Cryptocurrency has been a hot topic for a number of years and only seems to be heating up with each passing day. The crypto-ecosystem is full of terms and abbreviations that can make it inaccessible to newcomers. So, let’s start at the beginning – What is a cryptocurrency?
Let’s break this down its basics. The word cryptocurrency is a portmanteau of two words, “cryptography” and “currency”.
First, what is a currency? A currency is a sort of economic buffer that allows individuals to convert their work and efforts into something that can be converted back into goods or services, or stored until later.
Cryptography is the process of converting messages into unintelligible text and vice-versa. It is the foundation of online security and is used within banks, governments, and any other entity that wishes to keep their information private. Modern cryptography deals with confidentiality — information cannot be understood by anyone, integrity — information cannot be altered, and authentication — sender and receiver can confirm each other.
Cryptocurrency is an alternative form of payment to cash, cards, and checks. The underlying technology allows individuals to send virtual currency to each other without using a third party like a bank. This brings the benefit of anonymity, as you don’t need a social security number or credit score. It also allows for global exchanges, as again, there is no middleman.
In a sense, cryptocurrencies act like virtual accounting systems, where a record of all transactions are kept.
These transactions are bundled into “blocks”, which are operated using cryptographical methods; hence the “crypto” in the cryptocurrency.
By itself, there are many applications for the above. Money can be sent instantly without international fees. Business operators don’t have to worry about payment fraud or invalid checks, because everything is checked cryptographically.
When you pay in person at a store, that cash transaction can be considered decentralized. There is nobody standing between you and the cashier, the money flows between you without going through a financial institution. This is possible because, unless you’re paying using counterfeit money, it is impossible to double-spend cash. No trusted middleman is required to verify a cash transaction. This can be considered a peer-to-peer transaction. Peer-to-peer transactions are a foundational instrument in cryptocurrency.
How could you replicate the peer-to-peer transaction you and the cashier had, but globally? This concept, for decades, was impossible to achieve. Sending cash between people that were not standing next to each other needed a middleman/financial institute to verify the transaction to ensure the safety of it.
There were many attempts to create such a technology, but all of them failed, until one day in 2007 an individual/group/entity named Satoshi Nakamoto began to write the code for something called Bitcoin.
Bitcoin: A Peer-To-Peer Electronic Cash System
Satoshi’s aim was to develop the first-ever viable cash-like payment system that can be freely used by any two people who don’t necessarily trust each other – without employing a middleman.
Bitcoin can be compared to the cash that you handed the cashier, but the transaction has limitless physical range. Yet, it is also like a credit card in that it requires passwords and protections in order to use.
Unlike cash, nobody can “find” your bitcoin on the ground like a $20 bill and spend it as they would cash.
Bitcoin is also traceable, as they are written into the blockchain, the cryptographic database Satoshi introduced. Every transaction can be viewed by anybody, and they can’t be tampered with, deleted, altered or disguised in any way.
Bitcoin has all the benefits of cash plus the security and traceability of digital money.
Satoshi circulated his white paper and in January 2009 he uploaded Bitcoin 0.1 to SourceForge.
He made the first transaction on the block. Embedded in the coinbase transaction of this block is the text: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”, citing a headline in the UK newspaper The Times published on that date. This note has been interpreted as both a timestamp and a derisive comment on the alleged instability caused by fractional-reserve banking.
In those early months, Bitcoin was mostly known to developers and those deeply interested in software and cryptography. Satoshi left their creation “Open Source”, meaning the code was open to the public. This also meant that anyone was free to copy it, and alter the code.
The first-ever bitcoin fork was in October, 2011 to create Litecoin. A fork is, fundamentally, copying the initial code and changing it in some way. Created by Charlie Lee, the largest differences are a more lightweight algorithm (scrypt instead of SHA-256), faster block times (2.5 minutes), and a higher number of total coins (84m). Litecoin was also the first to implement protocol changes designed to help scale bitcoin, Segregated Witness and Lightning Network.
This made Litecoin the first “Altcoin” – a cryptocurrency alternative to Bitcoin. Over time, and to this day, there are many forks of the original Bitcoin code. Satoshi had created a worldwide movement, but Bitcoin remains the #1 cryptocurrency.
With the explosion of forks and additional altcoins, a number of ways to buy, sell, and exchange cryptocurrencies popped up.
Cryptocurrency exchanges, which are systems where you could send some Bitcoin and receive tens of different coins on the other end, became the go-to vehicle for digital transactions.
Exchanges are like stockbrokers that allow you to securely trade cryptocurrencies for other cryptocurrencies and also for fiat money (dollars, euro etc).
Cryptocurrency: The Future of Money
In conclusion, cryptocurrency is a radical new way of paying that makes all the transactions secure and helps to get rid of intermediaries represented by banks, which also contributes to a significant reduction in the commission fee. The primary feature of cryptocurrencies, security, is provided by Blockchain technology invented by Satoshi, which is a network of computers having an identical copy of the database and changing its records by a common agreement based on pure mathematics.
Due to the openness of cryptocurrency and the blockchain, it is even possible to create your own currency and issue your own token – a type of privately issued cryptocurrency, a unit of value that an organization creates to regulate and self-govern its business model, and empower its users to interact with its products while facilitating the distribution and sharing of rewards and benefits to all of its stakeholders.
Protecting Your Cryptocurrency
Cryptocurrency and the blockchain stand to be a major driving factor in the technology of the future. However this popularity has attracted an element of cybercrime. There are several tools internet users should use to increase their online protection. One of these tools is SaferNet.
SaferNet is the perfect solution to the cybersecurity issues that individuals, families, and businesses face today. It not only connects every device using a secure, 24/7 always on, military grade VPN, but it also stops outside cyberthreats, malware and viruses as well. On SaferNet, all users are protected anywhere in the world, all the time, on any cellular or Wi-Fi network. In addition to SaferNet’s VPN and cyber protection, it also offers a range of employee or parental/family internet controls including internet filtering, monitoring, scheduling, and blocking access to websites or even entire website categories
Typically, a user would need 3 separate services for a VPN, Malware Protection, and Internet Controls; SaferNet offers all 3 features in one service. SaferNet truly is an endpoint security presence that can be implemented in minutes around the world, on phones, laptops, tablets, and computers at an economical price point that caters to all internet users. SaferNet guarantees a smooth setup and installation process that takes only minutes, and an easily accessible control hub for you to monitor all your employee’s or family members devices; including activity, time spent online, and threats blocked.