A cryptocurrency is a digital asset designed to work as a medium of exchange for products or actual currency. The most popular is Bitcoin, first released as open-source software in 2009. Bitcoin is the first and also the best at producing insta-millionaire hype. Since the release of bitcoin, over 6,000 other cryptocurrencies have been created.
When a cryptocurrency is minted or created prior to issuance or issued by a single issuer, it is generally considered centralized. When implemented with decentralized control, each cryptocurrency works through distributed ledger technology (DLT), typically a blockchain, that serves as a public financial transaction database.
Crypto and the Blockchain
Simply, a blockchain is a chain of events as transactions. The DLT creates large scale access to records and the blockchain creates layers of security blocks that cannot be removed or altered except by global consensus.
For example: If Dog buys something from Cat and sells it to Bird it creates a history of events (blockchain). Then, Dog can’t sell the same thing back to Cat because there is a previous record that says Bird owns it. The record can’t be changed unless all the animals agree (global consensus) and they are pretty darned hard to convince
Blockchain technology can be considered the gold standard for cryptocurrency. It provides stability and trust through it’s infrastructure and algorithms. In this case, the volume of transactions which cover those preceding them with a layer of data produce the brick and mortar that holds the bank together. Additionally, the transparency of the distributed ledger helps make sure that mistakes are quickly reconciled.
In the past, precious metals have been used to anchor currency to a certain value. Obviously, metals have their drawback with attachments to other uses and they can be dug right out of the ground. Similarly, early Bitcoin miners profited by supplying hardware to support the blockchain’s electronic storage and processing needs. However, the cost and complexity of mining has turned it into more agony than ecstasy.
Currently, cryptocurrency has stabilized somewhat. There are still trends to be found from new releases and other causes. Altogether, it is becoming a safe and stable medium of exchange. Importantly, online purchases fueled by global e-commerce and CoronaVirus lockdown events will only increase it’s value. Perhaps, cryptocurrency will soon become the new standard!
