Introduction to cryptocurrency.
In this post I wish to define and talk about the word cryptocurrency. I think it is important to start with a good foundation in the vocabulary of cryptocurrency. This is important because so cryptocurrency words or terms are new to newcomers to this subject are defined using other new cryptocurrency vocabulary. So before we discus the meaning of the word cryptocurrency, lets discus some of the basic building block terms of any discussion about the blockchain and cryptocurrency.
If you take the time to understand the words used in cryptocurrency, so many things will start to make sense to you. For example the need to take certain steps in the investment process will be more intuitive and you won't forget them, thus you will lose less money. Which is an important first step in making money.
The first terms I would like to define are : Bitcoin, Block, Blockchain, Cryptography and Decentralization.
Bitcoin
Bitcoin is the first decentralized cryptocurrency, was created in 2009. Since then, thousands of different cryptocurrencies have been created, each with its own unique features and uses.
Block
A computer file that records cryptocurrency transactions in a ledger given 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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Blockchain
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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Cryptography
Cryptography* is the practice of secure communication usually by something called code, frequently a secret or secret code.
Decentralized
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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Discussion of Cryptocurrency
Now that we have some important word definitions in our minds we can use thoem to discus our main topic: cryptocurrency. Cryptocurrency is a digital or virtual currency that uses cryptography for security.
Cryptocurrency is normally decentralized, meaning the ledger is kept in hundreds or thousands of places all over the world, and it 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. Bitcoin, the first decentralized cryptocurrency, was created in 2009. Since then, thousands of different cryptocurrencies have been created, each with its own unique features and uses. The concept of cryptocurrency is based on the idea of using cryptography to secure financial transactions. Cryptography is the practice of secure communication and is used to secure the transactions and to control the creation of new units of the currency.
The decentralized nature of cryptocurrency means that it is not controlled by any government, bank, or other centralized authority. Instead, transactions are recorded on a public ledger, called a blockchain, which is maintained by a network of computers.
One of the key features of cryptocurrency is the use of blockchain technology.
A blockchain is a public ledger that records all transactions on the network.Each block contains a record of multiple transactions, and once a block is added to the chain, the information it contains cannot be altered. This ensures that the transactions on the network are secure and transparent.
Cryptocurrency can be used for various purposes, such as buying goods and services, or as a form of investment. Many retailers and merchants now accept cryptocurrency as a form of payment, and there are also various platforms that allow individuals to trade and invest in different cryptocurrencies.
However, the use of cryptocurrency is still in its early stages, and there are many challenges that need to be overcome before it can be widely adopted.
Last Words
- 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.
- However, the use of cryptocurrency is still in its early stages, and there are many challenges that need to be overcome before it can be widely adopted.
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References for the Article Blockchain101: 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.
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