How do cryptocurrencies work?
Cryptocurrency transactions are transferred between two parties through cryptocurrency wallets by matching a public code with a private code (also known as a key ) associated with the user. Transactions between two parties will be recorded in a public transaction ledger known as the blockchain .
All users of cryptocurrencies have access to the ledger, as long as they download a wallet with a full node (rather than storing their coins in a wallet or a virtual wallet like Coinbase). The amount of the transaction is public, but the account number sending the transaction is encrypted.
Every transaction goes to a cryptocurrency wallet. Anyone who knows the wallet password can own the amount of cryptocurrency shown in the ledger.
When someone sends or receives cryptocurrency from one wallet to another by using a set of private and public keys, the transaction is queued to the general ledger.
Multiple transactions are added to a ledger at the same time. “Blocks” of transactions are added sequentially. This is why the ledger and the technology behind it is called a "blockchain", a "chain" of "blocks" of transactions.
History of cryptocurrencies
Cryptocurrencies don't have a long history. Yes, there were some digital currency systems in existence before the advent of cryptocurrencies. While previous versions of digital currencies were strictly centralized, these newer forms of cryptocurrencies, such as Bitcoin, are inherently decentralized.
The really interesting thing about today's well-known cryptocurrency is that its invention was a beautiful accident. In fact, it all started with a man called Satoshi Nakamoto, now known as the "Father of Bitcoin."
Satoshi Nakamoto's original goal was to build only a peer-to-peer electronic box system. For a long time, people have been trying to build some kind of online digital cash system, but they always failed due to centralization problems.
Satoshi Nakamoto knew that another attempt at building an online centralized cash system would only lead to more flaws, so he decided to build a decentralized digital cash system. This is the history of the birth of Bitcoin.
Yes, Satoshi Nakamoto invented Bitcoin, the first decentralized digital cash not controlled by a central government or institution. Bitcoins are owned by the entire Bitcoin community.
Satoshi Nakamoto created Bitcoin in 2008, and its value has undoubtedly exploded. But initially the currency was worth only one cent. However, its value has grown very rapidly, having soared to extremely high levels in recent months. Recently, investors have noticed some downside, but the overall price of cryptocurrencies remains high.
Going back to the creation of Bitcoin, the serious problem facing Satoshi Nakamoto is to stop double spending, that is, how to prevent currency owners from spending Bitcoin twice. The previous generation of digital currency spending and volume was controlled by a centralized authority.
So it was always limited by "centralization". And Satoshi Nakamoto invented a digital currency that does not require this centralization. In a decentralized digital currency system.
Each user or individual or group must reach a formula for the balance and transactions of each account before the entire system can function properly.
However, the reason why Satoshi Nakamoto was able to build this cryptocurrency system required the full consensus of all parties, and if there was a disagreement between these, then everything would fall apart.
All of this seemed very complex and nearly impossible to execute, but Satoshi Nakamoto and his invention of Bitcoin proved that such a system could work.
Bitcoin and other cryptocurrencies have shown that there is no need for any kind of central authority to control spending and manage account balances at all, as long as all parties involved are in full agreement.
As we said, the history of cryptocurrencies is not very long, but it certainly has interesting and rich stories. Now that cryptocurrencies such as Bitcoin have proven their value and ability to operate in the real world.
More and more banks, investment firms, business organizations and even retailers have begun to use them as legitimate currencies and payment methods.
most common cryptocurrencies
Since Satoshi Nakamoto launched his amazing innovation, dozens of decentralized cryptocurrencies have been launched. The number of cryptocurrencies in the market has surpassed 1700.
And the number continues to grow. You can also join at any time to create a new cryptocurrency. Currently, the most popular and valuable cryptocurrencies are as follows:
Bitcoin : The beginning of all cryptocurrencies. Today it is the most popular digital currency on the market, although its legal status may vary from country to country.
Ethereum: A Turing-complete programmable cryptocurrency. Developers can build different distributed applications and technologies on Ethereum, which is different from Bitcoin.
Bitcoin Cash: A fork of Bitcoin. The origins of Bitcoin Cash and Bitcoin are recent, so its value has soared following Bitcoin and is now one of the top five major cryptocurrencies by market capitalization.
Bitcoin Gold: A project based on Bitcoin, but using a different type of algorithm for encryption. In the rest, basically follow the guidelines of the Bitcoin project.
Litecoin: Aims to be the "silver" of cryptocurrencies, the "gold" of which is Bitcoin. Litecoin is also a fork of Bitcoin, but unlike its predecessor, blocks are generated 4 times faster and the block limit is 4 times higher (8M).
Ripple: Unlike most cryptocurrencies, this currency does not use a blockchain to achieve consensus on transactions across the network. In contrast, Ripple implements an iterative process of consensus and is therefore faster than Bitcoin, but is therefore more vulnerable to hacking.
Dash: A two-tier network. The first tier is made up of miners who secure the network and record transactions, while the second tier is made up of masternodes who forward transactions and enable both InstantSend and PrivateSend transaction types. The first layer is much faster than Bitcoin, while the second layer is completely anonymous.
BXP Chip Coin: The first Mexican cryptocurrency. From this year, you can start using, investing or trading this currency.
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