History: Cryptocurrency is the latest attempt to re-invent the way we exchange money. The origin of cryptocurrency dates back to the beginning of the internet and it is the network of computers because of which cryptocurrency is able to function. David Chaum is considered as the earliest pioneers of cryptocurrency. In 1983, while pursuing his graduation, the American cryptographer David Chaum published a research paper that introduced an idea of an untraceable digital cash or simply cryptography.
Cryptography is an internet-based medium of conducting financial transactions byusingcryptographical functions. Cryptocurrencies leverage block chain technology to gain decentralization, transparency, and immutability. Bitcoin,Ethereum, Litecoinare cryptocurrency and the whole process of cryptocurrency can be understood through their functionality.
Bitcoin:Bitcoin is a digital currency which exists electronically and is not attached to any government or central issuing authority or regulatory body. There’s no organisation deciding when to make more bitcoins or figuring out how many to produce, keeping track of where they are or investigating fraud. Many technologist are intrigued by the potential of its innovative block-chain technology.
How does it work?
- Bitcoin wouldn’t exist without a whole network of people and a thing called cryptography. It’s often called as the world’s first cryptocurrency.
- Bitcoin is a fully digital currency and can be exchanged between computers in worldwide through peer to peer network. Unlike an mp3 or a video file, a bitcoin isnot a string of data that can be duplicated.
- A bitcoin is actually an entry on a huge global ledger called block-chain. The block-chain records every transaction that has ever happened.
- Even though block-chain is a central record but there is no official group of people updated the ledger and keeping the track of everybody’s money like a bank does, it’s decentralised.
- There are a bunch of people who keep on updating the ledger on their own level and then, they compare the updated data with others who are doing the same and try to find the discrepancies or the fraud in the process. And the people doing so are called miners.
- Bitcoin actually has a built in system to reward miners.
- For every block, miners are awarded some bitcoins which are directly credited to their accounts.
- Bitcoins are created in a way to reward bitcoin miners. Miners are also tipped a very small amount for each transaction they add to the ledger.
Benefits of cryptocurrency:
- Fraud:It is digital and cannot be counterfeited or reversed arbitrarily by the sender.
- No Issue of Identity theft: Cryptocurrency uses a mechanism that allows the cryptocurrency holder to just send the required amountto the sender or recipient with no further information. The private key and the corresponding public key make up your cryptocurrency address.
- Access: With a mobile phone in hand, you can easily access bitcoin wallets.
- No Fees: There is no transaction fee for cryptocurrency exchanges because the miners are compensated by the network itself.
A cryptocurrency course will provide you with an in-depth understanding of how these digital currencies work and the processes required to invest and trade them.