What is a cryptocurrency?
A cryptocurrency is a form of money that can be sent to anyone, anywhere in the world.
Just like bank transfers? Not entirely, as there is more to cryptocurrency than mobile bank transfer features.
You see, traditional online payment gateways are regulated by organizations that impose all kinds of terms and conditions on how you spend money.
In cryptocurrencies, there are no organizations. You, your friends, and thousands of others can act as your own banks, meaning you communicate directly. No middlemen needed!
Why is it called cryptocurrency?
The word cryptocurrency is a combination of crypto ( from the word cryptography) and currency. This is because cryptocurrency makes use of cryptography to secure transactions.
What makes cryptocurrency unique?
Cryptocurrency is unique for many reasons. Its primary function though is to serve as an electronic cash system that is not owned by anyone.
A good cryptocurrency will be decentralized. There isn’t a central bank even a subset of users cannot change the rules without reaching a consensus.
The decentralization of cryptocurrency networks makes them highly resistant to shutdown. On the other hand, to cripple a centralized network, all you need to do is disrupt the main server. If a bank's database gets wiped and there were no backups, it would be hard to determine users’ balances.
In cryptocurrency, everyone is their own server. Individual nodes can go offline, but their peers will be able to get information from other nodes.
Cryptocurrencies are therefore functional round the clock. They allow for the transfer of value anywhere around the globe without the intervention of intermediaries. Another reason why they are often called permissionless: anyone with an Internet connection can transmit funds.
Who invented cryptocurrency?
The first cryptocurrency was Bitcoin, released in 2009. It was created by a person or group of people using the assumed name Satoshi Nakamoto. To this day, no one knows who they are.
Bitcoin gave rise to several subsequent cryptocurrencies. Some, aiming to compete, and others, seeking to integrate features not available in Bitcoin.
What is a crypto wallet?
Essentially, a cryptocurrency wallet holds your cryptocurrency. It can be a purpose-built application on your PC or smartphone. Wallets are the interface that most users will rely on to interact with a cryptocurrency network.
Most exchanges have two wallets featured on their apps. One allows you to store your local currency and the other cryptocurrency.
Here’s the deal, if you want to own dollar bills for whatever reason, you’ll have to pay for them using your local currency. Similarly, if you are to buy Bitcoin, you need to pay for it using your local currency!
Further reading: Understanding Cryptography in 60 Seconds.
What are private and public keys?
A public key is the cryptography function that ensures that all users can send and receive cryptocurrency securely. While a private key is what grants a user ownership of the cryptocurrency on any given address.
This key has to be a well-kept secret, but you can generate a public one that can be safely be handed out to anyone. As they cannot reverse-engineer the public key to get your private one.
__How to get started? __
Now that you've been officially made a crypto-enthusiast, You can sign up here for a free wallet.
Digital signatures can be used to keep the transactions safe and let other people check that the transactions are real.
Well, because Cryptocurrencies make use of Cryptography to secure transactions.
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