Cryptocurrency is one of the most unique digital assets in the world today. One of the most well known cryptocurrencies is Bitcoin. This article will explain what cryptocurrency is, the history of it, the current use of cryptocurrency, the advantages and disadvantages, and the expected future.
What Is Cryptocurrency
Cryptocurrency is a digital and virtual currency. A virtual currency is a nonregulated digital currency that is made in electronic form. It is used as a method of payment. It can be exchanged online for good and services. When a cryptocurrency is used for exchanging goods and services, it is called a token. A token is created by a company that has their own type of cryptocurrency. A token can be thought of as arcade token that you would use to play video games at a local video game arcade environment or casino chips that you would use when placing bets on card games in Las Vegas. A cryptocurrency doesn’t work by itself. It uses a technology called Blockchain. Blockchain is a list of records called blocks. These records are connected together using cryptography. Cryptography is the method of securing information in a cryptocurrency through the use of codes. Every block has a hash of a prior block, timestamps, and transaction data.
The History of Cryptocurrency
Cryptocurrency has a long history in the technological world. In the late 1990’s Wei Dai published “b-money”. B-money is a distributed electronic cash system. After this, Nick Szabo was able to create “bit gold”. “Bit gold” isn’t the same as the gold-based exchange currency of the later formed Bit Gold. “Bit gold” was the electronic currency system that required users to do a proof of work function. It had cryptographically solutions that were placed together. It was published.
In 2009, bitcoin became the first decentralized cryptocurrency. It was created by Satoshi Nakamoto. Bitcoin as a cryptocurrency uses SHA-256. SHA-256 is a hash function that is cryptographic. The SHA-256 provided Bitcoin with a proof of work plan. Two years later in 2011, Namecoin was created. It was created as a way to form a decentralized DNS. By late 2011, Litecoin was released into the world. Litecoin was the first cryptocurrency that was able to use scrpyt as a hash function. A harsh function is a function that is used for mapping data to fixed-sizes.
Current Use Of Cryptocurrency
Cryptocurrency has many uses. Cryptocurrency can be used for investing into stocks and other types of cryptocurrencies. It can also be used for paying tuition. It can help other people in need through the use of donating to charities. There are several types of charities that accept cryptocurrency as a form of payment. Cryptocurrency can also be used for paying goods and services.
Advantages and Disadvantages of Cryptocurrency
Although cryptocurrency is a valued form of payment, there are advantages of it. One huge advantage that cryptocurrency has is its protection from inflation. Every type of cryptocurrency has been released to a fixed number. As the demand for cryptocurrency goes up, the value of it will be able to keep up with the market demand. This will protect cryptocurrency from inflation. Another advantage is that it can be stored by miners on hardware. They can obtain the transaction fee and keep their transaction records accurate. This helps cryptocurrency stay self-managed. A final advantage of cryptocurrency is that it’s secured and private. Cryptocurrency uses various mathematical puzzles on the blockchain ledger to protect its data.
It has disadvantages too. A cryptocurrency such as Bitcoin has been used for illegal transactions. These transactions include exchanging drugs on the dark and hiding the source of illegal obtained funds. Another disadvantage of cryptocurrency is that users can experience data loss with a cryptocurrency. As a result, financial losses can occur. An example of this is the user losing the key to their crypto wallet. When the key is lost, the crypto wallet will be locked with the cryptocurrency coins inside.
The Expected Future Of Cryptocurrency
Cryptocurrency has an unknown future ahead. Some analysts are predicting that cryptocurrency will be found on the NASDAQ. This will allow cryptocurrency to include plausibility to blockchain. This is in regards to cryptocurrency being used an alternative form of currency.