If youve ever had a company or friend offer to pay you with Bitcoins or another type of digital money, youve encountered cryptocurrency, also called crypto-money or cryptoassets.
Cryptocurrency is a digital currency that is created through the use of encryption software. This approach is a solution to security and control issues that prevented a purely digital currency from being successfully developed in the past. If you hear someone talking about one of these currencies, its almost certainly in a cryptocurrency format. This type of digitally created and secured money is currently in a period of very cool experimentation, so lets take a look at how it work, why its popular, and where cryptocurrency is heading in the future.
How does a currency exist in a totally digital format? What is it based on? While the process varies a little between different cryptocurrencies, they all follow the same general system.
First, cryptocurrency chooses a base unit and how much that particular unit is worth when compared to other currencies (often, the U.S. dollar is used as a baseline). Some cryptocurrencies are more imaginative than others at this point. They try to represent debt registries, contracts, or the act of currency exchange itself. It can get a little weird, but ultimately the unitin some way relates to the value of other currency, as is true of all currencies in the world.
Units of cryptocurrency are then created, typically when a transaction occurs. The units are carefully formed and preserved through algorithmic encryption, then linked together in vast chains of data, where the currency can be tracked and exchanged.
However, at this point, cryptocurrency is still too vulnerable and too easy to fake. The currency units need to be timestamped and processed to make them more concrete and harder to copy. A third party developer can do this, but most cryptocurrencies prefer to crowdsource the process to those with the right hardware and software to mine the currency.
Mining uses algorithms to go through each transaction, encrypt the cryptocurrency, and add it to a digital ledger, essentially verifying it and cementing its position online. This process may also be referred to as consensus protocols orconsensus platforms, depending on the currency. This process is meant to make the currency impossible to duplicate, though whether its successful is up for some debate.
Some cryptocurrencies are highly centralized, with someone usually the organization that created the process/software making decisions about how much currency is created and how it is used. Other types are very decentralized, controlled only by how and where people are willing to use them.
Originally posted here:
Cryptocurrency explainer: Everything you need to know - Digital Trends
- Cryptocurrency News Round-Up: Bitcoin in Space & MtGox 2.0 [Last Updated On: April 26th, 2014] [Originally Added On: April 26th, 2014]
- This week in bitcoin: Visualizing cryptocurrency [Last Updated On: April 26th, 2014] [Originally Added On: April 26th, 2014]
- PotCoin cryptocurrency aiming to aid Colorados cash-only pot shops [Last Updated On: April 26th, 2014] [Originally Added On: April 26th, 2014]
- Crypto()Currency - CryptoCurrency.org [Last Updated On: April 26th, 2014] [Originally Added On: April 26th, 2014]
- As Bitcoin Soars in Value, Alternative Cryptocurrencies ... [Last Updated On: April 26th, 2014] [Originally Added On: April 26th, 2014]
- Cryptocurrency - Wikipedia, the free encyclopedia [Last Updated On: April 26th, 2014] [Originally Added On: April 26th, 2014]
- Bitcoin vs. Political Power: The Cryptocurrency Revolution - Stefan Molyneux at TNW Conference - Video [Last Updated On: April 26th, 2014] [Originally Added On: April 26th, 2014]
- TNW - Stefan Molyneux - Money, Power and Politics The Cryptocurrency Revolution - Video [Last Updated On: April 26th, 2014] [Originally Added On: April 26th, 2014]
- Bit coin and Cryptocurrency - Video [Last Updated On: April 26th, 2014] [Originally Added On: April 26th, 2014]
- Atencoin is the First AML Compliant CryptoCurrency - Video [Last Updated On: April 26th, 2014] [Originally Added On: April 26th, 2014]
- How to Set Up a Ripple (CryptoCurrency) Generating System! - Video [Last Updated On: April 26th, 2014] [Originally Added On: April 26th, 2014]
- Bitcoin / Cryptocurrency - An Extensive FAQ - Video [Last Updated On: April 26th, 2014] [Originally Added On: April 26th, 2014]
- --- The Great Debate --- Bitcoin vs Altcoin @ The CryptoCurrency Convention 4/9/14 - - Video [Last Updated On: April 26th, 2014] [Originally Added On: April 26th, 2014]
- Bryce Weiner @ CryptoCurrency Convention 4/9/14 - - Video [Last Updated On: April 26th, 2014] [Originally Added On: April 26th, 2014]
- Popularcoin @ CryptoCurrency Convention 4/9/14 - Joshua Nold - Video [Last Updated On: April 26th, 2014] [Originally Added On: April 26th, 2014]
- TimeKoin @ CryptoCurrency Convention 4/9/14 - Michael Brown - Video [Last Updated On: April 26th, 2014] [Originally Added On: April 26th, 2014]
- Infinitecoin @ CryptoCurrency Convention 4/9/14 - Loring Small - Video [Last Updated On: April 26th, 2014] [Originally Added On: April 26th, 2014]
- Bitcoin Exchange CryptoRush Loses Millions of BlackCoin Cryptocurrency - Video [Last Updated On: April 26th, 2014] [Originally Added On: April 26th, 2014]
- Brock Pierce, Entrepreneur "FireSide Chat" @ CryptoCurrency Convention NYC - 4/9/14 - Video [Last Updated On: April 26th, 2014] [Originally Added On: April 26th, 2014]
- Dogecoin Founder Speaks on the Future of Cryptocurrency [Last Updated On: April 27th, 2014] [Originally Added On: April 27th, 2014]
- Flash Gordon Conquers the Universe 3 Captured by Shark Men (1940) - Video [Last Updated On: April 27th, 2014] [Originally Added On: April 27th, 2014]
- [OFFICIAL SPONSOR] Nick Spanos, Bitcoin Center NYC @ CryptoCurrency Convention 4/9/14 - Video [Last Updated On: April 27th, 2014] [Originally Added On: April 27th, 2014]
- AuroraCoin @ CryptoCurrency Convention NYC 4/9/14 - David Lio - Video [Last Updated On: April 27th, 2014] [Originally Added On: April 27th, 2014]
- Florincoin @ CryptoCurrency Convention NYC 4/9/14 - Joe Fiscella - Video [Last Updated On: April 27th, 2014] [Originally Added On: April 27th, 2014]
- DigiByte @ CryptoCurrency Convention NYC 4/9/14 - Jared Tate - Video [Last Updated On: April 27th, 2014] [Originally Added On: April 27th, 2014]
- Digitalcoin @ CryptoCurrency Convention NYC 4/9/14 - Andrew Davidson - Video [Last Updated On: April 27th, 2014] [Originally Added On: April 27th, 2014]
- PotCoin @ CryptoCurrency Convention NYC 4/9/14 - Nick Iversen - Video [Last Updated On: April 27th, 2014] [Originally Added On: April 27th, 2014]
- ZenithCoin @ CryptoCurrency Convention NYC 4/9/14 - Eddie Corral - Video [Last Updated On: April 27th, 2014] [Originally Added On: April 27th, 2014]
- BitAngels Co-Founder, David Johnson @ CryptoCurrency Convention NYC 4/9/14 - Video [Last Updated On: April 27th, 2014] [Originally Added On: April 27th, 2014]
- New York to Regulate Bitcoin: Is the Cryptocurrency Biz Like the Wild West? - Video [Last Updated On: April 27th, 2014] [Originally Added On: April 27th, 2014]
- Australian dogecoin founder speaks on the future of cryptocurrency [Last Updated On: April 28th, 2014] [Originally Added On: April 28th, 2014]
- Cryptocurrency [Last Updated On: April 28th, 2014] [Originally Added On: April 28th, 2014]
- How to Buy Bitcoins BTC Litecoins LTC Quarks QRK Cryptocurrency Altcoins - Video [Last Updated On: April 28th, 2014] [Originally Added On: April 28th, 2014]
- Coinnext Cryptocurrency Exchange Coming Soon - Video [Last Updated On: April 30th, 2014] [Originally Added On: April 30th, 2014]
- Cryptocurrency News Round-Up: MtGox Hearing Begins as Bitcoin gets Bloomberg Endorsement [Last Updated On: May 1st, 2014] [Originally Added On: May 1st, 2014]
- mTrader.org - Cryptocurrency Mining System - Video [Last Updated On: May 1st, 2014] [Originally Added On: May 1st, 2014]
- Ripple XRP Decentralized CryptoCurrency Bitcoin Exchange Open-Sourced BlockChain - Video [Last Updated On: May 1st, 2014] [Originally Added On: May 1st, 2014]
- Cryptocurrency News Round-Up: Transparent Exchange & Bitcoin Banks [Last Updated On: May 2nd, 2014] [Originally Added On: May 2nd, 2014]
- Bitcoin Cryptocurrency Crash Course with Andreas Antonopoulos - Jefferson Club Dinner Meet - Video [Last Updated On: May 2nd, 2014] [Originally Added On: May 2nd, 2014]
- MAX KEISER & ALEX JONES talks about BITCOIN - Is Cryptocurrency the FUTURE? - Video [Last Updated On: May 2nd, 2014] [Originally Added On: May 2nd, 2014]
- CryptoCurrency - cryptobars commodity Launch! - Video [Last Updated On: May 2nd, 2014] [Originally Added On: May 2nd, 2014]
- Coin Pursuit Launches SliceFeeds Interactive Cryptocurrency Network [Last Updated On: May 3rd, 2014] [Originally Added On: May 3rd, 2014]
- CS 171 Final Project: Cryptocurrency Visualizations - Video [Last Updated On: May 3rd, 2014] [Originally Added On: May 3rd, 2014]
- The Mises View: "Taxing Cryptocurrency" | Jeff Deist - Video [Last Updated On: May 3rd, 2014] [Originally Added On: May 3rd, 2014]
- Cryptocurrency Explained The Tech Guy 1046 - Video [Last Updated On: May 3rd, 2014] [Originally Added On: May 3rd, 2014]
- Such Dogecoin. Much Validity. How one altcoin may have turned into cryptocurrencys best marketing tool [Last Updated On: May 4th, 2014] [Originally Added On: May 4th, 2014]
- Cryptocurrency | Ground Zero with Clyde Lewis [Last Updated On: May 4th, 2014] [Originally Added On: May 4th, 2014]
- Know How 74 Cryptocurrency - Video [Last Updated On: May 4th, 2014] [Originally Added On: May 4th, 2014]
- MIT undergrads will each receive $100 in bitcoin [Last Updated On: May 5th, 2014] [Originally Added On: May 5th, 2014]
- Bitcoin wins US election panel's approval for political donations [Last Updated On: May 9th, 2014] [Originally Added On: May 9th, 2014]
- CryptoCurrency of the World Unite! - Video [Last Updated On: May 10th, 2014] [Originally Added On: May 10th, 2014]
- The Bitcoin Stats Show - Ep 6: 16th April 2014 - Video [Last Updated On: May 10th, 2014] [Originally Added On: May 10th, 2014]
- Bitcoin vs. Political Power: The Cryptocurrency Revolution Stefan Molyneux at TNW Conferen - Video [Last Updated On: May 11th, 2014] [Originally Added On: May 11th, 2014]
- AMD cuts Radeon R9 280 price as inflation woes die down [Last Updated On: May 15th, 2014] [Originally Added On: May 15th, 2014]
- BBT Presents: Ode to Cryptocurrency - Video [Last Updated On: May 15th, 2014] [Originally Added On: May 15th, 2014]
- The Cryptocurrency Certification Consortium - Video [Last Updated On: May 15th, 2014] [Originally Added On: May 15th, 2014]
- Scryptify Cryptocurrency Video - Crypto Currency Exchanges - Video [Last Updated On: May 15th, 2014] [Originally Added On: May 15th, 2014]
- Bitpagar Cryptocurrency - Video [Last Updated On: May 16th, 2014] [Originally Added On: May 16th, 2014]
- How to Mine Cryptocurrency Safely - Video [Last Updated On: May 17th, 2014] [Originally Added On: May 17th, 2014]
- Bunnycoin - Innovative New Cryptocurrency - Video [Last Updated On: May 17th, 2014] [Originally Added On: May 17th, 2014]
- Cubieboard 1 2 Mining Peercoins SHA256 based Cryptocurrency - Video [Last Updated On: May 17th, 2014] [Originally Added On: May 17th, 2014]
- Megacoin Teaser Video New CryptoCurrency Bitcoin Best AltCoin 2014 Anonymous Zerocoin - Video [Last Updated On: May 17th, 2014] [Originally Added On: May 17th, 2014]
- Jan Irvin on Learning, Statism, Culture, Cryptocurrency and Voluntarism -- Potent News Podcast #1 - Video [Last Updated On: May 17th, 2014] [Originally Added On: May 17th, 2014]
- Nxt cryptocurrency platform: Proof of Stake mining system - Video [Last Updated On: May 19th, 2014] [Originally Added On: May 19th, 2014]
- Givecoin.info Announces Partnership with Do A Bit of Good: World's First Charitable Mining Screensaver [Last Updated On: May 21st, 2014] [Originally Added On: May 21st, 2014]
- Cryptocurrency: Get Mining! - Video [Last Updated On: May 22nd, 2014] [Originally Added On: May 22nd, 2014]
- Violincoin - The first cryptocurrency for musician - - Video [Last Updated On: May 22nd, 2014] [Originally Added On: May 22nd, 2014]
- Trollcoin - The Fun Cryptocurrency! - Video [Last Updated On: May 22nd, 2014] [Originally Added On: May 22nd, 2014]
- The Cryptocurrency Store (Spanish/Espagnol) - Video [Last Updated On: May 23rd, 2014] [Originally Added On: May 23rd, 2014]
- How To Trade CryptoCurrency: Sign up to a safe and reliable exchange for trading CryptoCurrency - Video [Last Updated On: May 23rd, 2014] [Originally Added On: May 23rd, 2014]
- UT students to launch cryptocurrency exchange [Last Updated On: May 24th, 2014] [Originally Added On: May 24th, 2014]
- Cryptocurrency and Nonprofits with Eric Nakagawa - Video [Last Updated On: May 24th, 2014] [Originally Added On: May 24th, 2014]
- The Cryptocurrency Store - Video [Last Updated On: May 24th, 2014] [Originally Added On: May 24th, 2014]
- Videoconferencia Cryptocurrency 201243946 - Video [Last Updated On: May 27th, 2014] [Originally Added On: May 27th, 2014]
- VideoCharla Jesus Ramos Cryptocurrency - Video [Last Updated On: May 27th, 2014] [Originally Added On: May 27th, 2014]
- Cryptocurrency Round-Up: Bitcoin Pioneer Dies and Digital Currency's Status in Australia [Last Updated On: September 1st, 2014] [Originally Added On: September 1st, 2014]
- Bleutrade Cryptocurrency Exchange Review - Video [Last Updated On: September 1st, 2014] [Originally Added On: September 1st, 2014]
- Bitcoin enthusiasts discuss the cryptocurrency - Video [Last Updated On: September 1st, 2014] [Originally Added On: September 1st, 2014]
- Make Fast 1.0 up to 10.00 BTC or Any Cryptocurrency REAL CASH - Video [Last Updated On: September 1st, 2014] [Originally Added On: September 1st, 2014]
- Halcyon cryptocurrency - Video [Last Updated On: September 1st, 2014] [Originally Added On: September 1st, 2014]