record called a ledger, over a certain period of time. Each block has a certain value which incentivizes the block producer to record the transactions in a distributed ledger. When blocks are linked together, the result is a blockchain. The inclusion of unrelated block producers from all over the world is what makes one decentralized.
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- A Blockchain joins groups of financial transactions together in what are called blocks. These blocks result in a growing list of transactions that are linked together via cryptography.
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- The process of distributing power away from a central point. This can often create more resiliency to a system since the power is not in the hands of a few individuals or entities.
Many blockchains are coded as decentralized networks with many validators being required to assign block to the chain.
This is based upon whatever format the protocol is designed for.
The key for blockchains is to have the code act as the authority, eliminating the need for a centralized intermediaries.
This also reduces the level of trust the participants put on one another.
This is where the phrase trust the code, not people, comes from.
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Summary
What is cryptocurrency?
- Cryptocurrency is digital money that doesn't require a bank or financial institution to verify transactions and can be used for purchases or as an investment. Transactions are then verified and recorded on a blockchain, an unchangeable ledger that tracks and records assets and trades.
- Cryptocurrency is a type of money or currency, which exists only on the internet, not in a physical form, in the computer world created by the digits 0, 1 and 2, and thus called a digital word. So cryptocurrency is a mysterious type of money, which exists only in the computer or digital world, and is created by and lives on a blockchain.
- Cryptocurrency is a very exciting new technology, which exists at the interface between technology and finance. I suggest you learn more.
@shortsegments
Cryptocurrency references below.
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Shortsegments is a writer on Inleo.io, whose writing has been focused on cryptocurrency, the blockchain, non-fungible digital tokens or NFTs, and decentralized finance for over six years.
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References for the Article and recommended readings
- What is cryptocurrency?Nakamoto, S. (2008).
- Bitcoin: A peer-to-peer electronic cash system.Swan, M. (2015).
- Blockchain: blueprint for a new economy. O'Reilly Media, Inc.Vigna, P., & Casey, M. J. (2018).
- The truth machine: the blockchain and the future of everything. St. Martin's Press.Tapscott, D., & Tapscott, A. (2016).
- Blockchain revolution: how the technology behind bitcoin is changing money, business, and the world. Penguin.Swan, M. (2018).
- Cryptocurrency: a beginner's guide to investing and trading in Bitcoin, Ethereum, Litecoin, Ripple, Dash and more.Narayanan, A., Bonneau, J., Felten, E., Miller, A., & Goldfeder, S. (2016).
- Bitcoin and Cryptocurrency Technologies: A Comprehensive Introduction. Princeton University Press.Böhme, R., Christin, N., Edelman, B., Moore, T., & Moore, T. (2015).
- Bitcoin: Economics, Technology, and Governance. Journal of Economic Perspectives, 29(2), 213-238.Swan, M. (2015).
- Digital gold: Bitcoin and the inside story of the misfits and millionaires trying to reinvent money. Harper.Popper, N. (2018).
- Digital gold: Bitcoin and the inside story of the misfits and millionaires trying to reinvent money. HarperBusiness.
- Blockchain101: @shortsegments/blockchain101-what-is-cryptocurrency