Friday, September 18, 2015

What is Cryptocurrency?

Cryptocurrency and the use of it has grown immensely in popularity with the first of its kind introduced in Bitcoin in 2009.

Ever since then there have been many different cryptocurrencies (Altcoins) introduced into the market (For Example: Litecoin, Dogecoin etc..) and the latest one to make a splash… Ether (from Ethereum).

So what is Cryptocurrency?

To put it simply, cryptocurrency is digital currency. It acts like normal currencies such as the USD or the Euro and is designed for the purpose of exchanging digital information made possible through certain principles of cryptography.

Cryptocurrency is fully decentralized meaning it is theoretically immune to government interference or manipulation.

Cryptocurrencies make it easier to transfer funds between two parties in transactions. Transfers are facilitated through the use of public and private keys for security purposes. Fund transfers are done with minimal processing fees, this avoids steep fees charged by banks and financial institutions for wire transfers.  

Cryptocurrencies are mostly derived from one of two protocols: (1) Proof-of-work and (2) Proof-of-stake. We won’t go into detail into these protocols today but here is an example of what each are:

  1. Proof-of-work (POW): The requirement of computational work in order to verify the validity of the block-chain.
  2. Proof-of-stake (POS): The requirement of the validator to show ownership of a certain amount of currency.

The first Cryptocurrency was Bitcoin, later coins are referred to as Altcoins.

In our next Blog Post we will go into an introduction to what Ethereum is. 


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